Judge: Teresa A. Beaudet, Case: 22STCP02359, Date: 2022-08-25 Tentative Ruling

Case Number: 22STCP02359    Hearing Date: August 25, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Petitioner J.G. Wentworth Originations, LLC (“Petitioner”) requests that the Court approve the transfer of structured settlement payment rights by and between Kayla Logan (“Payee”) and Petitioner pursuant to Insurance Code §§ 10134, et seq.

Discussion

Under the transfer agreement entered into on July 27, 2022, Payee agreed to transfer (A) 12 monthly payments of $1,123.77 each, beginning on July 2, 2043 and ending on June 2, 2044; (B) 84 monthly payments of $1,685.34 each, increasing at 4% annually, beginning on July 2, 2044 and ending on June 2, 2051; and (C) 12 monthly payments of $2,306.51 each, beginning on July 2, 2052 and ending on June 2, 2053 in exchange for a purchase price of $16,000.00. The effective equivalent interest rate is 10.37% per year.

Under Insurance Code section 10136(b), ten or more days before the payee executes a transfer agreement, the transferee shall provide the payee with a separate written disclosure statement, accurately completed with the information that applies to the transfer agreement in at least 12-point type. Petitioner complied. (Second Amended Verified Petition, Ex. B.) The disclosure complies with Insurance Code section 10136(b) by stating all the information and other disclosures required by this section. The transfer agreement also complies with Insurance Code section 10136(c) by containing the required information and further disclosures. (Second Amended Verified Petition, Ex. A.)

Under Insurance Code section 10137, 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 Insurance Code section 10139.5.

Under Insurance Code section 10139.5, factors to consider include (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; and (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.

Payee is over the age of 18. (Second Amended Declaration of Payee in Support of Petitioner’s Petition for Approval for Transfer of Payment Rights (“Logan Decl.”) ¶ 1.) Payee is single and has no children and no child support obligations. (Logan Decl., ¶¶ 1, 8.) Payee is currently unemployed. (Logan Decl., ¶ 8.) When the underlying settlement was completed, the future periodic payments that are the subject of the proposed transfer were not intended to pay for future medical care and treatment relating to the incident that was the subject of the settlement, and were not intended to provide for necessary living expenses. (Logan Decl., ¶¶ 6, 7.) Payee is currently experiencing a financial hardship, and if approved, Payee will use the money received from the proposed settlement to purchase property out of state. (Logan Decl.,     ¶ 11.) The Court finds that the transaction is fair and reasonable and in the best interest of Payee.

Insurance Code section 10138 prohibits certain provisions. The transfer agreement in this proceeding does not contain any of the prohibited provisions. The transfer agreement also complies with provisions set forth in Insurance Code § 10139.3.

Under Insurance Code section 10139.5(a)(2), the petitioner is required to advise the payee in writing to seek independent professional advice regarding the transfer and payee must either obtain such advice or waive, in writing, the opportunity to receive such advice. Petitioner indicates that Payee has been advised in writing to seek independent professional representation regarding the transfer and has waived the opportunity to seek and receive such representation. (Second Amended Verified Petition, Ex. E.)  

Insurance Code section 10139.5(f)(2) requires that a notice of the proposed transfer and the application for its authorization be filed with the court and served on all interested parties not less than 20 days prior to the scheduled hearing on any petition for approval of a transfer of structured settlement payment rights. The notice includes the required elements. The transfer agreement complies with the other required elements in Insurance Code section 10139.5.

However, the Court notes a number of defects with the proposed order submitted by Petitioner on August 23, 2022. First, the exact number of monthly payments are not listed in the monthly payments referenced in paragraphs 1 and 8 of the proposed order.

Second, paragraphs 1 and 8 of the proposed order state that the transfer of the structured settlement payment rights will include, inter alia, “monthly payments of $2,306.51 each (out of total monthly payments of $7,472.19 each, increasing 4% every July 2nd), beginning July 2, 2052 and continuing through and including June 2, 2053, with a 4% annual increase every July 2^nd” The Court notes that the “Purchased Payments” listed in Section 2(B) of the subject purchase contract attached as Exhibit “A” to the Second Amended Verified Petition does not reference a 4% annual increase as to the monthly payments of $2,306.51.

Third, paragraph 1 of the proposed order references a Purchase Contract dated July 19, 2022. The purchase contract attached to the Second Amended Verified Petition is dated July 27, 2022.

Fourth, paragraph 10 of the proposed order should be revised from Insurance Code  section 10139.5(e) to Insurance Code section 10139.5(h).

Fifth, paragraph 11 of the proposed order indicates, inter alia, that Petitioner has served on the California Attorney General a copy of the petition, disclosure statement, Transfer Agreement, and other documents. The proof of service attached to the Second Amended Verified Petition does not indicate that the California Attorney General was served. In any event, Section 10139 no longer requires the filing of documents with the Attorney General.

Sixth, the Court is unable to locate the February 25, 2019 order referenced in paragraph 13 of the proposed order in Petitioner’s Second Amended Verified Petition.

Seventh, page 6, footnote 2 of the proposed order provides that “[a]s a result of an overpayment of $300.00 by NY Life to Ms. Logan, Wentworth shall deduct the overpayment amount from the net purchase price payable to Ms. Logan…” The subject purchase contract and disclosure statement attached to the Second Amended Verified Petition provide that Payee will receive $16,000.00, and do not appear to reference any deduction of $300.00.

Conclusion

Based on the foregoing, the Petition will be granted.

Petitioner shall file, directly in Dept. 50, within five days of this hearing, a proposed order that addresses the defects identified above.  

Petitioner is ordered to provide notice of this order.

DATED:  August 25, 2022                             ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court