Two Petitions To Sell Structured Settlement Payments in California Denied in California Court's Tentative Rulings
Shasta County's Superior Court (Department 8) in California has recently denied structured settlement transfer petitions (to sell structured settlement payments) in two separate Tentative Rulings on the same date, June 18, 2018), due to failure to comply with California's Insurance Code laws, such as "Payee's Best Interest" criteria that are needed to be met for the approval of an application to sell structured settlement payments in California.
In one of the two cases, the petition was denied due to its failure to include information about the monthly income and financial resources of the payee's spouse that is needed according to Insurance Code section 10139.5, subdivision c (4), as quoted here below:
"The amounts and sources of the payee's monthly income and financial resources and, if presently married, the amounts and sources of the monthly income and financial resources of the payee's spouse."
The petition also failed, among others, to inform the court what the payee plans to do with the money following the transfer, as provided by subdivision b.
As a result, the petition was denied in the tentative ruling (unless the petitioner appears in court and requests continuing the matter).
The ruling was about selling 180 future monthly structured settlement payments each in the amount of $681.00 (from Nov 25, 2027 through Oct 25, 2042) in a total of $122,580, in exchange for a present lump sum payment in the amount of $19,500.00.
This amounts to about 16% of what the payee would have received in the future payments (but consider that the payments begin to be issued in almost 10 years from now and is spread out over a period spanning almost 25 years from now, meaning that the end-buyer of the structured payment rights will receive the last payment in a quarter century from now, a fact that is probably factored into the discounting rate).
In another Tentative Ruling, the same court has denied another structured settlement transfer petition to buy out a single lump sum structured settlement payment in the amount of $40,000 that is due in about four years from now, on May 22,2022.
The petitioner offered to buy out the payment in exchange for a present payout of $26,250.11. That's about 65% of the payee's aggregate future value.
According to the court decision, the transfer agreement was signed on May 4, 2018.
Provided by California's law (Insurance Code 10136 (b)), "Ten or more days before the payee executes a transfer agreement, the transferee shall provide the payee with a separate written disclosure statement..."
The provision includes a sample of the detailed disclosure that California's law requires the buyer of structured settlement payments to provide to the payee 10 days or more before signing the transfer agreement.
In the case in question, the disclosure was provided as needed. The disclosure, however, was dated on May 4, the same date of the signed agreement, which means the disclosure was not provided 10 days or more before the transfer agreement as required by law.
For this lack of compliance with the law of selling structured settlement payments in California, the petition was considered void by the court stating that the transfer agreement "will need to be remedied by a new disclosure statement and transfer agreement if the parties intend to move forward on this matter."
In addition, the petition failed to comply with California's Insurance Code 10139.5 (b) (there seems to be an error in the publication of the court's tentative rulings citing Code section "10239.5" that probably should refer to "10139.5") detailing 15 exemplary factors for the court's consideration in determining whether a transfer proposal is fair and reasonable and in the best interest of the payee selling structured settlement payments.
As an example, the court states that the petition fails to include the amounts and sources of all of the payee's monthly income and financial resources; whether the payee or dependents are facing a hardship situation (that is required by subdivision b(13), and; the payee's intended use of the money.
Another notable reasoning by the court for denying the petition is that "The Petition also states different facts at different places."
For example, a 25 year old male is mentioned in the petition, while in a separate declaration, it is stated that there are no dependents relating to the petition.
The petition was denied unless the petitioner appears and requests continuation of the court matter. According to the ruling, a new petition will need to be submitted to the court if the parties intend to move forward on the matter.