Judge Thomas D. Long, Case Number: 23STCP03704, Date: 2023-11-30 Tentative Ruling

On October 6, 2023, Petitioner J.G. Wentworth Originations, LLC filed this petition for approval of transfer of structured settlement payment rights, and on October 24, 2023, it filed an amended petition. The petition seeks transfer of certain structured settlement payment rights held by Michael Boozer (“Payee”) arising from a personal injury claim. (Petition ¶¶ 2-3.) If approved, Payee will transfer to Petitioner 180 monthly Life Contingent payments of $4,456.06 each, increasing at 2% annually, beginning on January 10, 2025 and ending on December 10, 2039. (Petition ¶ 4.) In exchange, Petitioner will pay Payee $280,000.00. (Petition at p. 4.)

At the November 30, 2024 hearing, the Court continued the hearing to allow Petitioner time to file omitted exhibits. Petitioner did not timely file any additional exhibits.

A direct or indirect transfer of structured settlement payment rights is not effective unless the transfer has been approved in a final court order based on certain express written findings by the Court. (Ins. Code, § 10139.5, subd. (a).)

A. The Court Cannot Determine Whether the Transfers Is In the Best Interest of the Payee.

The transfer must be in the best interest of the payee, taking into account the welfare and support of the payee’s dependents. (Ins. Code, § 10139.5, subd. (a)(1).) When determining whether the transfer is fair, reasonable, and in the payee’s best interests, the Court must consider the totality of the circumstances, including but not limited to: (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; (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; and (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, subd. (b).)

The Petition asserts that Payee is 62 years old, single, and with no minor children. (Petition at p. 4.) He is unemployed and feels that it is in his best interest to enter into this transaction so he can n have the financial means to purchase rental properties. (Ibid.) Payee waived in writing his right to seek independent advice regarding the transaction. (Petition, Ex. E.)

There is no evidence regarding any other factor. Petitioner states that some information “will be set forth in the declaration to be filed in this matter.” (Petition at p. 4.) However, no declaration from Payee was filed. For this reason, the Court cannot determine whether the transfer is in the best interest of the Payee.

The payee must be advised in writing by the transferee to seek independent professional advice regarding the transfer and either receive that advice or knowingly waive, in writing, the opportunity to receive the advice. (Ins. Code, § 10139.5, subd. (a)(2).)

The Transfer Agreement advises that Payee may receive independent financial advice, and Payee knowingly waived the right. (Petition, Ex. E.)

The transferee must provide the payee with a disclosure form that complies with Insurance Code section 10136. (Ins. Code, § 10139.5, subd. (a)(3).) The disclosure form must contain specific text, and the transferee must provide the disclosure form at least 10 days before the payee executes a transfer agreement. (Ins. Code, § 10136, subd. (b).)

The disclosure form here contains the required text and form. (Petition, Ex. B.) Payee signed the form indicating that he received and read the disclosure form at least 10 days before signing the transfer agreement. (See Petition, Ex. B at p. 3.)

The transfer agreement must comply with Insurance Code sections 10136 and 10138. (Ins. Code, § 10139.5, subd. (a)(3).)

The transfer agreement contains the required text and form. (Petition, Ex. A.) Additionally, the transfer agreement does not contain any provision (1) waiving the seller’s right to sue or waiving his jurisdiction or standing to sue; (2) requiring the seller to indemnify the buyer or to pay the buyer’s costs of defense; (3) waiving benefits or rights conferred by law with respect to garnishment of wages; (4) providing that the contract is confidential or proprietary, belonging to the buyer; (5) in which the seller stipulates to a confession of judgment; (6) requiring the seller to pay the buyer’s attorney’s fees and costs if the purchase agreement is not completed; (7) requiring the seller to pay any tax liability arising under the federal tax laws, other than the seller’s own tax liability that results from the transfer; (8) providing for brokerage fees incurred in the contract to be deducted from the purchase price disclosed; (9) providing for forum selection and jurisdiction to be in a court outside of California for any action arising under the contract, if the seller is domiciled in California at the time he signs the transfer agreement; (10) providing for controlling law to be other than California law in any action arising under the contract, if the seller is domiciled in California at the time he signs the transfer agreement; (11) providing the buyer with a security interest or collateral interest in any structured settlement payment rights that exceed the actual dollar amount of the structured settlement payment rights being transferred; or (12) creating a “buyer’s first right of refusal” to purchase any remaining structured payment rights that the payee may desire to sell in the future. (Ins. Code, § 10138, subd. (a).)

Accordingly, Court finds that the transfer agreement complies with Insurance Code sections 10136 and 10138.

The transferee must comply with the notification requirements of subdivision (f)(2). (Ins. Code, § 10139.5, subd. (a)(3).) A notice of proposed transfer and petition must be filed and served no later than 20 days before the hearing and must include: (1) a copy of the transferee’s current petition and any other prior petition; (2) a copy of the proposed transfer agreement and disclosure form required by section 10139.5, subdivision (a)(3); (3) a listing of each of the payee’s dependents and their ages; (4) a copy of the disclosure required in section 10136, subdivision (b); (5) a copy of the annuity contract, any qualified assignment agreement, and underlying structured settlement agreement, if available; (6) proof of service showing compliance with the notification requirements; (7) notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s petition by submitting written comments to the court or by participating in the hearing; (8) notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the petition must be filed; and (9) notice to the payee’s attorney of record at the time the structured settlement was created, if payee entered into the structured settlement at issue within five years prior to the date of the transfer agreement. (Ins. Code, § 10139.5, subd. (f)(2).)

Petitioner’s Notice and Petition comply with some of these requirements. Petitioner filed a proof of service on October 24, 2023, reflecting timely service on October 24, 2023 before the November 30, 2023 hearing. The proof of service shows service of the Notice of Rescheduled Hearing, Verified Petition, and Notice of Case Assignment on the Payee, the Annuity Issuer, and the Annuity Obligor. The Petition includes a copy of the transfer agreement (Petition, Ex. A) and disclosure form (id., Ex. B). The Petition also states, although without evidence or declarations, that Payee has no minor children. (Petition at p. 4.)

The Petition includes a written verification of benefits from Brighthouse Financial that confirms the terms of the Structured Settlement Annuity, but it does not contain any qualified assignment agreement, and the underlying structured settlement agreement. (Ins. Code, § 10139.5, subd. (f)(2)(E)-(G); see Petition, Ex. C-D [stating only “TO BE PROVIDED”].)

Due to the missing information, the Court cannot find that this requirement was satisfied.

F. The Court Cannot Determine Whether the Petition Contravenes Any Statute or Order.

The transfer must not contravene any applicable statute or the order of any court or other government authority. (Ins. Code, § 10139.5, subd. (a)(4).)

The transfer generally complies with statutory requirements, and there is no evidence that it contravenes the order of any court or other government authority.

However, given the missing information and exhibits, the Court cannot determine whether this requirement is satisfied.

The payee must understand the terms of the transfer agreement, including the terms set forth in the disclosure statement, and the right to cancel the transfer agreement. (Ins. Code, § 10139.5, subd. (a)(5)-(6).)

Payee signed the Transfer Agreement directly under a statement advising him of his right to cancel the agreement. (Petition, Ex. A.) However, there is no other information, such as a declaration from Payee, proving Payee’s understanding.

Given the missing information discussed above, the Petition is DENIED WITHOUT PREJUDICE.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court