Superior Court of California

County of Los Angeles

Department 78

IN RE PETITION OF:

INTELIFUND, LLC;

PACIFIC LIFE INSURANCE COMPANY; 

PETITIONER INTELIFUND, LLC’S PETITION FOR APPROVAL OF TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS

Petitioner Intelifund, LLC’s Petition for Approval of Transfer of Structured Settlement Payment Rights is GRANTED.

Moving party to provide notice and to file proof of service of such notice within five court days after the date of this order. 

FACTUAL BACKGROUND

This is Petition for Approval of Transfer of Structured Settlement Payment Rights (“Petition”). Within the underlying Petition, Petitioner Intelifund, LLC (“Petitioner”) alleges as follows. Payee L.M. (“Payee”) became entitled to certain structured settlement payments in connection with a settlement she had received through a personal injury lawsuit when she was a minor. (Petition at ¶ 3.) Through the structured settlement, Payee became entitled to future payments through a structured settlement annuity. (Ibid.) Under this annuity, Payee is set to receive period payments from Pacific Life & Annuity Services, Inc. (Id. at ¶ 4.) Payee has now entered into a Structured Settlement Payments Purchase Agreement (“Transfer Agreement”) with Petitioner for the purpose of transferring certain structured settlement payments to Petitioner in exchange for a lump payment. (Id. at ¶ 5, Exh. A.) 

If the Transfer Agreement is approved by the Court, then Payee will transfer and assign to Petitioner one payment of $44,756.47, which will be due and payable on May 30, 2023. (Motion, Exh. 2.) In exchange, Petitioner will pay Payee $17,685.73.(Supplemental filing, Exh. A.) 

PROCEDURAL HISTORY

Petitioner filed the instant Petition on May 10, 2023. 

On June 23, 2023, Petitioner filed a Motion for Order Approving Petition for Transfer of Structured Settlement Payment Rights, which included a proof of service. 

On July 27, 2023, the Court continued this matter to allow Plaintiff to file supplemental papers in support of this petition.

On August 7, 2023, Plaintiff filed supplemental papers.

DISCUSSION

I. Petition for Approval of Transfer of Structured Settlement Payment Rights

A direct or indirect transfer of structured settlement payment rights is not effective unless the transfer has been approved in a final court order based on certain express written findings by the Court.  (Ins. Code, § 10139.5, subd. (a).) 

A. Whether the Petition Complies with the Notice Requirements

The transferee must comply with the notification requirements of subdivision (f)(2).  (Ins. Code, § 10139.5, subd. (a)(3).) A notice of proposed transfer and petition must be filed and served no later than 20 days before the hearing and must include: (1) a copy of the transferee’s current petition and any other prior petition; (2) a copy of the proposed transfer agreement and disclosure form required by section 10139.5, subdivision (a)(3); (3) a listing of each of the payee’s dependents and their ages; (4) a copy of the disclosure required in section 10136, subdivision (b); (5) a copy of the annuity contract, any qualified assignment agreement, and underlying structured settlement agreement, if available; (6) proof of service showing compliance with the notification requirements; (7) notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s petition by submitting written comments to the court or by participating in the hearing; (8) notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the petition must be filed; and (9) notice to the payee’s attorney of record at the time the structured settlement was created, if payee entered into the structured settlement at issue within five years prior to the date of the transfer agreement.  (Ins. Code, § 10139.5, subd. (f)(2).)

With the filing of the Motion, the Court finds that Petitioner has generally complied with the requirements set forth under Institution Code § 10139.5, subd. (f)(2). Neither the Petition nor Motion include a copy of the annuity contract, any qualified assignment agreement, and underlying structured settlement agreement. (Ins. Code, § 10139.5, subd. (f)(2)(E)-(G). Instead, Petitioner has included a Declaration of Due Diligence from its counsel Katherine E. Saba, indicating that these documents were requested from Pacific Life Insurance Company but not yet provided. (Motion, see generally, Due Diligence Decl.) Petitioner’s supplemental briefing does not address the availability of these documents. It appears the agreements are not available. However, Petitioner adequately describes the terms of the annuity in the motion and in the transfer agreement. Although the structured settlement was created within the past five years, examination of the MC-350 from 2019 shows Dyamond Murray, Lyric Minor’s parent, petitioned for the compromise in pro per, meaning there was no attorney involved in the original settlement. 

Thus, the Court finds that Petitioner complied with the notice requirements set forth under Institution Code §10139.5, subd (f)(2).  

B. Whether the Transfer Agreement Complies with Statutory Requirements.

The transfer agreement must comply with Insurance Code sections 10136 and 10138.  (Ins. Code, § 10139.5, subd. (a)(3).) Here, the transfer agreement contains the required text and form.  (Motion, Exh. 2.)

Accordingly, the Court finds that the transfer agreement complies with Insurance Code sections 10136 and 10138. 

C. Whether the Petition Contravenes Any Applicable Statute or Order. 

The transfer must not contravene any applicable statute or the order of any court or other government authority.  (Ins. Code, § 10139.5, subd. (a)(4).) 

The transfer generally complies with statutory requirements, and there is no evidence that it contravenes the order of any court or other government authority. 

Accordingly, the Court finds that this requirement is satisfied. 

D. Whether Payee Knowingly Waived Her Right to Receive Independent Professional Advice.

The payee must be advised in writing by the transferee to seek independent professional advice regarding the transfer and either receive that advice or knowingly waive, in writing, the opportunity to receive the advice.  (Ins. Code, § 10139.5, subd. (a)(2).) 

The Transfer Agreement advises that Payee may receive independent legal and financial advice, but Payee knowingly waived the right.  (Motion, Exh. 2; Exh. 5, Minor Decl. ¶ 11; Exh. 7.) 

Accordingly, the Court finds that this requirement is satisfied. 

E. Whether Payee Received the Required Disclosure Form.

The transferee must provide the payee with a disclosure form that complies with Insurance Code section 10136.  (Ins. Code, § 10139.5, subd. (a)(3).)  The disclosure form must contain specific text, and the transferee must provide the disclosure form at least ten days before the payee executes a transfer agreement.  (Ins. Code, § 10136, subd. (b).) 

The disclosure form here contains the required text and form.  (Motion, Exh. 4.)  Payee received and read the disclosure form at least ten days before signing the transfer agreement.  (Id.; see also Petition at pg. 2.) 

Accordingly, the Court finds that this requirement is satisfied.

F. Whether Payee Declares Her Understanding of the Terms. 

The payee must understand the terms of the transfer agreement, including the terms set forth in the disclosure statement, and the right to cancel the transfer agreement.  (Ins. Code, § 10139.5, subd. (a)(5)-(6).) 

Payee declares that she understands the terms of the transfer agreement, including the terms set forth in the disclosure statement.  (Motion, Exh. 5, Minor Decl. ¶ 13; Exh. 6, Affidavit at ¶ 6.)  Additionally, Payee signed the Transfer Agreement directly under a statement advising her of her right to cancel the agreement.  (Motion, Exh. 2.) 

The Court therefore finds that this requirement is satisfied.

G. Whether the Transfer is in the Best Interest of the Payee.

The transfer must be in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.  (Ins. Code, § 10139.5, subd. (a)(1).)  When determining whether the transfer is fair, reasonable, and in the payee’s best interests, the Court must consider the totality of the circumstances, including but not limited to: 

(1) the reasonable preference and desire of the payee to complete the proposed transaction, taking into account the payee’s age, mental capacity, legal knowledge, and apparent maturity level; 

(2) the stated purpose of the transfer; 

(3) the payee’s financial and economic situation; 

(4) the terms of the transaction, including whether the payee is transferring monthly or lump sum payments or all or a portion of his or her future payments; 

(5) whether, when the settlement was completed, the future periodic payments that are the subject of the proposed transfer were intended to pay for the future medical care and treatment of the payee relating to injuries sustained by the payee in the incident that was the subject of the settlement and whether the payee still needs those future payments to pay for that future care and treatment; 

(6) whether, when the settlement was completed, the future periodic payments that are the subject of the proposed transfer were intended to provide for the necessary living expenses of the payee and whether the payee still needs the future structured settlement payments to pay for future necessary living expenses; 

(7) whether the payee is, at the time of the proposed transfer, likely to require future medical care and treatment for the injuries that the payee sustained in connection with the incident that was the subject of the settlement and whether the payee lacks other resources, including insurance, sufficient to cover those future medical expenses; 

(8) whether the payee has other means of income or support, aside from the structured settlement payments that are the subject of the proposed transfer, sufficient to meet the payee’s future financial obligations for maintenance and support of the payee’s dependents, specifically including, but not limited to, the payee’s child support obligations, if any; 

(9) whether the financial terms of the transaction, including the discount rate applied to determine the amount to be paid to the payee, the expenses and costs of the transaction for both the payee and the transferee, the size of the transaction, the available financial alternatives to the payee to achieve the payee’s stated objectives, are fair and reasonable; 

(10) whether the payee completed previous transactions involving the payee’s structured settlement payments and the timing and size of the previous transactions and whether the payee was satisfied with any previous transaction; 

(11) whether the transferee attempted previous transactions involving the payee’s structured settlement payments that were denied, or that were dismissed or withdrawn prior to a decision on the merits, within the past five years; 

(12) whether, to the best of the transferee’s knowledge after making inquiry with the payee, the payee has attempted structured settlement payment transfer transactions with another person or entity, other than the transferee, that were denied, or which were dismissed or withdrawn prior to a decision on the merits, within the past five years; 

(13) whether the payee, or his or her family or dependents, are in or are facing a hardship situation; 

(14) whether the payee received independent legal or financial advice regarding the transaction; and 

(15) any other factors or facts that the payee, the transferee, or any other interested party calls to the attention of the reviewing court or that the court determines should be considered in reviewing the transfer.  

(Ins. Code., § 10139.5, subd. (b).)

Here, Payee declares that she is a single 18-year-old with no child support obligations. (Motion, Exh. 3; Exh. 5, Minor Decl. ¶¶ 4-5.) Payee claims to be unemployed and have no monthly income, and she currently resides at 5348 Kinston Ave, Culver City, CA 90230. (Motion, Exh. 5, Minor Decl. ¶ 4.) Payee intends to use the money received from this transaction to pay off her current auto loan, which has an interest rate of 24%. (Id. at ¶ 6.) Payee further claims that the purpose of the original settlement was to compensate her for her injuries, and because she is no longer being treated for her injuries, she has no further need to provide for future medical expenses. (Id. at ¶ 3.)

Furthermore, Payee has not completed or attempted any previous transactions. (Motion, Exh. 6, Affidavit at ¶ 11.) Payee acknowledges that she was advised of his right to seek independent counsel and financial advice, and he knowingly waived that right.  (Motion, Exh. 5 at ¶ 11.) Payee understands the terms of the transfer agreement and does not want to exercise her right to cancel the agreement. (Id. at ¶ 13.)

Payee’s additionally testifies that she will use the funds to help defray her living expenses. (Minor Supp Decl., ¶3.) Plaintiff was originally employed at Triyar Realty, but the location where she was working closed. (Id.) Although she was offered the same position at another location in Orange County, her commute was too far. (Id.) Payee is looking for other work and applied to several other companies. (Id.) Payee requires the funds from the transfer to pay for her vehicle because she is behind on payments and needs the car to go to interviews and eventually to work. (Id., ¶5.) As of May 2023, Payee owes $2,383.07 in payments for her auto loan. (Id., Exh. 1.) Payee requires the vehicle to care for her grandmother because she is partially responsible for taking her to her medical appointments. (Id.) Additionally, Payee requires the funds to repay rent to her mother, to whom she owes $1,200. (Id., ¶6.) Payee has been relying on credit cards to cover other expenses and owes approximately $3,000. (Id.) Petitioner also decreased the effective rate from 17.95% to 14%, allowing Payee to obtain $17,685.73. (Supplemental filing, Exh. A.)

Upon review of the attached Petition to Approve Compromise of Disputed Claim of a Minor filed in the Payee’s underlying personal injury lawsuit, it states that, to the extent that Payee’s recovered from her injuries, she still possessed two scars on her forehead. (Motion, Exh. 8 at ¶ 9(c).) While it is suggested that surgery could improve one of these scars, the purpose of the structure settlement annuity does not appear to be for future medical costs. Under this annuity, Payee received a lump sum payment of $10,000 when she turned 18 on May 30, 2022. (Id., Attachment 19b(3) at pg. 1.) Thereafter, Payee would receive an educational stipend of $5,000 per year for seven years starting when she turned 19. (Ibid.) By the age of 26, Payee would receive a lump sum of $44,756.47. 

Under the Transfer Agreement, Payee’s right to her educational stipend would not be affected. Instead, Payee would only assign to Petitioner the right to receive payment of the final lump sum of $44,756.47 in exchange for $17,685.73. (Motion, Exh. 2 at pg. 2; Supplemental filing, Exh. A.) Payee’s supplemental declaration shows she is experiencing financial hardship because she became unemployed, owes rent to her mother, is behind on car payments, and is relying on credit cards for other expenses.  Payee’s outstanding debts currently total $6,583.07. Payee continues to rely on credit cards to pay for other expenses and will continue to incur debts while she is unemployed. Payee does not explain the other financial alternatives that she had considered prior to entering the Transfer Agreement. Nevertheless, the Court finds that Payee has sufficiently indicated that she is experiencing financial hardship. 

CONCLUSION

Accordingly, Petitioner’s Petition for Approval of Transfer of Structured Settlement Payment Rights is GRANTED. 

Petitioner to give notice.

DATED:  August 14, 2023

Hon. Jill Feeney 

Judge of the Superior Court