Case Number: BS147737 Hearing Date: June 25, 2014 Dept: 34

Moving Party: Petitioner J.G. Wentworth Originations, LLC (“petitioner”)

Resp. Party: None

Petitioner’s petition is GRANTED.

BACKGROUND:

Petitioner submitted this petition on 3/21/14. The payee, Antonio Baker aka Antonio Dwayne Baker Jr. (“Payee”), was the recipient of structured settlement payments under which Allstate Assignment Company is the obligor. Payee entered into a transfer agreement to transfer structured settlement payments totaling $37,784.16 (48 payments of $787.17). In exchange, payee will receive $24,500.00 from petitioner.

ANALYSIS:

Under Insurance Code § 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 Section 10139.5.

Pursuant to Insurance Code § 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 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 reasonably understands and does not wish to exercise the payee’s right to cancel the transfer agreement.

Insurance Code § 10139.5(b) sets forth 15 factors to consider in determining whether the transfer is fair and reasonable and in the best interest of the payee, including (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.

Procedurally, Insurance Code § 10136(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. In addition, the following elements are required to be served and filed not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights (Ins. C. §10139.5(f)(2)):

(A) A copy of the transferee’s application.
(B) A copy of the transfer agreement.
(C) A listing of each of the payee’s dependents, together with each dependent’s age.
(D) A copy of the disclosure required in subdivision(b) of Section 10136.
(E) A copy of the annuity contract.
(F) A copy of any qualified assignment agreement.
(G) A copy of the underlying structured settlement agreement.
(H) If a copy of the annuity contract, qualified assignment agreement, or underlying structured settlement agreement is unavailable or cannot be located, then the transferee is not required to attach a copy if the transferee satisfies the court that reasonable efforts to locate and secure a copy have been made, including making inquiry with the payee.
(I) Proof of service showing compliance with the notification requirements.
(J) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing.
(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 application 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.
(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 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.

Further, at the time of filing such a petition, the transferee shall file a copy of the petition with the California Attorney General. (Ins. C. §10139.)

Lastly, the court shall retain continuing jurisdiction to interpret and monitor the implementation of the transfer agreement as justice requires. (Ins. C. §10139.5(i).)

Payee has agreed to transfer $37,784.16 in future payments [48 monthly payments of $787.17] in exchange for $24,500.00. (See Pet. Exh. A.)

Petitioner has submitted a declaration from the payee. Payee states that he believes it is in his best interest to transfer the payments. (Baker Decl., ¶ 4.) Payee describes the terms of the transfer. (Id., ¶ 5.) Payee declares that the subject of the transfer was not intended to pay for future medical care and treatment, was not intended to provide for necessary living expenses, and was monetary in its entirety. (Id., ¶¶ 6-7.) Payee is single and has one child, a two-year-old daughter. (Id., ¶ 8.) Payee does not have any court-ordered child support but does pay $200.00 per month to the Child Services Agency. (Ibid.) Payee is unemployed and earns $0 per month. (Ibid.) Payee has not completed any previous transaction involving the settlement payments. (Id., ¶ 9.) Payee has not attempted other transactions involving the settlement. (Id., ¶ 10.) Payee states that he is currently experiencing a financial hardship and that he plans to use the proceeds from the transfer to pay off debts and purchase a vehicle. (Id., ¶ 11.) Payee declares that he owes $15,000.00 in property taxes and that he will pay off this amount with the transfer proceeds so that he may keep his home. (Ibid.) Payee states that he will use the remaining $9,500 towards the purchase of a new vehicle. (Ibid.) Payee states that he has been actively looking for a job but without steady transportation his search has been limited. (Ibid.) Payee did not receive independent legal and financial advice regarding the proposed transaction. (Id., ¶ 12.) A copy of payee’s waiver of such advice is attached to the petition. (See Pet., Exh. E.)

The disclosure statement complies with section 10136(b). (See Exh. B.) The transfer agreement complies with section 10136(c). (See Exh. A.) Petitioner complies with section 10139 because petitioner has submitted a proof of service on the Attorney General. The petition does not appear to violate any statutes. The petition includes a waiver of independent professional representation. (See Exh. E.)

The transfer appears to be reasonable. Though payee states that he pays $200.00 per month and that he is presently unemployed, he also declares that he intends to use the transfer payment toward the purchase of a new vehicle, which could aid in his search for employment. (See Baker Decl., ¶¶ 8, 11.)

The Court’s main concern is over the discount rate applied to this transaction. In effect, J.G. Wentworth Originations LLC is charging payee 23.82% to lend him $24,500. While credit card companies routinely charge more than this on outstanding balances, this loan from petitioner is 100% guaranteed. The Court is aware that such a discount rate is perfectly legal and relatively standard for these types of transactions. Nonetheless, we should not blind ourselves to the fact that certain transactions – although legal and routine – may not be just.

On the other hand, the agreement between payee and petitioner complies with the statute, and it is not for this Court to put its own values on whether such a lump-sum advance of money is or is not in payee’s interest or whether petitioner is taking advantage of a person who is in dire economic straits.

Petitioner’s petition is GRANTED.