Judge Ralph C. Hofer, Case Number: 23GDCP00231, Date: 2024-01-12 Tentative Ruling

Judge: Ralph C. Hofer, Case: 23GDCP00231, Date: 2024-01-12 Tentative Ruling

Case Number: 23GDCP00231 Hearing Date: January 12, 2024 Dept: D

TENTATIVE RULING

Calendar: 1

Date: 1/12/2024

Case No: 23 GDCP00231

Case Name: Apollo Mathers, LLC v. Certain Statutory Interested Parties, etc.

PETITION FOR APPROVAL FOR TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS

Moving Party: Petitioner Apollo Mathers, LLC

Responding Party: No Opposition

RELIEF REQUESTED:

Approve transfer of structured settlement payment rights by and between Marion Tigner aka Jo Blakes, as payee, and petitioner Apollo Mathers, LLC

ANALYSIS:

Procedural

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(A) A copy of the transferee's current petition and any other prior petition, whether approved or withdrawn, that was filed with the court in accordance with paragraph (6) of subdivision (c).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

(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 full copy of the annuity agreement, including only a Certificate concerning payments due, and also fails to include a copy of the qualified assignment agreement, or the settlement agreement. The petition submits a Declaration in Lieu of Settlement Agreement of Marion Jo Tigner aka Jo Blakes, indicating that payee has searched for the underlying settlement agreement, has contacted the annuity issuer and structured settlement obligor, and searched her own records, but does not have a copy of the settlement agreement. [Decl. in Lieu, para. 3]. Tigner attests that she has read the settlement agreement and there is no party other than herself with any continuing right or interest in the structured settlement agreement, and that there is no prohibition in the agreement preventing assignment. [Decl. in Lieu, paras. 4, 5]. The Declaration of Kenneth Malate, petitioner’s customer service representative, indicates that Apollo Mathers has contacted the payee, annuity issuer, and requested court records but has been unable to locate these documents. [Malate Decl., para. 1 (b)]. The court finds that reasonable efforts have been made to locate and secure copies of the missing documents.

In addition, the petition fails to include copies of the records of seven previous transfer attempts.

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 provides a summary of the previous transactions, with specific descriptions of the payments already assigned, but without documentation. [Malate Decl., para. 7]. The Malate Declaration indicates that each of the previous transfers was approved, with the last transfer completed in 2023, and the funds used to pay off medical debt and past due bills. [Malate Decl., para. 7]. The court finds that the summary and declaration satisfy the statutory requirements.

Substantive

The petition seeks approval of a transfer of certain structured settlement payment rights held by transferor Marion Jo Tigner aka Jo Blakes pursuant to a structured settlement entered into intended as compensation for a personal injury claim, as, in 1999, Tigner was in a car accident, and suffered burns to 33% of her right side. [Tigner Decl., para. 3]. Tigner indicates that there are no longer any reoccurring medical problems related to the original injury and so no continuing need to provide for future medical expenses. [Tigner Decl., para. 3].

Tigner is 71 years old, married, and has one dependent, Jerry Blakes, 71-years old. [Tigner Decl., para. 4]. Tigner currently does not work, receives $480 per month from SS retirement income, and also receives $1,178.50 per month from her annuity, and does not rely on the structured settlement payments she is proposing to assign for his day-to-day living expenses. [Tigner Decl., para. 4]. Tigner has no court ordered child support or maintenance obligations. [Tigner Decl., para. 5].

Tigner has made seven prior attempts to transfer a portion of her payment rights, with the last transaction completed in 2023. [Tigner Decl., para. 7]. This petition indicates that the funds from the various transactions, beginning in 2010, have been used to pay for dental work, pay off medical debt and overdue bills, to purchase a car, conduct home renovations and for college expenses for her son. [Malate Decl., para. 7].

The current proposed transaction is with Apollo Mathers. Tigner is transferring 52 monthly payments of $1,178.50 beginning January 28, 2024, through and including April 28, 2028, and 68 monthly life-continent payments of $1,178.50 beginning May 28, 2028, through and including December 28, 2033.

The total dollar amount of payments being sold is $141,420.00, with a discounted present value of $107,265.75. The net amount to be paid to Tigner is $38,198.19, with no deduction for expenses. The effective equivalent interest rate being paid on the transaction is 39.99% per year.

Tigner states that the funds will be used to relocate to Waco, Texas, as at her present stage in life, her preference is to move closer to family, where the cost of living will also be cheaper. The funds will be used to cover housing and living expenses, and, although Tigner recognizes she is proposing to assign payments due in the immediate future, she would prefer to liquidate them to qualify for additional government benefits, feels it is in her best interest to enter into this transaction so that she can have the financial means to provide for the foregoing, and also feels the funds can be better used today rather than to provide support for herself several years from now. [Tigner Decl., paras. 6, 7].

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. The main concern is that the injuries described by payee appear to include serious burn injuries, and it is not entirely clear that such injuries would have completely resolved or might not require some future treatment. However, the injuries evidently were sustained in 1999, twenty-five years ago. This issue will be discussed at the hearing, and it will also be discussed whether the payee has medical insurance.

It appears from the petition, the description of the previous transfers, and Tigner’s Declaration that the current transfer, transferring payments beginning January of 2024, with life-contingent payments through 2033, would exhaust the payments which Tigner could reasonably expect to transfer in the future. The Tigner Declaration appears to recognize this, but the court will confirm at the hearing that the payee is aware of that circumstance.

This deal is, as usual, not a particularly favorable transaction for the transferor, but it appears that Tigner would like to relocate at this stage of her life to be closer to family in an area with cost of living savings, and the funds therefor could provide such long-term benefits.

The copy of the annuity submitted with the petition is not a complete copy of that agreement, but a “Certificate,” which states that the certificate is not a contract, and only the actual contract provisions will control. [Malate Decl., Ex. A]. No actual contract provisions are submitted.

This situation can sometimes be an issue, as such annuities often include non-assignment 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.

[First Amended Petition, para. 7].

The issue of whether non-assignment 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 non-assignment 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.4th 1059, 1075-1076.

The problem here is that while the Certificate identifies an address for the annuity company in Amarillo, Texas, the proof of service shows service of the moving documents at addresses in Houston, Texas. This irregularity does not permit the court to confirm from the petition and proof of service that the interested parties, specifically the annuity company, have received appropriate notice of the petition hearing to object. It will be discussed at the hearing how petitioner determined the appropriate service address for the interested parties.

RULING:

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

What efforts made to obtain full copy of annuity contract, qualified assignment, settlement agreement?

What is the current state of Ms. Tigner’s injuries, which appear to have been serious? Are any future medical expenses anticipated? Does the payee have medical insurance?

The payments being transferred appear to be the last remaining payment rights which payee could reasonably expect to receive or transfer. Is payee aware of such a circumstance?

How has the address of the annuity holder in the proof of service been confirmed so that it can be determined that all interested parties have notice of this hearing? Is petitioner aware of any objection?

First Amended Petition for Approval for Transfer of Structured Settlement Payment Rights is GRANTED.

DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE

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