TENTATIVE RULING

                                                                             

Calendar:         1                                                         

Date:               12/9/2022

Case
No:                                                                                 22GDCP00127

Case
Name:                                                                             Tanner
221, LLC v. Certain Statutory Interested Parties, etc.                 

 

PETITION FOR APPROVAL FOR TRANSFER OF STRUCTURED
SETTLEMENT PAYMENT RIGHTS

 

Moving Party:           
   Petitioner
Tanner 221, LLC     

Responding Party:          No Opposition

 

RELIEF REQUESTED:        

            Approve
transfer of structured settlement payment rights by and between Zeferina
Rodriguez, as payee, and Odyssea-Abe83, LLC, to be assigned to transferee
Tanner 221, LLC.  

 

ANALYSIS:

Procedural

No Declaration of Payee/Transferor

The file does not include a declaration of the payee/transferor Zeferina
Rodriguez providing critical information in this matter.

 

            Under Insurance Code § 10139.5:

“(c) Every petition for approval of a transfer of structured
settlement payment rights, except as provided in subdivision (d), shall
include, to the extent known after the transferee has made reasonable inquiry
with the payee, all of the following:



 (1) The payee's name,
address, and age.



 (2) The payee's
marital status, and, if married or separated, the name of the payee's spouse.



 (3) The names, ages,
and place or places of residence of the payee's minor children or other
dependents, if any.



 (4) The amounts and
sources of the payee's monthly income and financial resources and, if presently
married, the amounts and sources of the monthly income and financial resources
of the payee's spouse.



 (5) Whether the payee
is currently obligated under any child support or spousal support order, and,
if so, the names, addresses, and telephone numbers of any individual, entity,
or agency that is receiving child or spousal support from the payee under that
order or that has jurisdiction over the order or the payments in question.”

           

Here, without the declaration, the court has no information from a person
with personal knowledge concerning marital status, dependents, income, or
support obligations.   In addition,
without the declaration there is no information at all submitted concerning
what the funds are to be used for, and other information the court needs to
consider to approve the transfer, as discussed below. 

 

Under Insurance Code § 10139.5:

“(f)    

 

(1) A
petition under this article for approval of a transfer of structured settlement
payment rights shall be made by the transferee and brought in the county in
which the payee resides at the time the transfer agreement is signed by the
payee, or, if the payee is not domiciled in California, in the county in which
the payee resides or in the county where the structured settlement obligor or
annuity issuer is domiciled.



 (2) Not less than 20 days prior to the scheduled
hearing on any petition for approval of a transfer of structured settlement
payment rights under this article, the transferee shall file with the court and
serve on all interested parties a notice of the proposed transfer and the
petition for its authorization, and shall include the following with that
notice:…”

(Emphasis added).

 

Under Insurance Code 10139.5 (d):

“(d) With respect to
the information required to be included in every petition for approval of a
transfer of structured settlement payment rights pursuant to paragraphs (2),
(3), (4), (5), and (6) of subdivision (c), that information shall be deemed to
be included in the petition if it is provided at the scheduled hearing on the
proposed transfer through oral testimony or documentary evidence filed with the
court and made a part of the record consistent with the rules of evidence and
procedure.”

 

Unless the payee appears at the
hearing and offers oral testimony, the court cannot consider the petition.  The court prefers that the transferor provide
a written declaration before the hearing, with the 20-day window required in
the statute.  In addition, there is no
copy of the contract or qualified assignment attached to the moving papers, so
it is not clear that the qualified assignment is not one which expressly does
not permit assignment.  

 

The petition in fact indicates that
petitioner is informed and believes that the underlying structured settlement
that established the annuity at issue “contained language that restricted/and
or prohibited the right and/or power to assign the Assigned Payments in
question.”  [Petition, para. 7].  If the annuity contract does not permit
assignment, in order to avoid enforcement of this term, any information in
support of the application is required to be served in advance on the
interested parties.  See 321 Henderson
Receivables Origination LLC v. Sioteco (2009) 173 Cal. App.4^th 1059, 1075-1076,
holding that an anti-assignment provision does not bar a transfer, “where no
interested parties object to the transfer of structured settlement payment
rights.”  If there is no such satisfactory
declaration on file which has been served on the interested parties, the court
will deny the petition.

 

Copies of Documents

            Under Insurance Code § 10139.5:

“ (f) 



 (1) A petition under this article for approval of a transfer of
structured settlement payment rights shall be made by the transferee and
brought in the county in which the payee resides at the time the transfer
agreement is signed by the payee, or, if the payee is not domiciled in
California, in the county in which the payee resides or in the county where the
structured settlement obligor or annuity issuer is domiciled.



 (2) Not less than 20 days prior to the scheduled hearing on any
petition for approval of a transfer of structured settlement payment rights
under this article, the transferee shall file with the court and serve on all
interested parties a notice of the proposed transfer and the petition for its
authorization, and shall include the following with that notice:



            (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.”

 

            Here, the
petition fails to include a copy of the annuity contract, including only a letter
dated August 13, 2018, describing the annuity benefits/payments due.  [Grace Decl., para. 1, Ex. A].  There is no copy of the qualified assignment
agreement, and no copy of the settlement agreement. Accordingly, there is no
copy of any of the required documents before the court.

The Grace Declaration indicates
that Tanner 221, LLC has contacted the payee, annuity issuer, and requested
court records but has been unable to locate these documents.   [Grace Decl., para. 1(b)].  The verification letter is attached.  [Ex. A]. 
The transferor has also provided a Declaration in Lieu of Settlement
Agreement confirming that Rodriguez has searched for but been unable to locate
a copy of the Settlement Agreement.  
[Ex. B, Declaration in Lieu, para. 3]. 
The court finds that reasonable efforts have been made to locate and
secure copies of the documents.  

 

Substantive

            The
petition seeks approval of a transfer of certain structured settlement payment
rights held by transferor Zeferina Rodriguez pursuant to a structured
settlement entered into as a result of a wrongful death claim.  The Declaration in Lieu of Settlement
indicates that payee lost her daughter in 2015 when she was struck by a city
vehicle and a lawsuit was filed for damages against the city.  [Rodriguez Decl. in Lieu, para. 3].

 

            It is not
clear whether Rodriguez was dependent on her daughter for support, or whether
the funds were intended to cover Rodriguez’s living expenses. 

 

            The Grace Declaration
represents, with no personal knowledge established, that Rodriguez is 62 years
old, married to Juan Rodriguez, and has no minor children or other
dependents.  [Grace Decl., paras. 2-4].  However, the attachment to the First Amended
Petition indicating it is a list of “Payee’s dependents,” lists “Juan Rodriguez
(65 years old).  [First Amended Petition,
Ex. D].  This discrepancy will be
addressed at the hearing.  The Grace
Declaration indicates that Rodriguez is currently unemployed and receives $1,000
per month from her annuity, and her spouse is also unemployed.  [Grace Decl., para. 5].   Rodriguez
has no court ordered child support or maintenance obligations. [Grace Decl., para.
6].

 

            Rodriguez
has made one prior attempt to transfer a portion of her payment rights.  [Grace Decl., para. 7].  That transaction,with Estate Fund, LLC,  is currently pending in Los Angeles Superior
Court.  [Grace Decl., para. 7].   The court will require information concerning
the status of that transfer attempt, and whether the same payments are
implicated in both of these cases.

 

The transaction before this court
is with Odyssea-Abe83, LLC, to be assigned to petitioner Tanner 221, LLC.
[First Amended Petition, Exs. A, B].   Rodriguez is transferring 153 monthly payments
of $1,208.44 beginning January 15, 2023 through and including September 15,
2035. 

 

The total dollar amount of payments
being sold is $184,891.32, with a discounted present value of $143,711.14.  The net amount to be paid to Rodriguez is $87,631.73,
with no deduction for expenses. 

 

There is no declaration of the
payee, other than in connection with the settlement agreement, so it is not
clear what Rodriguez intends to do with the funds, or whether she is facing a
hardship situation.

 

It would appear that the transfer
would transfer a portion of the $1,000 a month which the Grace Declaration
reports as Rodriguez’s only source of monthly income.  The letter submitted from Pacific Life &
Annuity Services, Inc. indicates that annuity payments due are $1,608.44
payable monthly, guaranteed for 15 years with the last guaranteed payment on
September 15, 2035.  [Grace Decl., Ex.
A].  This transfer would leave payments
of $400 per month. 

 

            Under
Insurance Code section 10137(a):

“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 section 10139.5
provides the factors to be considered by the court in determining whether to
approve the transfer of a structured settlement.  The highlighted factors are those which are of
some concern in connection with this petition.

(a) A direct or indirect transfer of structured
settlement payment rights is not effective and a structured settlement obligor
or annuity issuer is not required to make any payment directly or indirectly to
any transferee of structured settlement payment rights unless the transfer has
been approved in advance in a final court order based on express written
findings by the court that:



 (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, in writing, the opportunity to
receive the advice.



 (3) The transferee has complied with the notification requirements
pursuant to paragraph (2) of subdivision (f), 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 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.

(b) When determining whether the proposed transfer should be
approved, including whether the transfer is fair, reasonable, and in the
payee's best interest, taking into account the welfare and support of the
payee's dependents, the court shall consider the totality of the circumstances,
including, but not limited to, all of the following:



 (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.
The payee shall disclose to the transferee and the court his or her
court-ordered child support or maintenance obligations for the court's
consideration.



 (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.
The court may deny or defer ruling on the petition for approval of a transfer
of structured settlement payment rights if the court believes that the payee
does not fully understand the proposed transaction and that independent legal
or financial advice regarding the transaction should be obtained by the payee.



 (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.”

 

            The highlighted
factors are of concern here.

 

Specifically, it is not clear
whether the funds were intended to provide for payee’s living expenses, or why
the payments, due to payee as an adult, were structured in this fashion.

 

It is also of concern that the
payee has not provided information setting forth any sources of income, other
than from the annuity payments, which will be reduced from the expected $1,000
per month to $400 per month due to this transaction.  It is also not clear if the other transaction
currently pending would eliminate any monthly annuity payments entirely or if
the payee is aware of this circumstance. 

 

            This is not
a particularly favorable transaction for the transferor, as the monthly
payments would be due in the full amount beginning next month, January 15, of
2024, but the court will receive evidence concerning the intended purpose of
the annuity, if payee has any other sources of income, and if those are sufficient
to cover expenses without the monthly payments proposed to be transferred.

 

We do not have an actual copy of
the annuity, only a letter indicating the payments due to Rodriguez as payee
under the plan purchased in the annuity. 
 [Grace Decl., Ex. A]. 

This can sometimes be an issue, as
such annuities often include nonassignment clauses.  In fact, the petition indicates:

“Petitioner is informed and
believes and upon that basis alleges that the underlying structured settlement that
established the annuity at issue in the present case contained language that
restricted and/or prohibited the right and/or power to assign the Assigned
Payments in question.”

[Petition, para. 7].

 

The issue of whether nonassignment
clauses bar a structured settlement transfer such as the one at issue here, has
been addressed by case law, and the court of appeal has concluded that where
notice has been provided to the interested parties, and no objection is made,
the court is authorized to consider the petition regardless of the existence of
a nonassignment clause:

“The superior court, however, did
conclude that public policy bars the waiver of the contractual antiassignment
clauses with respect to factoring transactions. We disagree. We conclude that California Uniform Commercial Code section 9408
evidences a public policy against antiassignment provisions in general and that
the SSTA, Insurance Code section 10136 et seq.,
evidences a public policy in favor of court-approved factoring transactions.
 Thus, public policy favors the legal conclusion that antiassignment
provisions do not bar court-approved transfers of structured settlement
payments.



Therefore, we conclude that, where no interested parties object to the transfer
of structured settlement payment rights, the antiassignment provisions in the
annuity contract, settlement agreement or other related contracts do not bar
the factoring transaction at issue in this appeal.

321 Henderson Receivables
Origination LLC v. Sioteco (2009) 173 Cal. App.4^th 1059, 1075-1076.

 

            The proof
of service shows that the annuity holder has been served with the moving papers
at an address which is not included on the letter submitted to the court from
the annuity holder.  [See Grace Decl.,
Ex. A; Notice of Proof of Service].  As
noted above, the First Amended Petition actually alleges that the formal
agreement includes a non-assignment clause. 
The court will inquire at the hearing how the appropriate mailing
address was determined, and whether there is any expectation that there will be
objection to the transfer.

 

The Court notes the filing of a Notice of Declaration of
Zeferina Rodriguez on December 2, 2022, just five court days prior to the
hearing, and after the Court had already prepared the tentative ruling without
the benefit of this document.  The Court
has reluctantly considered the declaration. 

 

The declaration of the payee now explains that the original
settlement was intended as compensation for the death of Rodriguez’s daughter,
and it does not appear that Rodriguez was dependent upon the daughter for
financial support.  Rodriguez indicates
that she is 62 years old, married, with one dependent, Juan Rodriguez, age 65,
evidently her husband.  Rodriguez indicates
that she currently receives $1,608.44 per month from the annuity, and that
after completing the transfer will continue to receive $400 per month from the
annuity.  [Rodriguez Decl., para.  4]. 
Rodriguez is currently self-employed selling medicinal herbs and
supplements and earns $5,000- $8,000 per month and has a rental property for
which she receives $380.00 per month. 
[Rodriguez Decl., para. 4].  Her
husband is retired and receives $380.00 per month in social security benefits.   Rodriguez indicates that she does not rely
on the portion of structured settlement payments she is assigning for her
day-to-day living expenses. [Rodriguez Decl., para. 4].  Rodriguez does not have any court-ordered
child support or maintenance obligations. 
[Rodriguez Decl., para. 5].

 

With the funds, Rodriguez intends to pay off debts, property
taxes and add an additional room to her home. 
She indicates that due to Covid-19, she had minimal income from her
supplements business, and had to rely on loans and credit cards to stay afloat
with the business and personal expenses and would prefer to pay these off now
to avoid accruing further interest. 
[Rodriguez Decl., para. 6].  She
will allocate $9,000 to pay off a personal loan, $11,000 to pay off credit card
debt and $10,000 to pay off property taxes. [Rodriguez Decl., para. 6].  She will use another $20,000 to $30,000 to
attach an additional room to her home and expects to rent out the current room
to a tenant for $2,500.00 per month to provide additional secondary
income.  [Id.].  Any remaining funds will be used to expand
the business and to cover unexpected expenses.

 

The Court will require information at the hearing concerning
the matters set forth in the original tentative ruling which are not addressed
by the declaration, including efforts to obtain documents, confirmation that
the $400 per month payment is not being transferred, the status of the other
pending transfer transaction, whether this transfer combined with the other
pending transfer will dispose of all future payments payee can realistically
expect to transfer, how the parties determined the appropriate address at which
to provide notice to the annuity holder, and whether there is any expectation
that there would be objection to this transfer.

 

There being no objection, the Petition is GRANTED.

 

RULING:

The Court has the following questions for the petitioner and
transferor:

What efforts were made to obtain annuity contract, qualified
assignment, settlement agreement?

Why was no timely declaration of the transferor submitted in
support of the petition?

Are the representations in the Grace Declaration correct
that transferor is 62 years old, married, with no minor children or other
dependents?   A dependent, Juan Rodriguez
(Age 65) is listed in the First Amended Petition.  [Ex D]. 
 

Were the funds from the settlement intended for the support
of payee?  Was payee dependent upon her
daughter for her support?

What are all payee’s sources of income?  How will transfer of or reduction in monthly
annuity payments affect ability to cover expenses?

What is the status of the other pending transfer
transaction, and what payments does it involve?

What does transferor intend to do with the funds received
from the current transfer?

Will this transfer combined with the other pending transfer dispose
of all future payments payee can realistically expect to transfer, and is payee
aware of that circumstance?

How did the parties determine the appropriate address at
which to provide notice to the annuity holder?

Is petitioner aware of any objection to the transfer on the
part of the annuity holder?

 

First Amended Petition for Approval for Transfer of
Structured Settlement Payment Rights will be GRANTED if the above-mentioned
conditions are met.  The court will need
a declaration of the payee or her testimony under oath at the hearing.

 

 

GIVEN THE CORONAVIRUS
CRISIS, AND TO ADHERE TO HEALTH GUIDANCE THAT DICTATES SAFETY MEASURES,
DEPARTMENT D IS ENCOURAGING AUDIO OR VIDEO APPEARANCES

 

Please make arrangement in advance if you wish to appear via
LACourtConnect/Microsoft Teams by visiting www.lacourt.org to schedule a remote appearance.  Please note that
LACourtConnect/Microsoft Teams offers free audio and video appearance. Counsel
and parties (including self-represented litigants) are encouraged not to
personally appear.  With respect to the wearing of face masks, Department
D recognizes that currently, the Los Angeles Department of Public Health
strongly recommends masks indoors, especially when interacting with individuals
whose vaccination status is unknown; for individuals who have a health
condition that puts them at higher risk for severe illness; individuals who
live with someone who is at higher risk; and for individuals who are around
children who are not yet eligible for vaccines. 
In accordance with this guidance, it is strongly recommended that anyone
personally appearing in Department D wear a face mask.  The Department D Judge and court staff will
continue to wear face masks.  If
no appearance is set up through LACourtConnect/Microsoft Teams, or otherwise,
then the Court will assume the parties are submitting on the tentative.