TENTATIVE RULING

Calendar:    2

Date:               10/20/2023

Case No: 23 GDCP00176

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

PETITION FOR APPROVAL FOR TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS

Moving Party:               Petitioner Apollos Mathers, LLC     

Responding Party:    No Opposition

RELIEF REQUESTED:

ANALYSIS:

Procedural

Copies of Documents

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    (A) A copy of the transferee's current petition and any other prior petition, whether approved or withdrawn, that was filed with the court in accordance with paragraph (6) of subdivision (c).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

Petitioner has attached a declaration of its customer service representative, which indicates that Apollo Mathers has contacted the payee, annuity issuer, and requested court records but has been unable to locate this document.   [Sanchez Decl., para. 1 (b)].  The court finds that reasonable efforts have been made to locate and secure copies of the missing document.  

Substantive

Meza is now 46 years old, with two dependents, Esther Meza, 47 years old, and Estrella Meza, 13 years old, who both reside with Meza.  [Meza Decl., para. 4].  Meza currently works as a real estate agent, but business has been very slow this year, and he has earned a reduced income and made approximately $1,000 per month.  He is looking for another full-time job to supplement his income.  His spouse works as an IHSS (In Home Supportive Services (?), not defined), and earns $2,000 per month.  [Meza Decl., para. 4]. Meza does not rely on the future structured settlement payments he is proposing to assign for his day-to-day living expenses.   [Meza Decl., para. 4].  Meza has no court-ordered child support or maintenance obligations. [Para. 5]. 

The proposed transaction is with Apollo Mathers, LLC. 

Meza is selling the following payments:

1 lump sum payment of $1,000.00 due on October 20, 2023;

1 lump sum payment of $3,411.25 due on October 27, 2023;

2 monthly payments of $1,000.00 beginning November 20, 2023 through and including October 20, 2024; 

1 lump sum payment of $3,411.25 due on October 27, 2024;

35 monthly payments of $1,000.00 beginning November 20, 2024 through and including September 20, 2027; 

1 lump sum payment of $3,411.25 due on October 15, 2027; 

5 monthly payments of $1,000.00 beginning October 20, 2027 through and including February 20, 2028; 

7 monthly payments of $1,125.00 beginning March 20, 2028 through and including September 20, 2028; 

1 lump sum payment of $3,411.25 due on October 15, 2028; 

12 monthly payments of $1,125.00 beginning October 20, 2028 through and including September 20, 2029; 

1 lump sum payment of $3,411.25 due on October 15, 2029; 

12 monthly payments of $1,125.00 beginning October 20, 2029 through and including September 20, 2030; 

1 lump sum payment of $3,411.25 due on October 15, 2030; 

29 monthly payments of $1,125.00 beginning October 20, 2030 through and including February 20, 2033; 

1 lump sum payment of $25,000.00 due on September 01, 2034; 

1 lump sum payment of $25,000.00 due on September 01, 2037; 

1 lump sum payment of $25,000.00 due on September 01, 2040; 

1 lump sum payment of $32,000.00 due on September 01, 2043

The total dollar amount of payments being sold is $247,967.50, with a discounted present value of $161,756.09.  The net amount to be paid to Meza is $135,002.06, with no deduction for expenses. The effective equivalent interest rate being paid on the transaction is 7.75% per year.  

   

Meza states that the funds will be used to pay off significant debt and keep up with monthly mortgage payments and living expenses.   He intends to allocate $85,000 to pay off personal loans and $15,000 to pay off credit card debt.  Given his reduced income as a real estate agent this year, he has had to rely on friends and family for personal loans to keep up with his mortgage and other bills and would like to completely pay off those debts and avoid incurring further interest.  The remainder of the funds will be used to keep up with a monthly mortgage of $2,500 per month and miscellaneous monthly bills. [Meza Decl., para. 7]. 

Meza indicates that he feels it is in his best interest to enter into this transaction so that he can have the financial means to provide for the foregoing, and that although the monthly payments begin to become due in the immediate future, the lump sum he will receive will allow him to immediately address his financial hardship.  [Meza Decl., paras. 7, 8].  

“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 main concern is that the injuries described by payee appear to include severe back and neck injuries, from which the payee describes still experiencing occasional pain and limited mobility.   It is accordingly not clear that such injuries would have completely resolved or might not require future treatment.  This issue will be discussed at the hearing, and it will also be discussed whether Meza has medical insurance and medical insurance for his dependents.  

This deal is not a particularly favorable transaction for the transferor, but it appears that payee is facing a hardship circumstance, and the funds will be used for the benefit of the household payee shares with his dependents.   

The subject Annuity Agreement includes a non-assignment clause.  The Annuity Agreement states:

“This Contract and the payments provided under this contract are nonassignable and will be exempt from the claims of any any creditor of the Owner, Optional Payee or Contingent Payee to the maximum extent permitted by law.” 

[Sanchez Decl., Ex. A, p. 3 of 6].  

“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. 

RULING:

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

What efforts made to obtain qualified assignment? 

What is the current state of payee Meza’s injuries, which appear to have been serious and ongoing?  Are any future medical expenses anticipated?  Does the payee have medical insurance?  Does the payee’s dependents have medical insurance? 

Are the payments being transferred all of the 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?

 

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

 DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE 

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