Judge: Lisa R. Jaskol, Case: 23STCV20013, Date: 2024-08-27 Tentative Ruling

Case Number: 23STCV20013    Hearing Date: August 27, 2024    Dept: 28

Having considered the petitioning papers submitted August 8, 2024 and August 14, 2024, the Court rules as follows. 

BACKGROUND 

On August 21, 2023, Plaintiff Michele Woodward (“Plaintiff”), by and through her guardian ad litem, Mari Woodward, filed this action against Defendants Easter Seals Southern California, Inc. (“Easter Seals”), Kathy Azzam (“Azzam”), City of Los Angeles (“City”), and Does 1-50 for general negligence and premises liability. 

On September 28, 2023, the Court appointed Mari Woodward to serve as Plaintiff’s guardian ad litem. 

On November 29, 2023, Plaintiff filed a notice of settlement. 

On December 4, 2023, the City filed an answer and a cross-complaint against Cross-Defendants Roes 1-10 for indemnification, apportionment of fault, and declaratory relief.  On December 11, 2023, the City filed s first amended answer to the complaint. 

On February 26, 2024, the Court granted the request of Easter Seals and Azzam for a good faith settlement determination. 

On June 20, 2024, Petitioner Mari Woodward (“Petitioner”) filed a petition to approve the compromise of Plaintiff’s action.  The petition was set for hearing on July 31, 2024.  On July 31, 2024, the Court spoke with Plaintiff and Petitioner and continued the hearing to August 27, 2024. 

Trial is currently scheduled for February 18, 2025. 

PETITIONER’S REQUESTS 

Petitioner asks the Court to approve the compromise of Plaintiff’s pending action, including placement of the net settlement proceeds in a special needs trust. 

DISCUSSION 

A.   Petition to approve minor’s compromise 

Section 12a(2) of the petition states that none of the medical expenses were paid, including payments by Medi-Cal.  However, Section 12b(4) states that Medi-Cal paid $828.84 of the medical expenses.  (This figure appears to be incorrect.  The Department of Health Care Services’s letter states that Medi-Cal paid $827.84.) 

Section 12a(3) of the petition states that the medical expenses were not reduced by any negotiated, statutory, or contractual reductions.  However, Sections 12b(4) and 12b(5)(b)(ii) of the petition state that the Department of Health Care Services reduced the amount it was requesting as reimbursement. 

Section 12a(4) of the petition states that $22,689.84 in medical expenses will be paid or reimbursed from the settlement proceeds.  However, Section 16b of the petition states that $22,478.21 in medical expenses will be paid or reimbursed from the settlement proceeds.  The figures should be consistent. 

Section 12b(5)(b)(i) states that Dr. Zschaschel charged $21,862.00.  However, the medical bill attached to the petition shows $17,231.00 in charges.  Petitioner should explain the difference in the figures. 

Section 12b(5)(b)(i)(F) (the amount to be paid to Dr. Zschaschel out of the settlement proceeds) has been left blank and should be filled out. 

B.   Special needs trust 

1.    Notice to State agencies 

A petitioner seeking approval of a special needs trust (SNT) must give notice of the hearing and serve the petition on three State agencies: (1) the Department of Mental Health, (2) the Department of Developmental Services, and (3) the Department of Health Care Services.  (Prob. Code, §§ 3602, subd. (f), 3611, subd. (c).)   

Petitioner has not provided notice of hearing or proof of service on the three State agencies.  Therefore, the Court continues the hearing and orders Petition to give proper notice to the agencies (15 days by mail).  

2.    Proposed trust instrument 

The main requirements for Court-created or funded trusts are set forth at California Rules of Court, rule 7.903(c), and LASC rule 4.116(b).  The proposed trust instrument meets the requirement of California Rules of Court, rule 7.903(c). 

The proposed trust instrument does not contain the following terms traditionally required by LASC rule 4.116(b), labelled below by quoted subsection.  The Court continues the hearing to allow Petitioner to submit a revised proposed SNT instrument that contains the following terms: 

(b)(2) Any purchase of a personal residence for a beneficiary may be made only if authorized by the Court pursuant to the rules applicable to conservatorships and guardianships. (See Prob. Code, § 2571); 

(b)(3) Any sale of a personal residence of the beneficiary may be made only if authorized by the Court pursuant to the rules applicable to conservatorships and guardianships. (Prob. Code, § 2540, subd. (b).) Such sales must be returned to Court for confirmation. (See Prob. Code, § 10300 et seq.); and 

(b)(4) The trustee may not borrow money, lend money, give security, lease, convey, or exchange any property of the estate without prior authorization of the Court. (Prob. Code, § 2550.) 

3.    Findings 

When approving the establishment or funding of a SNT from settlement proceeds, the Court must make the following findings under Probate Code section 3604, subdivision (b): 

•         The SNT beneficiary has a disability which substantially impairs the individual’s ability to provide for her own care or custody and constitutes a substantial handicap;

•         The SNT beneficiary is likely to have special needs that will not be met without the trust;

•         The money to be paid to the trust does not exceed the amount that appears reasonably necessary to meet the SNT beneficiary’s special needs.

  The petition contains factual allegations that generally cover these findings. 

4.    Trustee and bond 

The proposed initial co-trustees are Mari Woodward (parent/petitioner) and Andrew Woodward (relationship unknown).  Petitioner should provide a signed written consent from Andrew Woodward.  

Normally, bond is be required of a trustee unless the trustee is a corporate fiduciary.  (Cal. Rules of Court, rule 7.903(c)(5); Prob. Code, § 2320.)  The proposed co-trustees do not meet that definition.  Therefore, a bond is required. 

Petitioner does not state or calculate a bond.  Based on the assets to be funded into the trust, plus anticipated annual income from investments and any annuity, plus an additional amount required for the costs of any recovery on the bond, the bond should be $89,000.  If and when the Court approves the petition, the Court will require the co-trustees to submit a $89,000 bond to this department.  The bond will later be resubmitted to the Probate Court in any trust supervision action.     

5.    Proposed order 

The proposed order does not include general trust orders (approval of trust instrument and funding, appointment of trustee, etc.).  Petitioner should correct the proposed order to include these items. 

In addition, the proposed order does not include trust terms to indicate the Court approves the trust.  Petitioner should correct the proposed order to include these terms. 

The proposed order attaches a Judicial Council form Order to Deposit Funds in Blocked Account.  However, funds held by an SNT are held by the trustee and are not in a blocked account.  Therefore, the form order is not appropriate. 

The proposed order does not include the required Probate Code section 3604, subdivision (b) findings.  Petitioner should correct the order to include these findings. 

The proposed order does not provide for Court jurisdiction over the trust.  Petitioner should correct the order to include this item. 

The proposed order does not require a first trust accounting in one year or set a 14 month calendar due date.  Petitioner should correct the order to include these items. 

The proposed order does not require filing of a Notice of Commencement of Proceedings for a Court Supervised Trust on LASC Form PRO 044 within 60 days.  Petitioner should correct the order to include these items. 

The proposed order does not set an OSC in this Civil department in approximately 60 days to ensure funding of the settlement, submission of the bond, and filing of LASC Form PRO 044 to open a trust supervision action in the Probate Court.  Petitioner should correct the order to include these items. 

CONCLUSION 

The Court CONTINUES the hearing on the petition to approve the compromise of Plaintiff Michele Woodward’s claim filed by Petitioner Mari Woodward to a date to be provided at the August 27, 2024 hearing. 

At least 10 days before the continued hearing, Petitioner Mari Woodward is ordered to file: (1) a revised petition to approve the compromise of Plaintiff’s action, (2) revised special needs trust paperwork, and (3) a revised proposed order.  The revised submissions should address the issues raised in this order. 

Petitioner is ordered to give notice of this ruling. 

Petitioner is ordered to file the proof of service of this ruling with the Court within five days.