Judge: Yolanda Orozco, Case: 22STCP02379, Date: 2022-08-04 Tentative Ruling

Case Number: 22STCP02379    Hearing Date: August 4, 2022    Dept: 31

PETITION FOR APPROVAL OF TRANSFER OF
STRUCTURED SETTLEMENT PAYMENT RIGHTS IS CONTINUED 

Background 

Petitioner Stone Street Obligations, LLC moves the Court for approval of a transfer of structured settlement payment rights from named payee Joshua McIntyre (“McIntyre” or “payee”). 

Legal Standard 

This Petition is governed by Insurance Code sections 10134–10139.5. (See 321 Henderson Receivables Origination LLC v. Sioteco (2009) 173 Cal.App.4th 1059, 1066.)  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 and will not contravene other applicable law, and the court has reviewed and approved the transfer as provided in Section 10139.5. 

Pursuant to Insurance Code section 10139.5(a), the Court must make the following express findings as to a transfer of structured settlement payment rights: 

(1)   The transfer is in the best interest of the payee, taking into account 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 receipt of that advice in writing.

(3)   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 reasonably 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. 

The transfer agreement is effective only upon approval in a final court order. (Ins. Code, § 10139.5(a).) 

When determining whether the proposed transfer should be approved, including whether the transfer is fair, reasonable, and in the payee’s best interest, the Court shall 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 the future periodic payments were intended to pay for future medical care of the payee related to the incident that was the subject of the settlement;

(6)   whether the payee has other means of income or support sufficient to meet the payee’s future financial obligations for support of payee’s dependents, such as child support;

(7)   whether there were previous transactions involving payee’s structured settlement payments; and

(8)   whether the payee and his or her dependents are facing a hardship situation. (Ins. Code, § 10139.5, subd. (b).

Procedurally, Insurance Code section 10136, subdivision (b) provides that 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. The Court-approval process requires the transferee to file a petition in the county in which the transferor resides for approval of the transfer. (Ins. Code, § 10139.5, subd. (f)(1).) Further, at the time of filing such a petition, the transferee shall file a copy of the petition with the California Attorney General. (Ins. Code, § 10139.) Lastly, the Court shall retain continuing jurisdiction to interpret and monitor the implementation of the transfer agreement as justice requires. (Id. § 10139.5, subd. (i).) 

Discussion 

The requirements of Insurance Code § 10139.5(f)(2) and Petitioner’s compliance therewith are listed below: 

A)   A copy of the transferee’s current and any prior petitions. (NO, the Payee did list prior petitions and their terms but did not provide copies of each prior petition. Petitioner did provide a summary of the previous transfers, but not the reason for pursuing the previous transfers. (See McIntyre Decl. ¶ 9, Ins. Code, § 10139.5(c)(6).

B)    A copy of the transfer agreement. (YES, Exh. A.)

C)    A listing of each of the Payee’s dependents, together with each dependent's age. (YES, McIntyre Decl. ¶ 8.)

D)   A copy of the disclosure required in subdivision (b) of section 10136. (YES. Exh. B.)

E)    A copy of the annuity contract, if available. (YES. Exh. C.)

F)    A copy of any qualified assignment agreement. (YES. Exh. C.)

G)   A copy of the underlying structured settlement agreement, if available. (Yes. Exh. D.)

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. (N/A.)

I)      Proof of service showing compliance with the notification requirements of this section. (YES. Amended petition (Exh. A) filed July 27, 2022, by mail and overnight mail, original petition with filed July 07, 2022.)

J)      (Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee's petition, either in person or by counsel, by submitting written comments to the court or by participating in the hearing. (YES.)

K)   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, which may not be less than 15 days after service of the transferee's notice, in order to be considered by the court. (YES, executed July 7, 2022.)

L)    If the payee entered into the structured settlement at issue within five years prior to the date of the transfer agreement, then the transferee shall provide the following notice to the payee's attorney of record at the time the structured settlement was created, if the attorney is licensed to practice in California, at the attorney's address on file with the State Bar of California. The notice shall be delivered by regular mail and shall contain the following language:

“Your former client, (insert name, address and telephone number of payee), the ‘payee,’ has entered into a contract with (insert name of transferee) to transfer and assign certain future structured settlement payment rights. The transaction is subject to court review and approval under California law. As the payee's former attorney, you are entitled to receive this notice. You are not required to represent, advise, or consult with the payee in connection with the proposed transaction. You are not required to take any action at all in response to this notice. You may, but are not required to, contact the payee regarding the transaction. The payee is not required to consult with you or provide you any information regarding the transaction, but the payee may do so if he or she wishes.”

The notice to the former attorney described in this section is not required to be provided if the payee in the transaction was not a party to the original structured settlement at issue (for example, if the payee is an heir or beneficiary of the person who was a party to the original structured settlement). Also, if the payee cannot recall or identify his or her former attorney and if the identity of the former attorney cannot be ascertained from the available structured settlement documents, then the notice described in this subparagraph is not required to be provided and the transfer may proceed without the notice. (N/A.)

Payee McIntyre submitted a declaration in support of the petition attesting that he is 40 years old. (McIntyre Decl. ¶ 8.) Payee has three minor children, S.M. who is 17 years old, R.M, who is 12 years old, and M.M. who is 17 years old. (Id.) All three children reside with their mother. (Id.)

Payee is not married, is currently unemployed, and does not have any court-ordered child support obligations. (Id.) Payee attests that he is experiencing financial hardship, and if the petition is approved, the money will be used to help provide for his children. (Id. ¶ 11.) 

Petitioner filed an amended transfer agreement served on July 28, 2022. Payee signed the amended transfer agreement on July 27, 2022, the same date his declaration was signed. The terms of the agreement are the same in that Payee will receive $3,000.00 in exchange for future payments totaling $333, 267.60. (Ex. A, ¶ 11.) McIntyre seeks to transfer 120 monthly life contingent payments of $2,536.35 beginning February 01, 2048, through January 01, 2058, with a 2% increase every February. (McIntrye Decl. ¶ 5, Ex. A, ¶  2).  Payee asserts that none of the future payments were intended to pay for future medical care or provide for necessary living expenses. (McIntyre Decl. ¶¶ 6,7.) 

Petitioner states that on or about August 28, 2000, Payee, by and through his guardian, became entitled to certain structured settlement payments in connection with a wrongful death claim. (Ex. D.) 

Payee did not receive independent legal or financial advice regarding the transaction. (McIntyre Decl. ¶ 12.) A copy of the waiver is attached as Exhibit “E” of the petition. Payee asserts that he understands the terms of the transfer agreement, including the terms as set forth in the disclosure statement. (Id. ¶ 13.) Payee also states that he does not wish to exercise his right to cancel the agreement. (Id. ¶ 14.) 

Payee has completed prior transactions involving the payee’s structured settlement payments. 

McIntyre has entered into the following prior structured settlements. 

·       12/06/2007, through the Montgomery County Court House in Pennsylvania (Case 07-27569), transferring to $66,279.40 to J.G. Wentworth Originations, LLC. McIntyre received $23,419.02 from the settlement.

·       10/20/2010, through LASC (Case BS128290), transferring lump sum payments of $10,000 (due on 03/13/2012) and $50,000 (due on 03/13/2017) to Settlement Funding LLC. McIntyre received $35,550.32 from the settlement

·       08/10/2011, through LASC (Case BS 132502), transferring monthly payment or $275.00 starting September 1, 2011 through and including January 1, 2012; and monthly payments of $295.81, increasing 2% every February 1, starting on February 1, 2012 through and including January 1, 2021 to Settlement Funding, LLC. McIntyre received $20,250.20 from the settlement.

·       09/22/2014, through LASC (Case BS 150598), transferring monthly payments of $550, increasing 2% every February 1, starting June 1, 2014 through and including January 1, 2021; and one lump sum payment of $100,000 due on March 13, 2027 to Genex Capital Corporation. McIntyre received $56,230.00 from the settlement.

·       08/31, 2015, through the Los Angeles County Court (Case# BS155353), transferring monthly payments of $214.82 starting July 1, 2015 through and including January 1, 2016; monthly payments of $242.88 increasing 2% every February I, starting February 1, 2018 through and including January 21, 2021; monthly life contingent payments of $1,485.93, increasing 2% every February 1, starting February 1, 2021 through and including February 1, 2035 to Genex Capital Corporation. McIntyre received $59,295.00 from the settlement.

·       10/04/2019, through the Los Angeles County Court (Case # 19BBCP00329), transferring 155 monthly life contingent payments of $1,960.68 increase 2% every February beginning 03/01/2035 through and including 01/01/2048 to JG Wentworth, LLC. McIntyre received $10,500.00 from the settlement. 

Payee asserts that he has not attempted previous transactions involving his structured settlement payments that were denied, dismissed or withdrawn prior to a decision on the merits, within the past five years. (McIntyre Decl. ¶ 12.) 

The Court finds that:  

1)     The transfer is in the best interests of Payee, taking into account the welfare and support of Payee’s dependents since the funds would be better used to provide for dependents, rather than to provide support to Payee several years from now. 

2)     Payee has been advised in writing by Petitioner to seek independent professional advice regarding the transfer and has knowingly waived receipt of that advice in writing;   

3)     Petitioner has provided Payee with a disclosure form that complies with Section 1013 and the Transfer Agreement complies with Sections 10136 and 10138;  

4)     The transfer does not contravene any applicable statute, order of any court, or other government authority;  

5)     Payee reasonably understands the terms of the Transfer Agreement, including the terms set forth in the Disclosure Statement required by Section 10136; and  

6)     Payee understands his right to cancel and does not wish to exercise his right to cancel the Transfer Agreement. 

However, there are two deficiencies that need to be corrected before the Court grants the Petition. 

First, Petitioner must provide the Payee’s address pursuant to Insurance Code Section 10139.5(c) 

Second, instead of providing copies of previous petitions, Payee has provided a summary of the previous petitions, as permitted by Insurance Code Section 10139.5(c)(6). However, the summaries neglect to state Payee’s reason for completing the previous transactions. (Id. [noting “generally the payee's reasons for pursuing or completing a previous transaction.”].) 

Accordingly, the hearing on the Petition is CONTINUED to allow Petitioner to correct the noted issues. 

Conclusion 

Petitioner Stone Street Obligations, LLC’s Petition for Approval of Transfer of Structured Settlement Payment Rights is CONTINUED to August 18, 2022. 

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.