Judge: Michael P. Linfield, Case: 22STCP02490, Date: 2022-08-01 Tentative Ruling

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Case Number: 22STCP02490    Hearing Date: August 1, 2022    Dept: 34

SUBJECT:                 Amended Petition for Approval for Transfer of Payment Rights

Moving Party:          Petitioner J.G. Wentworth Originations, LLC (“Wentworth”)

Resp. Party:             None

The Court GRANTS the Petition for Approval for Transfer of Payment Rights in return for a payout to Mr. Oliver of $6,100.00.

I.           BACKGROUND

On July 1, 2022, Petitioner J.G. Wentworth Originations, LLC filed a verified petition for approval for transfer of payment rights to petition the Court “pursuant to §§ 10134 et seq. of the California Insurance Code, as amended, for approval of the transfer of certain structured settlement payment rights.” (Petition, p. 1:20-22.)

On July 6, 2022, Petitioner J.G. Wentworth Originations, LLC amended its petition to the Court “pursuant to §§ 10134 et seq. of the California Insurance Code, as amended, for approval of the transfer of certain structured settlement payment rights.” (Amended Petition, p. 1:20-22.)

II.        ANALYSIS

A.          Legal Standard

This Petition is governed by Insurance Code sections 10134–10139.5. (See 321 Henderson Receivables Origination LLC v. Sioteco (2009) 173 Cal.App.4th 1059, 1066.) Under Insurance Code section 10137, a transfer of structured settlement payment rights is void unless a court reviews and approves the transfer and finds the following conditions are met:

a.           The transfer of the structured settlement payment rights is fair and reasonable and in the best interest of the payee, taking into account the welfare and support of his or her dependents.

b.           The transfer complies with the requirements of this article and will not contravene other applicable law, and the court has reviewed and approved the transfer as provided in Section 10139.5.

Pursuant to Insurance Code section 10139.5(a), the Court must make the following express findings as to a transfer of structured settlement payment rights:

1.           The transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.

2.           The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received that advice or knowingly waived receipt of that advice in writing.

3.           The transferee has provided the payee with a disclosure form that complies with Section 10136 and the transfer agreement complies with Sections 10136 and 10138.

4.           The transfer does not contravene any applicable statute or the order of any court or other government authority.

5.           The payee reasonably understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136.

6.           The payee understands and does not wish to exercise the payee's right to cancel the transfer agreement.

The transfer agreement is effective only upon approval in a final court order. (Ins. Code, § 10139.5(a).)

Insurance Code section 10139.5(b) sets forth 15 factors to consider in determining whether the transfer is fair and reasonable and in the best interest of the payee, 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; and (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.

Procedurally, Insurance Code section 10136(b) provides that ten or more days before the payee executes a transfer agreement, the transferee shall provide the payee with a separate written disclosure statement, accurately completed with the information that applies to the transfer agreement in at least 12-point type.

The court-approval process requires the transferee to file a petition in the county in which the transferor resides for approval of the transfer. (Ins. Code, § 10139.5(f)(1).) In addition, the following elements are required to be served and filed not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights (Id., §10139.5(f)(2)):

(A) A copy of the transferee's current petition and any other prior petition, whether approved or withdrawn, that was filed with the court in accordance with paragraph (6) of subdivision (c).

(B) A copy of the proposed transfer agreement and disclosure form required by paragraph (3) of subdivision (a).

(C) A listing of each of the payee's dependents, together with each dependent's age.

(D) A copy of the disclosure required in subdivision (b) of Section 10136.

(E) A copy of the annuity contract, if available.

(F) A copy of any qualified assignment agreement, if available.

(G) A copy of the underlying structured settlement agreement, if available.

(H) If a copy of a document described in subparagraph (E), (F), or (G) is unavailable or cannot be located, then the transferee is not required to attach a copy of that document to the petition or notice of the proposed transfer if the transferee satisfies the court that reasonable efforts to locate and secure a copy of the document have been made, including making inquiry with the payee. If the documents are available, but contain a confidentiality or nondisclosure provision, then the transferee shall summarize in the petition the payments due and owing to the payee, and, if requested by the court, shall provide copies of the documents to the court at a scheduled hearing.

(I) Proof of service showing compliance with the notification requirements of this section.

(J) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee's petition, either in person or by counsel, by submitting written comments to the court or by participating in the hearing.

(K) 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, which may not be less than 15 days after service of the transferee's notice, in order to be considered by the court.

(L) If the payee entered into the structured settlement at issue within five years prior to the date of the transfer agreement, then the transferee shall provide the following notice to the payee's attorney of record at the time the structured settlement was created, if the attorney is licensed to practice in California, at the attorney's address on file with the State Bar of California…

Further, at the time of filing such a petition, the transferee shall file a copy of the petition with the California Attorney General. (Ins. Code, § 10139.) Lastly, the court shall retain continuing jurisdiction to interpret and monitor the implementation of the transfer agreement as justice requires. (Id., § 10139.5(i).)

B.          Discussion

Payee Christopher Oliver agreed to transfer a portion of his interest in a structured settlement to Petitioner J.G. Wentworth Originations, LLC, specifically the following annuity payments: “180 monthly Life Contingent payments of $4,643.30 each, increasing at 3% annually, beginning on February 16, 2055 and ending on January 16, 2070.” (Amended Petition, ¶¶ 3, 5; Petition, Ex. A, p. 3, ¶ 2.B.) The future payments would total $1,036,324.08. (Petition, Ex. A, p. 11. ¶ 10.) Payee Oliver sells these payments in exchange for a purchase price of $4,500.00. (Id.; Amended Petition, ¶ 5.) The future payments have a discounted present value equal to $248,776.23, calculated by applying the discount rate of 3.60% utilized by the Internal Revenue Service to value annuities in probate proceedings. (Petition, Ex. A, p. 11. ¶ 10.) The purchase price top be paid to Payee Oliver was calculated using a discount rate of 14.80%. (Id.)

1.           Procedural and Notice Requirements:

·        Payee Oliver has been “advised in writing to seek independent professional advice regarding the transfer.” (Amended Petition, §  VI, ¶ 11, p. 9:9-10.) Payee Oliver waived this advice in writing. (Amended Petition, Ex. E.)

·        Wentworth provided the required disclosures under Sections 10136 and 10138. (Amended Petition, p. 10:16-18, p. 12 Verification, Ex. B.)

·        The Court does not find evidence that Wentworth provided notice of this Petition to the California Attorney General.

·        Payee Oliver’s amended declaration establishes that he understands the terms of the transfer agreement and does not wish to cancel. (Amended Oliver Decl., ¶¶ 13-14.)

According to his declaration, Christopher Oliver is thirty (30) years old and resides in Los Angeles, California. (Amended Oliver Decl., ¶ 8.) Payee Oliver is married to Gabriella Oliver and has one minor child, K.O., who is 4 years old, and resides in Los Angeles County, California. (Id.) Payee Oliver is unemployed and has no court-ordered child support obligations. (Id.) The future period payments that are the subject of the proposed transfer “were not intended to pay for the future medical care and treatment relating to the incident that was the subject of the settlement. The settlement was monetary in its entirety.” (Amended Oliver Decl., ¶ 6.) The future periodic payments that are the subject of the proposed transfer were not intended to provide for necessary living expenses. (Amended Oliver Decl., ¶ 7.)

Payee Oliver, currently experiencing a financial hardship, intends to use the money he receives from this transfer “to go back to school to become a licensed electrician.” (Amended Oliver Decl., ¶ 11.) Payee Oliver believes it in his best interest “to enter the transaction contemplated in the Purchase Agreement as the original structured settlement entered into by me on 12/15/2006 which is attached as Exhibit “D” to the Petition.” The settlement was intended as compensation for a wrongful death claim.” (Amended Oliver Decl., ¶ 4.)

Although the Petition complies with the procedural requirements of the law, the Court is concerned whether the transfer of payment rights is in Payee Oliver’s best interest.  (See Ins. Code, § 10139.5(a)(1).) 

In particular, Petitioner J.G. Wentworth Originations, LLC is using a discount rate of 14.80%. In other words, if Payee Oliver could receive a loan for $4,500.00 at less than 14.80%, it would be in Payee Oliver’s interest to get the loan rather than enter into this structured settlement payment.

The Court is unaware of any evidence that Payee Oliver negotiated the 14.80% discount rate. 

Payee Oliver has not been represented by counsel in this matter.  (Notice of Hearing, Exs. 4, 8, 10.) The Court wonders if Petitioner J.G. Wentworth Originations, LLC would have increased the payout to Payee Oliver if Payee Oliver had been represented by counsel in these negotiations?

        During oral argument, counsel for Petitioner stated that they had agreed to increase the payout to Mr. Oliver from $4,500.00 to $6,100.00.  Mr. Oliver stated that he would prefer to receive the increased amount.

III.     CONCLUSION

The Court GRANTS the Petition for Approval for Transfer of Payment Rights in return for a payout to Mr. Oliver of $6,100.00.