Judge: Peter A. Hernandez, Case: 22PSCP00393, Date: 2022-10-10 Tentative Ruling
Case Number: 22PSCP00393 Hearing Date: October 10, 2022 Dept: O
1. Petitioner Bifco, LLC’s Verified Petition for Approval of Transfer of Structured Settlement Payment Rights is GRANTED.
2. Petitioner Bifco, LLC’s Motion to File Under Seal Verified Petition for Approval of Transfer of Structured Settlement Payment Rights is GRANTED.
Background
On or about May 11, 2022, Letters of Guardianship were issued for the appointment of a guardian of the Estate of A.C. On November 17, 2011, A.C.’s guardian (i.e., A.C.’s uncle) entered into a Settlement and Release (“Settlement Agreement”) with certain defendants in resolution of a wrongful death claim involving A.C.’s mother. The Settlement Agreement provided for the disbursal of certain periodic payments to the Estate of A.C. The obligation to provide periodic payments was assigned to BHG Structured Settlements, Inc. (“BHG”). BHG purchased an annuity from Berkshire Hathaway Life Insurance Company of Nebraska (“BHLN”).
The Estate of A.C. now seeks to transfer portions of the Periodic Payments. The effective annual interest rate of the proposed transfer is 6.73%.
Under Insurance Code § 10136, subdivision (b), 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. Exhibit H shows the disclosure. The disclosure itself complies with Ins. Code § 10136(b).
Under Insurance Code § 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, will not contravene other applicable law, and the court has reviewed and approved the transfer as provided in Section 10139.5.”
Insurance Code § 10139.5 sets forth 15 factors to consider when reviewing a petition for transfer of a structured settlement, including (1) “[t]he 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) “[t]he stated purpose of the transfer;” (3) “[t]he payee's financial and economic situation;” (4) “[t]he 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) “[w]hether, 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) “[w]hether, 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) “[w]hether 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) “[w]hether the payee has other means of income or support . . . sufficient to meet the payee’s future financial obligations for maintenance and support of the payee’s dependents. . .;” (9) “[w]hether the financial terms of the transaction . . . are fair and reasonable;” (10) “[w]hether the payee completed previous transactions . . .;” (11) “[w]hether the transferee attempted previous transactions involving the payee’s structured settlement payments . . . within the past five years;” (12) “[w]hether . . . the payee has attempted structured settlement payment transfer transactions with another person or entity . . . within the past five years;” (13) “[w]hether the payee, or his or her family or dependents, are in or ae facing a hardship situation;” (14) “[w]hether the payee received independent legal or financial advice regarding the transaction . . .” and (15) “[a]ny 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 . . .”
A.C. is currently 14 years old and resides with her maternal grandparents in a Los Angeles suburb. (Petition, ¶ 12, Exh. 1, ¶¶ 2, 3 and 12.) The guardian of the Estate of A.C. currently resides in Los Angeles County. (Id., ¶ 3.) A.C. does not have any dependents or any child support obligations. (Id., ¶¶ 11 and 16.) If the transaction is approved, the funds will be used to pay for A.C.’s private school tuition for the 2022-23 and 2023-24 school years. (Id., ¶ 12.) The public school system where A.C. resides with her grandparents is not as safe as the subject private school and A.C. would like to stay with her peers. (Id.) A.C. has attended private school since preschool. (Id.) Although A.C.’s father has legal custody of A.C. and contributes to her expenses, he cannot afford private school tuition. (Id., ¶ 14.) A.C.’s grandparents support her financially. (Id.) The guardian of the Estate of A.C. is employed full-time, but he has his own family (identified in Exhibit J) and his income is insufficient to pay the entirety of costs for private school. (Id.) The guardian of the Estate of A.C. will not be using any of the proceeds from the transaction to pay for daily living expenses or necessities or for anyone other than A.C. (Id., ¶ 15.) A.C. has not previously filed a petition seeking to transfer Periodic Payments, not has anyone operating on her behalf ever done so. (Id., ¶ 16.) The underlying Settlement Agreement related to the wrongful death of A.C.’s mother; as such, A.C. will not require future medical care and treatment for the injuries sustained in connection with the Settlement Agreement. (Id., ¶ 17.) A.C. currently qualifies for health coverage through the state. (Id., ¶ 17.)
BGH and BHLN have executed a waiver of anti-assignment provisions. (Petition, ¶ 8, Exh. G.) Insurance Code § 10138 prohibits certain provisions. The transfer agreement does not contain any of the prohibited provisions. The transfer agreement complies with Ins. Code § 10139.3 and does not contain any prohibited penalties. Insurance Code § 10139.5, subdivision (a)(2) requires Bifco to advise the Estate of A.C. in writing to seek independent professional advice regarding the transfer. Exhibit H reflects that such advisement was given. Exhibit K is comprised of an executed waiver of an independent professional adviser. The guardian of the Estate of A.C. also states in ¶ 10 of his declaration that he was advised by Bifco to seek independent professional advice regarding the transfer and has received or knowingly waived that advice.
Insurance Code § 10139.5, subdivision (f)(2) requires that a notice of the proposed transfer and the petition for its authorization (to include copies of the petition, proposed transfer agreement and disclosure form, a listing of the payee’s dependents, the 10136, subdivision (b) disclosure, annuity contact, qualified assignment agreement and underlying structured settlement agreement) be filed with the court and served on all interested parties not less than 20 days prior to the scheduled hearing on any petition for approval of a transfer of structured settlement payment rights. Sufficient notice has been provided.
The court determines that the proposed transfer is fair and reasonable and in A.C.’s best interest and that the proposed transfer complies with the requirements of Insurance Code § 10134, et seq. The petition is granted.
2. Motion to Seal
Legal Standard
California Rules of Court (“CRC”) Rules 2.550 and 2.551 govern records sealed or proposed to be sealed by court order. “Unless confidentiality is required by law, court records are presumed to be open.” (CRC Rule 2.550, subd. (c).)
“A party requesting that a record be filed under seal must file a motion or application for an order sealing the record. The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing.” (CRC Rule 2.551, subd. (b)(1).)
“The court may order that a record be filed under seal only if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.” (CRC Rule 2.550, subd. (d).)
“An order sealing the record must: (A) Specifically state the facts that support the findings; and (B) Direct the sealing of only those documents and pages or, if reasonably practicable, portions of those documents and pages, that contain the material that needs to be placed under seal. All other portions of each document or page must be included in the public file.” (CRC Rule 2.550, subd. (e)(1).)
Discussion
Bifco moves the court for an order sealing the unredacted versions of the (1) verified Petition for Approval of Transfer of Structured Settlement Payment Rights, (2) memorandum of points and authorities in support of motion to file under seal and the (3) proposed order granting motion to file under seal, which were lodged conditionally under seal on August 16, 2022 in connection with Motion #1 above.
Bifco’s motion is granted. A.C. became entitled to receive certain structured settlement payments (“Periodic Payments”) pursuant to a wrongful death lawsuit resolved on or about November 17, 2011; that the court in the underlying lawsuit sealed the record there due to the sensitive nature of the death of A.C.’s mother and due to A.C.’s minority; that A.C. remains a minor; that there is a significant amount of Periodic Payments that reman due to A.C. over her lifetime; that the exhibits attached to the petition contain financial information which should not be disclosed to the public; and that some of the documents Bifco is required to attach to the petition relate to the underlying settlement and were required to be sealed by the court in the underlying lawsuit. (Motion, ¶¶ 1-4.) Bifco’s motion is supported by a declaration from counsel, attesting that the petition contains sensitive, confidential financial information and that some of the documents Bifco was required to attach to the petition pursuant to Insurance Code § 10134 et seq. relate to the underlying settlement and were required to be sealed by the court in that lawsuit. (Belcher Decl., ¶¶ 2 and 3.)
The court finds that the parties’ interest in maintaining the confidentiality of their sensitive financial and business information overrides the public’s interest in disclosure and supports sealing the record. The court finds that there is a substantial probability that the parties’ overriding interest will be prejudice if the motion to seal is not granted. The court further finds that the proposed sealing is narrowly tailored and that no less restrictive means exist to achieve the parties’ overriding interest.