Judge Ralph C. Hofer, Case Number: 24GDCP00021, Date: 2024-03-29 Tentative Ruling

Judge: Ralph C. Hofer, Case: 24GDCP00021, Date: 2024-03-29 Tentative Ruling

Case Number: 24GDCP00021 Hearing Date: March 29, 2024 Dept: D

TENTATIVE RULING

Calendar: 1

Date: 3/29/2024

Case No: 24 GDCP00021

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 Charles Antuna, as payee, and Apollo Mathers, LLC, as transferee.

ANALYSIS:

Procedural

No Proof of Service

There has been no proof of service filed showing that the interested parties have been served with the petition or that notice has been given of the assigned hearing date.

Insurance Code §10139.5 provides, in pertinent part, that “[a] direct or indirect transfer of structured settlement payment rights is not effective…unless the transfer has been approved in advance in a final court order based on express written findings by the court that: (3) The transferee has complied with the notification requirements pursuant to paragraph (2) of subdivision (f)…”

Insurance Code § 10139.5(f)(2) provides:

“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…

The notice shall include a copy of the petition, along with copies of other specified documents and information, including, under Insurance Code § 10139.5(f)(2)(I), “Proof of service showing compliance with the notification requirements of this section.”

There is no proof of service showing service of the petition or the specified documents, information and notification. The file shows that on February 16, 2024, the court issued and served on petitioner a Notice of Hearing on Petition, setting the hearing on the petition for March 29, 2024, ordering petitioner to give notice of the hearing by serving a copy of the notice on all parties to the action, and file proof of service thereof. Petitioner has filed a Notice of Hearing of Petition but has failed to file the required proof of service.

The file shows that well beyond the twenty-day window, on March 21, 2024, petitioner filed a Notice of Acknowledgement of Receipt from Charles Atuman, acknowledging service of the notice of hearing and other supporting documents executed on March 21, 2024. There is no proof of service showing service of these documents and appropriate notice on the annuity holder or any other interested party.

Unless appropriate proof of service is produced before the hearing, the petition will be denied for failure to show proof of service and notice on the interested parties.

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 copy of the underlying settlement agreement. The First Amended Petition includes a Declaration in Lieu of Settlement Agreement of Charles R. Antuna, in which Antuna states that the assigned payments are due to him as a result of a wrongful death claim, as in 2009 his parents passed away due to a car accident, and Antuna’s siblings filed a lawsuit on his behalf in Orange County, California. Antuna indicates that he has diligently searched for the underlying settlement agreement, contacted the annuity issuer and structured settlement obligor, and searched his own records, but does not have a copy of the Settlement Agreement. [Grace Decl., Ex. C., Decl. in Lieu, paras. 2, 3]. The court finds that reasonable efforts have been made to locate and secure copies of the missing document.

In addition, the petition fails to include copies of the records of four 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 Grace Declaration provides a summary of the previous transactions, without documentation. [Grace Decl., para. 7]. The Grace declaration describes the prior transfers, from 2015 through 2021, which were all approved, and explains that the funds for those transfers were used to pay for dental work, pay a mortgage, make repairs to Antuna’s home and car, pay for living and housing expenses, and to pay off a home mortgage loan for a property Antuna inherited. [Grace Decl., para. 7]. The court finds that the summary in the declaration satisfies the statutory requirements.

Substantive

The petition seeks approval of a transfer of certain structured settlement payment rights held by transferor Charles Antuna pursuant to a structured settlement entered into on behalf of Antuna, intended as compensation for a wrongful death claim, arising from an incident in 2009, when his parents passed away in a car accident. [Antuna Decl., para. 3].

Antuna is now 46 years old, married, and has one dependent, Tammara Antuna (4 years old). [Antuna Decl., para. 4]. He is currently on disability and receives $1,200 per month from SSDI, and his wife is a nurse working two nursing jobs and earning approximately $5,000 per month. [Antuna Decl., para. 4]. Antuna does not rely on the structured settlement payments he is proposing to assign for his day-to-day living expenses. [Antuna Decl., para. 4]. Antuna has no court ordered child support or maintenance obligations. [Antuna Decl., para. 5].

Antuna has previously assigned a portion of his structured settlement payments rights, with the last transfer being in 2021. [Antuna Decl., para. 6].

Antuna has made four prior attempts to transfer a portion of his payment rights, which were all approved. [Grace Decl., para. 7]. A transfer in 2015 resulted in a payment to Antuna of $65,000, which funds were used to pay for dental work and a portion of his mortgage. [Grace Decl., para. 7]. A transfer in 2016 resulted in payment to Antuna of $25,078.97, which funds were used to make repairs on his home and car. [Id.]. A transfer in 2021 resulted in a payment of $65,000, which funds were used to pay for living and housing expenses. [Id.]. The most recent transfer in 2021 resulted in a payment of $231,074.003, which funds were used to pay off a home mortgage loan for a property Antuna had inherited. [Id.].

The current proposed transaction is with Apollo Mathers, LLC. Antuna is transferring 144 monthly life-contingent payments of $3,268.26 beginning November 1, 2040, through and including October 1, 2052, with a 3% annual increase each November.

The total dollar amount of payments being sold is $556,559.12, with a discounted present value of $187,170.79. The net amount to be paid to Antuna is $20,109.32, with no deduction for expenses. The effective equivalent interest rate being paid on the transaction is 16.2% per year.

Antuna states that the funds will be used to replace his home roof, repair his vehicle and pay off past due utility bills. He intends to allocate $15,000 to replace his current roof which was damaged in recent storms and has a hole in it, $3,000 to repair his Toyota Prius battery, and $2,000 to catch up on past due utility bills. [Antuna Decl., para. 7]. Antuna 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 also indicates that since the payments he is assigning are due more than sixteen years from now, he does not rely on the payments for his current wellbeing, and feels that the funds from the transaction can be better used today rather than to provide support several years from now. [Antuna Decl., paras. 7, 8].

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 payee’s only dependent is evidently his wife, who is earning a living as a nurse. It appears that the intent of the funds to compensate for the wrongful death of Antuna’s parents is no longer of such pressing concern. However, it also appears that the payments being sold extend far enough into the future that Antuna may not realistically have any further opportunity to obtain funds from his annuity. It is not clear if Antuna is aware of this, and this issue will be discussed at the hearing.

This deal is, as usual, not a particularly favorable transaction for the transferor, but it appears that payee’s living conditions may be stable and that the funds will be used to support the household in a time of need.

The annuity contract submitted includes a nonassignment clause, which states:

“Nonassignability; Claims of Creditors: This certificate and the payments provided under it are nonassignable and will be exempt from the claims of creditors to the maximum extent permitted by law.”

[Grace Decl., Ex. A, p. 2].

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 without proof of service of the moving documents, the court cannot confirm that the interested parties, specifically the annuity company, have received appropriate notice of the petition hearing to object.

RULING:

First Amended Petition for Approval for Transfer of Structured Settlement Payment Rights is DENIED WITHOUT PREJUDICE. There is no proof of service showing that the petition has been served on the interested parties, or that notice has been given of the assigned hearing date, other than to the payee.

Or, if satisfactory proof of service shown:

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

What efforts made to obtain settlement agreement, copies of documents reflecting previous transfers?

Is Charles Antuna’s only dependent his wife?

Is Charles Antuna aware that this may realistically be the last opportunity to transfer funds from his annuity?

Is petitioner aware of any objection to the petition?

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

DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE

AUDIO OR VIDEO APPEARANCES

Please make arrangement in advance if you wish to appear via LACourtConnect by visiting www.lacourt.org to schedule a remote appearance. Please note that LACourtConnect offers free audio and video appearances. However, ADVANCE REGISTRATION IS REQUIRED.

If no appearance is set up through LACourtConnect, or no appearance is otherwise made, then the Court will assume the parties are submitting on the tentative.