Judge: Theresa M. Traber, Case: 23STCP00083, Date: 2023-02-16 Tentative Ruling

Case Number: 23STCP00083    Hearing Date: February 16, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     February 16, 2023                 TRIAL DATE: NOT SET

CASE:                         In Re Petition of Ark Financial Group, LLC (Payee: E. Abreu)

CASE NO.:                 23STCP00083           

MOTION FOR ORDER APPROVING TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS

MOVING PARTY:               Petitioner Ark Financial Group, LLC

RESPONDING PARTY(S): No response on eCourt as of 2/10/23

PROOF OF SERVICE:

• Correct Address: Unknown. Only Petitioner has appeared in the lawsuit.  
• OK. [Insurance Code § 10139.5(f)(2)]: Served by express mail on January 17, 2021. Notice of Hearing filed and served with motion. 

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            In its January 11, 2023 petition, Petitioner seeks court approval of a proposed transfer of structured settlement payments.  

TENTATIVE RULING:

The petition for approval of structured settlement payments is GRANTED, conditioned on the filing and service of the relevant portions of the annuity contract, qualified assignment agreement, and underlying structured settlement agreement, or the filing of a declaration under perjury stating why these documents were not provided.

DISCUSSION:

            Petitioner seeks court approval of a proposed transfer of structured settlement payments.  

A direct or indirect transfer of structured settlement payment rights is not effective unless the transfer has been approved by a court order finding:  

(1) The transfer is in the best interest of the payee, considering 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.  

(Ins. Code § 10139.5(a).) 

As a result of a personal injury settlement entered into when he was a minor, Payee E. Abreu became entitled to certain structured settlement payments. (Petition, Exh. A.) 

E. Abreu, as Payee, and Petitioner Ark Financial Group, LLC, as Assignee, have entered into a Structured Settlement Payments Purchase Agreement, under which Payee is to sell future payments totaling $3,880,752.42 in exchange for a purchase price of $37,000. (Ibid.)  

The discounted present value of the amount being sold is $1,813,332.46, calculated by applying the 5.2% discount rate used by the Internal Revenue Service to value annuities in probate proceedings. The purchase price was calculated using a discount rate of 34.87%. If Payee did not sell the right to receive structured settlement payments but instead borrowed the net amount of $37,000 and paid that loan back in installments with each of the payments he is now selling, the equivalent interest rate would be 34.87%. (Ibid.) 

All of this information has been properly disclosed to Payee by way of the disclosure form in compliance with Insurance Code § 10136, as required by § 10139.5(a)(3). (Petition, Exh. B.) Payee was advised in writing to seek independent professional advice, both legal and financial. (Ibid.) Payee chose not to seek an independent professional’s advice. (Petition, Exhs. E; F ¶ 15.) Thus, Petitioner has complied with the statutory disclosure requirements. (Ins. Code § 10139.5(a)(2).) 

The transfer agreement (Exh. A) also complies with Insurance Code §§ 10136 and 10138 as required by § 10139.5(a)(3). It does not contravene any applicable statute or order of any court or other governmental authority. (Ins. Code § 10139.5(a)(4).)  

Copies of the relevant portions of the annuity contract, qualified assignment agreement, and underlying structured settlement agreement were not submitted as required by Ins. Code § 10139.5(f)(2)(E)-(G). (Petition ¶ 9.) Instead, Payee has described the relevant terms of the original agreement in his declaration. (Petition, Exh. F [Declaration] ¶ 10.) These documents, along with the transfer agreement itself, provide adequate information as to the terms of the underlying structured settlement. Petitioner has indicated that these documents will be served prior to the hearing. (Petition ¶¶ 17-18.) Based on this information, the Court will condition its ruling on the filing and service of these documents, or the filing of a declaration under perjury stating why these documents were not provided.

Information About Transferor 

Payee is 44 years old. (E. Abreu. ¶ 2).  

Payee has indicated that he resides at 6220 Owensmouth Ave, Apt. 211, Woodland Hills CA 91367. (Exh. B. ¶ 2.)

Payee has stated his marital status (married) and identified his spouse as required by Insurance Code § 10139.5(c)(2). (Exh. D.) 

Payee has identified his wife and two children as dependents as required by Insurance Code § 10139.5(c)(3). Although their names and ages have been provided, their place of residence is not. (Exh. C.)  The Court construes Payee’s declaration, which states that he is married with two minor children, to mean that the family resides together at the same place of residence. (Exh. F. ¶ 2.) The Court therefore finds that Payee has substantially complied with section 10139.5(c)(3).

Payee has indicated the amount and source of his monthly income as required by Insurance Code § 10139.5(c)(4). (Exh. F ¶ 3.) 

Payee has stated that he has no child support obligations, as required by Insurance Code § 10139.5(c)(5). (Exh. F ¶ 2.) 

Payee has provided information regarding previous transfers, as required by Insurance Code § 10139.5(c)(6). (Exh. F ¶ 10.) 

In sum, Payee has provided all of the information required by Insurance Code § 10139.5(c). 

Payee indicates how the proceeds would be used as required by Insurance Code § 10139.5(b)(2): He intends to invest in a food truck business that will yield a projected monthly income of $20,000 based on current sales. (¶ 6.) He has indicated that he is currently experiencing a financial hardship, as required by Insurance Code § 10139.5(b)(3). (¶ 8.)  

Payee has indicated that the periodic payments were not intended for necessary living expenses nor medical expenses, as required by Insurance Code § 10139.5(b)(5)-(7). (¶¶ 8, 9.) 

Given the foregoing, the Court finds that the transfer is fair, reasonable and in the best interest of Payee. (Insurance Code § 10139.5(a)(1) & (b)(1)-(15).)  The Payee understands the terms of the transfer agreement, including those set forth in the § 10136 disclosure statement, as required by Insurance Code § 10139.5(a)(5). In signing the California Disclosure Statement and in his declaration and affidavit in support of the Petition, Payee has evidenced an understanding of the right to cancel and election not to cancel the transfer agreement, as required by Insurance Code § 10139.5(a)(6). 

Thus, Petitioner has met all the procedural requirements under the Insurance Code. The Petitioner has also served a copy of the notice to all interested parties and the Attorney General.  

Accordingly, the petition for approval of structured settlement payments is GRANTED, conditioned on the filing and service of the relevant portions of the annuity contract, qualified assignment agreement, and underlying structured settlement agreement, or the filing of a declaration under perjury stating why these documents were not provided.

Moving party to give notice, unless waived. 

IT IS SO ORDERED.

Dated:  February 16, 2023                              ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.