Judge: Ralph C. Hofer, Case: 22GDCP00175, Date: 2022-12-09 Tentative Ruling
Case Number: 22GDCP00175 Hearing Date: December 9, 2022 Dept: D
TENTATIVE RULING
Calendar: 5
Date: 12/9/2022
Case
No: 22GDCP00175
Case
Name: Merope-43,
LLC v. Certain Statutory Interested Parties, etc.
PETITION FOR APPROVAL FOR TRANSFER OF STRUCTURED
SETTLEMENT PAYMENT RIGHTS
Moving Party:
Petitioner
Merope-43, LLC
Responding Party: No Opposition
RELIEF REQUESTED:
Approve
transfer of structured settlement payment rights by and between Rolando
Guerrero, as payee, and petitioner Merope-43, LLC
ANALYSIS:
Procedural
No Declaration of Payee/Transferor
The file does not include a declaration of the payee/transferor Rolando
Guerrero 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, as was customary at the time it was issued.
The petition in fact indicates that
petitioner is informed and believed 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
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
from the issuer of payments dated February 2, 2022 describing the monthly
payments due, and which states, “The provisions of the
contract do not allow for withdrawals.” [Malate
Decl., para. 1, Ex. A]. There is
also no copy submitted of the qualified assignment agreement.
In addition, the petition fails to
include copies of the records of several previous transfers and attempts to
transfer.
Under Insurance Code § 10139.5
“(c) Every petition for
approval of a transfer of structured settlement payment rights, except as
inquiry with the payee, all of the following:
“(6) Information regarding previous transfers or attempted
transfers, as described in paragraph (11), (12), or (13) of subdivision (b).
The transferee or payee may choose to provide this information by providing
copies of pleadings, transaction documents, or orders involving any previous
attempted or completed transfer or by providing the court a summary of
available information regarding any previous transfer or attempted transfer,
such as the date of the transfer or attempted transfer, the payments
transferred or attempted to be transferred by the payee in the earlier
transaction, the amount of money received by the payee in connection with the
previous transaction, and generally the payee's reasons for pursuing or
completing a previous transaction. The transferee's inability to provide the
information required by this paragraph shall not preclude the court from
approving the proposed transfer, if the court determines that the information
is not available to the transferee after the transferee has made a reasonable
effort to secure the information, including making an inquiry with the payee.”
The Malate Declaration indicates
that Merope-43, LLC has contacted the payee, annuity issuer, and requested
court records but has been unable to locate these documents. [Malate Decl., para. 1(b)]. The petition does include a copy of a
Settlement Agreement and Order approving a minor’s compromise. [Malate Decl.,
para. 1 (a), Exs. B, C]. The Malate
Declaration, without personal knowledge or reference to documentation, provides
a summary of the previous transactions.
[Malate Decl., para. 7]. 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 Rolando Guerrero pursuant to a structured settlement
entered into by Guerrero’s guardian ad litem on his behalf in connection with a
complaint alleging negligent, intentional and other tortious acts or omissions
by defendant Amtech Reliable Elevator Company.
[Malate Decl., Ex. B].
It is not
clear what the nature of the lawsuit was—whether it was for injuries to the
settling parties, Lucila Guerrero, and minors Rolando Guerrero and Felipe
Guerrero, or for wrongful death.
The Malate Declaration
represents, with no personal knowledge established, that Rolando Guerrero is 40 years old, divorced, with one dependent, Juaquin
Guerrero (11 years old), residing with payee. [Malate Decl., paras. 2-4]. Guerrero is currently employed as a Train Tech
and earns $5,000 per month. [Malate Decl.,
para. 5]. Guerrero has no court ordered child support or
maintenance obligations. [Malate Decl., para. 6].
Guerrero has
made seven prior attempts to transfer a portion of his payment rights. [Malate Decl., para. 7]. Three transactions were approved, three were
dismissed, and one was denied. [Malate Decl.,
para. 7]. Guerrero used the proceeds
from the three previously approved transactions to purchase a car, pay bills
and expenses from a divorce, and pay for tuition for his oldest son to attend
university. [Id.].
The current transaction is with Merope-43,
LLC. Guerrero is transferring 280
monthly life-contingent payments of $1,333.29 beginning January 19, 2027
through and including April 19, 2050.
The total dollar amount of payments
being sold is $373,321.20, with a discounted present value of $205,431.63. The net amount to be paid to Guerrero is $20,972.19, with no deduction for expenses. The Proposed Addendum at paragraph 5 states in the boxed
notice that the purchase price is “($0.00).” This figure must be corrected.
There is no declaration of the
payee, so it is not clear what Guerrero intends to do with the funds, or
whether he is facing a hardship situation.
It would appear that the transfer could
dispose of all remaining payments which Guerrero could realistically transfer,
so that this may be the last opportunity for Guerrero to access settlement
funds.
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.”
Specifically,
it is not clear what the funds from the original settlement were intended to
provide, future funds to address personal injuries, or to provide for the
living expenses due to a wrongful death.
If there were injuries to payee, it is not clear if there could be
future medical expenses, and it is also not clear if the transferor has medical
insurance.
It is also of concern that
transferor has a dependent and it is not clear what the funds are intended to
cover, and why there is urgency in having access to funds immediately. It is also not clear that the payee does not
depend on the monthly payments for daily living expenses or understands that
this could likely be the last opportunity for payee to access settlement funds.
This deal
is a particularly unfavorable transaction for the transferor, but the court
will receive evidence concerning the intended purpose of the settlement funds,
and any relevant information concerning the transferor’s medical condition, and
whether transferor or the dependent are able 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 Rolando
Guerrero. [Malate Decl., Ex. A]. As noted above, that document states, “No
previous transfers of payments have been processed for this contract. The provisions of the contract do not allow
for withdrawals.” [Malate Decl., para.
1, Ex. A].
This situation 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
The proof
of service shows that the annuity owner identified in the petition has been served
with the moving papers and the issuer of payments has been served at the
address included on the letter as Exhibit A.
There is evidently no objection to the transfer by these parties,
although it is not clear how the parties determined the appropriate service
address for the annuity owner, Travelers Casualty and Surety Company. This issue will be discussed that the
hearing.
RULING:
The Court has the following questions for the petitioner and
transferor:
What efforts made to obtain annuity contract, qualified
assignment, copies of documents in connection with previous transactions?
Why was no timely declaration of the transferor submitted in
support of the petition?
Are the representations in the Malate Declaration correct
that transferor is 40 years old, divorced, with one minor dependent, eleven
years of age?
Was the underlying settlement intended to compensate for
personal injuries to transferor, or for future support due to wrongful death?
What is the current status of transferor’s injuries, if any? Does transferor need the funds from the
annuity to address current and future medical expenses with respect to those
injuries? Does the transferor and his
dependent have medical insurance?
What are all transferor’s sources of income? How will transfer of or reduction in monthly annuity
payments affect ability to cover expenses?
What does transferor intend to do with the funds received
from the current transfer?
Will this transfer dispose of all future payments transferor
can realistically expect to transfer, and is transferor aware of that
circumstance?
Is petitioner aware of any objection to the transfer on the
part of the annuity holder? How did
petitioner locate the service address for the annuity owner Travelers Casualty
and Surety Company?
The Proposed Addendum at paragraph 5 states in the boxed
notice that the purchase price is “($0.00).” This figure must be corrected to
reflect the correct purchase price, $20,972.19.
Petition for Approval for Transfer of Structured Settlement
Payment Rights is GRANTED if the above conditions are met, The Court notes the
filing of a Notice of Declaration of Rolando Guerrero on December 6, 2022, just
three 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 a wrongful death claim, as when
Guerrero was a child, his father was killed. [Guerrero Decl., para. 3].
The declaration indicates that Guerrero is 40 years old,
divorced, and has one dependent, eleven years old, who lives with
Guerrero. [Guerrero Decl., para. 4] Guerrero currently works as a screen tech and
earns approximately $4,500 per month and does not rely on the portion of
structured settlement payments he is assigning for his day-to-day living
expenses. [Guerrero Decl., para. 4].
Guerrero has no court ordered child support
obligations. [Guerrero Decl., para. 5]. With the funds, Guerrero intends to pay off
personal debts, and use the remaining funds for moving expenses and to purchase
a vehicle. [Guerrero Decl., para.
6]. Guerrero intends to allocate $20,000
to pay off $3,000 in credit card debt and $17,000 in personal loans, as
Guerrero ended up in serious debt primarily due to limited work hours during
the Covid-19 lockdowns. [Guerrero Decl.,
para. 6]. The payee wishes to pay off the debts to avoid accruing further
interest and going further into debt. He
also intends to allocate $5,000 for moving expenses to relocate to a place with
lower monthly rent, and to allocate any remaining funds to place a down payment
on a reliable vehicle, to ensure he can get to and from work and maintain his
job. [Guerrero Decl., para. 6].
The declaration confirms that during the transactions
previously assigning portions of his structured settlement payment rights, in
connection with the last transfer in 2019 he used the funds to help with his
son’s college tuition. [Guerrero Decl.,
para. 8].
This remains an unusually unfavorable transaction for the
payee. However, the payee is now an
adult, appears to be gainfully employed, and the structured settlement payments
are no longer necessary for their intended purpose of the minor’s future
support due to the death of a parent. It
also appears the funds are intended to be used in a manner which will benefit
the family unit and the dependent.
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, whether this
transfer will dispose of all future payments transferor can realistically
expect to transfer, and whether transferor aware of that circumstance, and
whether there is any expectation that there would be objection to this
transfer.
The Court notes that the Addendum at paragraph 5 has been
corrected to include the correct sum of the purchase price.
There being no objection, the Petition is GRANTED.
and the payee submits
his declaration under oath or testifies 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.