Judge Ralph C. Hofer, Case Number: 24NNCP00512, Date: 2024-10-04 Tentative Ruling

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(A) A copy of the transferee's current petition and any other prior petition, whether approved or withdrawn, that was filed with the court in accordance with paragraph (6) of subdivision (c).

(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 submitted a Declaration in Lieu of Settlement Agreement of Jackie Washington, which indicates that the assigned payments are due to Washington as a result of the settlement of a personal injury claim, as when Washington was six years old, Washington’s family was involved in a house fire, in which Washington suffered burns on to the hands and arms, but nothing long lasting. [Grace Decl., Ex. B, Decl. in Lieu, para. 2]. A lawsuit was filed on behalf of the family in Los Angeles County. [Id.]

Washington indicates that Washington has diligently searched for the underlying settlement agreement, contacted the annuity issuer and structured settlement obligor, and searched the payee’s own records, but does not have a copy of the Settlement Agreement. [Grace Decl., Ex. B., Decl. in Lieu, para. 3]. With respect to the qualified assignment agreement, the Grace Declaration similarly represents that petitioner has personally contacted the payee, the annuity issuer, has requested court records, and after diligent efforts does not believe that there are other reasonable means of obtaining the requested documents. [Grace Decl., para. 1]. Petitioner requests that this due diligence by considered by the court and that the court waive submission of the missing underlying documents. [Grace Decl., para. 1]. The court finds that reasonable efforts have been made to locate and secure copies of the missing documents.

The petition seeks approval of a transfer of certain structured settlement payment rights held by transferor Jackie Washington pursuant to a structured settlement entered into on behalf of Washington, intended as compensation for a personal injury claim. When Washington was six years old, Washington was injured in a house fire with the payee’s family and suffered burns on to the hand, arms, and face. Washington indicates that are no longer any reoccurring medical problems related to the original injury, and no continuing need to provide for future medical expenses. [Washington Decl., para. 3]. Washington also indicates that if any unexpected medical expenses were to arise, Washington has health insurance through her employer. [Washington Decl., para. 3].

Washington is now 48 years old, single, and has no dependents. [Washington Decl., para. 4]. Washington is currently working part-time as a security officer for a school, and earns approximately $1,900 per month after taxes. [Washington Decl., para. 4]. Washington indicates that there is no reliance on the structured settlement payments which are proposed to be assign for Washington’s day-to-day living expenses. [Washington Decl., para. 4]. Washington has no court ordered child support or maintenance obligations. [Washington Decl., para. 5].

The proposed transaction is with Mic-Bry8, LLC. Washington is transferring 96 monthly life-contingent payments of $738.00 beginning December 21, 2029, through and including November 21, 2037, and 120 monthly life-contingent payments of $1,130.00 beginning December 21, 2037, through and including November 21, 2047.

The total dollar amount of payments being sold is $206,448.00, with a discounted present value of $97,057.82. The net amount to be paid to Washington is $20,018.60, with no deduction for expenses. The effective equivalent interest rate being paid on the transaction is 19.8% per year.

Washington states that the funds will be used to move to a new apartment, repair Washington’s vehicle, pay off a light bill, and to set aside funds to supplement Washington’s income. [Washington Decl., para. 6]. Washington will allocate $5,700.00 to cover first and last month’s rent plus security deposit, $500 to paying off the light bill, and $1,200 to replace the catalytic converter in the vehicle, to ensure a working vehicle to travel to and from work. [Washington Decl., para. 6]. The remaining funds will be used to help supplement income, as Washington is currently working only part-time, but has been advised that Washington will be given full-time hours in the future. [Washington Decl., para. 6].

Washington indicates that Washington feels it is in the payee’s best interest to enter into this transaction so that Washington can have the financial means to provide for the foregoing, and also indicates that since the payments being assigned are due five years in the future, there is no reliance on the payments for Washington’s current well-being, and the payee feels that the funds from the transaction can be better used today rather than to provide support several years from now. [Washington Decl., paras. 6, 7]. It appears that for the period from 2029 to 2037, there will remain a balance of approximately $600 in monthly payments remaining owing, assuming that these have not previously been transferred more than five years ago.

(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:

(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.

(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.

(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.

(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 has no dependents, and has indicated that the injuries have been resolved and that payee in any case has medical insurance through payee’s employer.

This deal is, as usual, not a particularly favorable transaction for the transferor, but it appears that transferor is employed, with an expectation of obtaining full time work, and no dependents will be affected by the transferor’s choice to use the funds now.

The contract submitted includes a clause that permits assignment but requires that notice be given “in writing and in a form that meets our needs.” Grace Decl., Ex. A, General Provisions, Ownership and Control]. The contract specifies, “We will not be deemed to know of an assignment unless we receive it, or a copy of it, at our Home Office.” [Grace Decl., Ex. A, Assignment]. The contract indicates that the “Corporate Office” for Prudential is in Newark, New Jersey. [Grace Decl., Ex. A].

The court will inquire at the hearing concerning why the Pennsylvania address was used, whether the parties can confirm that the interested parties, specifically the annuity company, have received appropriate notice of the petition hearing, and whether petitioner expects any objection to the transaction.

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