Judge: Michelle C. Kim, Case: 20STCV08506, Date: 2024-02-22 Tentative Ruling


Case Number: 20STCV08506    Hearing Date: February 22, 2024    Dept: 31

DEPT:  

31 

HEARING DATE: 

02/22/2024 

CASE NAME/NUMBER: 

20STCV08506 RICHARD MUPENZI, et al. vs MIRACLE HOME HEALTH CARE, INC. 

PETITION TO APPROVE COMPROMISE OF PENDING ACTION OF A MINOR 

RICHARD MUPENZI, Age 29 

RECOMMENDATION: 

DENY 

 

TENTATIVE¿ 

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The Court excuses the personal appearance of Claimant and the guardian ad litem. Counsel may appear by telephone or video conference call.¿ 

 

Plaintiffs have agreed to settle their claims against Defendants for the total amount of $200,000, with $175,000 being apportioned to Richard Mupenzi (“Claimant”), an adult person with a disability. If the settlement is approved, $3,559.39 will be used for medical expenses, $60,416.66 for attorneys’ fees, and $7,905.64 will be used for costs.  The net balance of $103,122.31 will be placed into a Special Needs Trust for the benefit of Claimant. 

 

The Court has reviewed the settlement and finds it fair and reasonable.  The Court also finds the attorneys’ fees fair and reasonable, because the Court is satisfied with the attorney declaration justifying 35% of Claimant’s settlement.     

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  1. NOTICE  

 

NOTICE TO STATE AGENCIES WHEN PROPOSED TRUST IS AN SNT: 

 

When seeking approval of a special needs trust (SNT), notice of the hearing and service of the petition must be made upon three state agencies including the Dept. of Mental Health, Dept. of Developmental Services, and Dept. of Health Care Services.  (Probate Code sections 3602(f), 3611(c).). There is no proof of service for the state agencies and the court will continue this heating to require the 15 days’ notice.  (In the briefing, petitioner recognized the need to notice the state agencies but then failed to indicate such service in any proof of service.) 

 

PLAINTIFF:   

 

Richard Mupenzi, age 30, disabled 

 

PETITIONER:   

 

Monica Mbabazi, parent and GAL 

 

GROSS AND NET SETTLEMENT (Petition, p. 6, sections 15 and 16f):   

 

Gross $175,000, Net $103,122.31 

 

PROPOSED RECIPIENT OF SETTLEMENT PROCEEDS (Petition, pp. 8-9, sec. 18): 

 

Petitioner proposes to fund the entire net settlement proceeds, minus requested $6,000 fees to SNT counsel, net $97,122.31 into the SNT.   

 

An SNT is used to receive the settlement funds in these situations so that plaintiff does not lose benefits eligibility for Medi-Cal, SSI, and other benefits.  Historically, a person receiving Medi-Cal or SSI benefits could have only up to $2,000 in non-exempt assets, and any additional non-exempt assets over $2,000 would cause the loss of benefits eligibility under the relevant federal and state law.  Funds held in a valid SNT, however, are exempt assets that do not count toward the $2,000 asset limit for purposes of calculating benefits eligibility.  On January 1, 2024, the Medi-Cal asset qualification limit was eliminated and there is no longer a means test for Medi-Cal.  The asset qualification for other benefits, like SSI, did not change and therefore there might remain a reason for creation and funding of a SNT to maintain other benefits.   

 

SCOPE OF REVIEW: 

 

This referral to the probate department is limited to the review of the proposed trust instrument and a suggestion of how to move forward regarding administration of the trust.  This memorandum therefore does not address the advisability of the compromise amount/terms or related concerns including attorney’s fees and costs.  

 

BRIEFING REGARDING TRUST ISSUES: 

 

Petitioner provides briefing regarding trust issue at Attachment 18b(4) (court’s pdf at p. 53). 

 

  1. PROPOSED TRUST INSTRUMENT 

 

Petitioner provides the proposed trust instrument at Attachment 18b(4). 

 

The main requirements for court created or funded trusts are set forth at California Rules of Court (CRC) rule 7.903(c) and LASC rule 4.116(b).  The proposed trust instrument meets those requirements and is ready for approval for creation and funding. 

 

 

ADDITIONAL REQUESTS FOR RELIEF: 

 

Petitioner makes the following additional requests for relief that are beyond those fundamental to the approval and funding of a settlement trust: 

 

• Petitioner requests authority to pay $6,000 fees to trust specialist counsel, Joel J. Loquvam, for tasks relating to the minor’s settlement trust including drafting of the trust instrument and related portions of this petition.  (Attachment 18b(4), court’s pdf at p. 61.)  This is approved.    

 

 

FINDINGS WHEN THE PROPOSED TRUST IS AN SNT: 

 

When approving the establishment or funding of a SNT from settlement proceeds, the court must make the following findings pursuant to Probate Code section 3604(b) and the court makes the following findings (there are factual allegations in the Petition to Approve Compromise and its attachments supporting the settlement that generally cover the requisite findings): 

 

• 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. 

 

TRUSTE AND BOND: 

 

The proposed initial trustee is petitioner, Monia Mbabazi. 

 

Normally, bond must be required of a trustee unless the trustee is a corporate fiduciary.  (California Rules of Court, Rule 7.903(c)(5), Probate Code section 2320.)  The proposed trustee does not meet that requirement and the court will require bond.   

 

Petitioner does not calculate or request a bond amount.  A proper bond calculation based upon 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, would be $113,000.  The court will require $113,000 bond submitted by trustee to this department (which will later be resubmitted to the Probate court in any trust supervision action).      

 

ORDERS/PROPOSED ORDER: 

 

Proposed Order received stamp date:  12/28/23 

General trust orders re creation and funding of SNT, appointment of trustee, bond, the findings required by Probate Code section 3604(a), etc. are NOT stated.  Need correction.   

Trust terms included in order as required (Probate Code section 3604(a):  No, need correction.   

Order provides for court jurisdiction over trust: No, need correction.   

Order requires first trust accounting in one year and sets 14 month calendar due date:  No, need correction.   

Order requires filing of a Notice of Commencement of Proceedings for a Court Supervised Trust on LASC Form PRO 044 within 60 days:  No, need correction.   

Order sets OSC in this civil department in approximately 60 days to ensure funding of settlement, submission of bond if required, purchase of annuity if relevant, and filing of LASC Form PRO 044 to open trust supervision action in probate:  No, need correction.   

In the petition, petitioner requests $6,000 fees to SNT counsel Joel Loquvam whereas the proposed order states $5,000 fees and $1,200 costs for a total of $6,200 (order sections 8(a)(1), 8(a)(4), and 8(b)(2)).  Need correction.   

 

ORDERS: 

 

• The Court continues the hearing to require 15 days’ notice to the three state agencies.   

• The Court will require trustee bond: $113,000 

• The Court will require first trust accounting in one year and set calendar due date for filing in 14 months. 

• The Court sets OSC in civil department in approximately 60 days to ensure funding of settlement, submission of bond, purchase of annuity if relevant, and filing of LASC Form PRO 044 to open trust supervision action in probate. 

• Proposed Order: Corrections needed.    

 

Petitioner must reserve a new date and file a new petition curing the above-noted defects at least 9 court days before the continued hearing date. 

 

Moving party is ordered to give notice.