Judge: Teresa A. Beaudet, Case: 25STCP01374, Date: 2025-05-21 Tentative Ruling

Case Number: 25STCP01374    Hearing Date: May 21, 2025    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background   

            On April 15, 2025, Clearhill Ent, LLC (“Petitioner”) filed a verified petition for approval for transfer of structured settlement payment rights by and between J.B., transferor and real party in interest (“Payee”), and Petitioner as transferee. Petitioner seeks to transfer payments owed to Payee under an annuity held by American General Annuity Service Corporation (“Obligor”).

            On April 18, 2025, Petitioner filed a Notice of Motion for an Order Approving the Transfer of [Payee’s] Structured Settlement Payment Rights, indicating a hearing set for August 26, 2025. Petitioner also filed proof of service of its Notice of Motion, Motion, and Petition by express mail on Payee and Obligor.

            On April 22, 2025, Petitioner filed an Amended Notice of Motion for an Order Approving the Transfer of [Payee’s] Structured Settlement Payment Rights.

On April 28, 2025, Petitioner filed a First Amended Verified Petition (“FAP”) and a Second Amended Notice of Motion, each with proof of service on Payee and Obligor by express mail, which identify the correct hearing date.

Legal Standard

“[T]o ensure that a transfer of a structured settlement payment has no adverse tax impact on any of the persons involved in a factoring transaction, in January 2002, Congress amended the Internal Revenue Code by adopting section 5891 to expressly sanction a tax-free transfer of structured settlement payments.” ((321 Henderson Receivables Origination LLC v. Sioteco (2009) 173 Cal.App.4th 1059, 1065.) “In California, the court approval process is governed by the Structured Settlement Transfer Act, (hereinafter SSTA), which requires (1) disclosures to the transferor of the structured settlement payment rights, (2) notice to the Attorney General, and (3) court approval.” (Id.) “The court-approval process requires the factoring company to file a petition in the county in which the transferor resides for approval of the transfer, attaching copies of the petition, the transfer agreement, the disclosure form, the annuity contract, any qualified assignment agreement and the structured settlement agreement, a list of the names and ages of the transferor’s dependents, notice of the court hearing date, and notice of a right to respond.” (Id. at p. 1066.)

Pursuant to Insurance Code Section 10139.5(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.”

(Ins. Code, § 10139.5(b).)

Discussion

Payee seeks to transfer the following payments from his annuity:

·       96 monthly payments of $1,104.55 from July 18, 2029 through June 18, 2037;

·       12 monthly payments of $1,457.15 from July 18, 2037 through June 18, 2038; and

·       120 monthly payments of $397.17 from July 18, 2038 through June 18, 2048.

(Bulosan Decl., ¶ 11.)

            Petitioner will acquire the structured payments from Payee in exchange for a single $50,597.92 payment. (Ibid.) Accounting for the time value of immediate payment, Petitioner’s future payments are discounted by roughly 10% annually. This discount is not unreasonable, particularly because Petitioner intends to deposit some of the funds into a retirement account that he ostensibly believes will yield satisfactory results compared with the annuity. (See id., ¶ 10.)

Petitioner has provided the proposed Transfer Agreement and disclosure form; disclosure statement for California; and the Structured Settlement Annuity Contract with Prudential Insurance Company of America (“Annuity Issuer”). (Mot., Exh. B.) Petitioner also submitted the Statement of Professional Representation signed by Payee Moreno attesting to his waiver of independent professional representation. (Id., Exh. C.) Finally, Petitioner has filed the Notice of Filing of Annuity Contract with the Court, showing the annuity was purchased pursuant to a 2002 settlement referred to in Payee’s declaration. (Id., Exh. H; Bulosan Decl., ¶ 6.)

            Payee is thirty-six years old and currently receives monthly income of $2,426.95 from the subject annuity. (Bulosan Decl., ¶ 3.) He has no minor dependents and has never been married. (Id., ¶¶ 4-5.) The annuity payments are not intended for necessary expenses. (Id., ¶ 8.) Payee intends to use the funds acquired in this transaction to make improvements on his home and add to his retirement account. (Id., ¶ 10.) He requires more funds to pay his ailing father’s medical expenses. (Ibid.)

            The Court notes that Payee will continue to receive substantial payments from the annuity for several years, and life-contingent payments will resume in 2048 under the terms of the transaction. After the transfer, the annuity will still provide Payee with payments of $2,426.95 through June 2027, $2,151.99 through June 2028, and approximately $985.00 through June 2029, totaling $103,390.46. (Id., ¶ 12.) He will then receive life-contingent monthly payments of approximately $5,000.00 beginning in July 2048 and continuing through the remainder of his life. (Id., ¶ 11.) Payee has completed several structures settlement transfers in the past and has been satisfied with their results. (Id., ¶ 9.) As noted, he will invest some of the funds in a retirement account which may yield similar results to the yield on his annuity. (Id., ¶ 10.)

            Under the circumstances, the proposed transfer is fair and reasonable.

Conclusion

The Court grants the petition.

Petitioner is ordered to provide notice of this ruling to all parties.

DATED:  May 21, 2025                                

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court