Mark W Shurtleff et al vs Sanctuary Centers of Santa Barbara Inc et al

Case Number

21CV03687

Case Type

Hearing Date / Time

Fri, 10/24/2025 - 10:00

Nature of Proceedings

Petition for Order Establishing Special Needs Trust; Petition for Approval of Compromise of Claims

Tentative Ruling

For all reasons discussed herein, the (1) petition of plaintiff and petitioner Mark W. Shurtleff for approval of compromise of claim or action or disposition of proceeds of judgment for minor or person with a disability, and (2) petition of plaintiffs for an order establishing a special needs trust and for authority to invest in mutual funds and U.S. government bonds with maturity dates of later than 5 years, are each granted in accordance with this ruling. Petitioner shall appear at the hearing and be prepared to discuss any matters remaining for the court at this time.

Background: 

On September 15, 2025, plaintiffs Mark W. Shurtleff (Mark), individually and as the conservator for Ellen P. Shurtleff (Ellen), and Ellen (collectively, plaintiffs) filed a complaint against defendants Sanctuary Centers of Santa Barbara, Inc., (Sanctuary), AVA Billing & Consulting, LLC,(AVA), Lisa B. Moschini (Moschini), Barry R. Schoer (Schoer), and Ashton V. Abernathy (Abernathy) (collectively, defendants), alleging seven causes of action: (1) breach of written contract (against Sanctuary and AVA only); (2) conversion (against Sanctuary); (3) fraud (against all defendants); (4) negligence misrepresentation (against all defendants); (5) negligence (against all defendants); (6) financial abuse and neglect of a dependent adult (alleged by Ellen against all defendants); and (7) elder financial abuse (alleged by Mark against all defendants). (Note: Due to common familial surnames and to avoid confusion, the court will refer to plaintiffs, individually, by their first names. No disrespect is intended.) As alleged in the complaint:

Mark is 65 years of age and the father of Ellen, who is a disabled dependent adult. (Compl., ¶¶ 1-3.) Ellen and Mark are members of the Gibson, Dunn Employee Benefits Plan (the plan) for which Blue Cross of California (Anthem) is the claims administrator. (Id. at ¶ 12.)

Sanctuary is a behavioral health provider that operates a residential program for adults with mental illness in Santa Barbara, California. (Compl., ¶ 5.) Moschini is Sanctuary’s Clinical Director and Schoer is its Chief Executive Officer and President. (Id. at ¶¶ 6, 7.) AVA provides insurance claims and billing services to Sanctuary, including services relating to the recoupment of fees from customer’s health plans. (Id. at ¶ 8.) Abernathy is AVA’s Chief Executive Officer and President. (Id. at ¶ 9.)

In April 2019, Ellen received treatment for Bipolar I disorder at UCLA Hospital. (Compl., ¶ 14.) After Anthem cut off further authorization for in-patient services at the hospital, Moschini evaluated Ellen for placement at Sanctuary’s residential facility in Santa Barbara County and advised Mark that Sanctuary could house and help Ellen at that facility. (Ibid.)

Moschini informed Mark that the plan would consider Sanctuary an “out-of-network” provider, and that Ellen and Mark would be required to pay Sanctuary directly and in full for its services. (Compl., ¶ 15.) Moschini stated that Sanctuary would arrange for AVA to submit claims to the plan, that AVA would recoup health plan money as reimbursement to Mark and Ellen for the monthly fees paid to Sanctuary, that Mark and Ellen would be required to use AVA for this purpose, and that Mark and Ellen must pay to AVA a monthly fee of 8.5 percent of all benefits recovered on Mark and Ellen’s behalf. (Id. at ¶ 16.)

In reliance on Moschini’s statements described above, Mark entered into an admissions agreement (the agreement) with Sanctuary for Ellen to receive residential treatment at Sanctuary’s facility. (Compl., ¶ 17.) The agreement provided for an initial monthly admission charge to be paid to Sanctuary of $11,000 per month, which was later raised to $12,000 per month. (Ibid.) The agreement also set forth the services to be provided to Ellen. (Id. at ¶ 18.) On April 10, 2019, Ellen was admitted as a full-time resident at Sanctuary’s Santa Barbara facility. (Id. at ¶ 19.)

After insurance reimbursements from Anthem began to decline, Mark requested from Sanctuary information regarding AVA’s claims submission process with Anthem. (Compl., ¶¶ 22-26.) AVA would not provide Mark with claims submission details. (Id. at ¶¶ 24, 25.) Abernathy told Mark that AVA would resubmit certain claims for service dates occurring after August 2, 2019, which would void the original claims submissions. (Id. at ¶ 25.) At the end of December 2019, Mark discovered that Abernathy and AVA had not been in contact with Anthem, and had submitted few claims after August 2, 2019. (Id. at ¶ 27.)

In January 2020, Mark again inquired of AVA about reimbursements from Anthem, but AVA provided no explanation. (Compl., ¶ 29.) Despite no known change in Ellen’s medical status or treatment rendered, Anthem suddenly began processing claims for service dates in January 2020 at full post-hospitalization rates, confirming for the first time that AVA and Sanctuary had failed to properly submit claims to Anthem during Ellen’s stay at Sanctuary’s facility. (Ibid.) Following a 30-day notice, Ellen left Sanctuary on the morning of February 1, 2020. (Id. at ¶ 30.)

In February 2020, Mark received a written demand from Anthem for repayment of the amount of $20,300 based on “incorrect billing” submitted by Sanctuary and AVA in April, May, and June of 2019. (Compl., ¶ 32.) Anthem confirmed that AVA had resubmitted claims for service dates prior to August 3, 2019, only. (Ibid.) According to Anthem, AVA’s re-submission of pre-August 3, 2019, claims effectively “voided” prior claims submissions for April, May and June 2019, for which Mark and Ellen had already been reimbursed by Anthem. (Ibid.) The post-August 3, 2019, claims submissions were di minimis, and did not reflect charges Mark and Ellen had paid to Sanctuary for after August 2019. (Ibid.)

Anthem also informed Mark that the January claims from Sanctuary included a representation from AVA and Sanctuary that Sanctuary was authorized to receive the Anthem payments instead of Mark and Ellen, to which Mark had not agreed. (Compl., ¶ 35.) Anthem paid Sanctuary directly for services in January 2020, which Mark and Ellen had already paid in full. (Id. at ¶ 36.) AVA and Sanctuary refused to remit these funds to Mark or Ellen, who have not been fully reimbursed by the plan for money paid to Sanctuary. (Id. at ¶¶ 36, 38.)

In addition, Sanctuary misrepresented the scope of services it would provide to Ellen. (Compl., ¶ 42.) Ellen weighed approximately 142 pounds when admitted to Sanctuary, and approximately 205 pounds when she left Sanctuary on February 1, 2020. (Id. at ¶ 44.) Ellen was also allowed to go absent without leave or supervision from Sanctuary despite the 24-hour supervision promised in the Agreement. (Id. at ¶ 45.)

On October 13, 2022, Sanctuary, Moschini, and Schoer filed an answer to plaintiffs’ complaint.

On October 28, 2022, AVA and Abernethy filed a demurrer to the first, sixth and seventh causes of action alleged in the complaint which was opposed by Mark and Ellen. The court overruled that demurrer by order dated February 17, 2023, and directed AVA and Abernethy to file and serve an answer to the complaint on or before March 1, 2023.

On May 1, 2023, AVA and Abernethy filed an answer to plaintiff’s complaint.

On August 12, 2025, plaintiffs filed a notice of a conditional settlement of this case.

On August 13, 2025, Mark filed an unopposed verified petition (the Approval Petition) for approval of compromise of claim or action or disposition of proceeds of judgment for minor or person with a disability, and separately filed an unopposed verified petition for an order (the Special Needs Petition) establishing a special needs trust to be funded with the proceeds of a settlement in this action. The petition and the motion were each set for hearing on September 12.

On September 12, the court entered a minute order (the Order) continuing all matters as follows:

““The guardian or conservator of the estate or guardian ad litem so appearing for any ... person who lacks legal capacity to make decisions, or person for whom a conservator has been appointed shall have power, with the approval of the court in which the action or proceeding is pending, to compromise the same, to agree to the order or judgment to be entered therein for or against the ward or conservatee, and to satisfy any judgment or order in favor of the ward or conservatee or release or discharge any claim of the ward or conservatee pursuant to that compromise.” (Code Civ. Proc., § 372, subd. (a)(3).) The requirement that the court must approve any proposed compromise of a claim of any person described in Code of Civil Procedure section 372, subdivision (a)(3), “exist[s] to protect the best interests of” that person. (Pearson v. Superior Court (2012) 202 Cal.App.4th 1333, 1338.)

“A petition for court approval of a compromise or covenant not to sue under Code of Civil Procedure section 372 must comply with rules 7.950 or 7.950.5, 7.951, and 7.952.” (Cal. Rules of Court, rule 3.1384(a).) The petition must “be verified by the petitioner and must contain a full disclosure of all information that has any bearing on the reasonableness of the compromise, covenant, settlement, or disposition. Except as provided in rule 7.950.5, the petition must be submitted on a completed Petition for Approval of Compromise of Claim or Action or Disposition of Proceeds of Judgment for Minor or Person With a Disability (form MC-350).” (Cal. Rules of Court, rule 7.950.)

The allegations of the complaint described above, which are set forth in 80 paragraphs exclusive of subparagraphs, indicate to the court that the claims and damages alleged in the complaint arise primarily from what Mark and Ellen contend constitutes a breach of the agreement, conversion, fraud, negligence, and financial abuse arising from a failure by Sanctuary and AVA to obtain or process claims for reimbursement from the plan, and false promises or representations by Sanctuary and AVA that they would take all steps necessary to obtain reimbursement with the intention to defraud Ellen and to misappropriate or convert Ellen’s funds. (See, e.g., Compl., ¶¶ 16-42, 46(a), 49, 51, 59(b), 60(b), 67, & 74.)

Though the complaint also includes allegations regarding a purported failure by defendants to use reasonable care in caring for Ellen, it appears that these allegations give rise to part of the third, fifth, and sixth causes of action for, respectively, fraud, negligence, and financial neglect of a dependent adult. (See, e.g., Compl., ¶¶ 42, 43, 44, 45, 59(a), 60(a), 67, 73.)

The petition seeks the court’s approval of a settlement of Ellen’s disputed claims in the amount of $999,996. (Appr. Pet., ¶ 10.) The petition states that the relevant facts, events, and circumstances giving rise to that claim are that the Sanctuary was negligent in caring for Ellen, leading to Ellen suffering rapid weight gain and emotional distress. (Appr. Pet., ¶ 5.)

Assuming without deciding that the claim described in the petition is alleged in the complaint, wholly absent from the petition is any reference to Ellen’s claim for misappropriation, theft, or conversion of Ellen’s personal funds, or fraud or financial abuse arising from the purported failure by Sanctuary and AVA to obtain or submit claims for reimbursement from the plan on Ellen’s behalf as alleged in the complaint. There is also no information in the petition explaining whether the proposed settlement includes these claims.

For reasons further discussed above, the court is required to protect Ellen’s bests interests when determining whether the proposed settlement is reasonable under the circumstances present here. Even if the present record was sufficient to show that the settlement is reasonable as to any claims arising from the care provided to Ellen or Ellen’s residency at Sanctuary, the absence of any information regarding whether the settlement includes the claims described above with respect to the purported misappropriation, theft, or abuse of Ellen’s personal funds, deprives the court of full and complete information sufficient to permit it to discharge its duty in determining whether the settlement is reasonable and in Ellen’s best interests.

Though California Rules of Court, rule 3.114(a), does not require the submission of a memorandum in support of the petition, the court will, in the interests of justice, continue the hearing on the petition to require petitioner to submit a memorandum explaining why the proposed compromise of the claim described in the petition is reasonable as to all of the claims alleged in the complaint. (Cal. Rules of Court, rule 3.1114(b).)

In the interests of judicial efficiency, the court will also continue the hearing on the Special Needs Petition to permit that petition to be heard concurrently with the Approval Petition.”

Pursuant to the Order, the court continued the hearing on the subject petitions to October 24, and ordered petitioners to, on or before October 10, 2025, file and serve a memorandum or supplemental brief addressing the matters described in the Order.

On October 10, 2025, plaintiffs filed a supplemental brief, which is supported by a declaration of Mark, and a declaration of plaintiffs’ counsel, Gregory M. Hatton (Hatton), as further discussed herein.

The Approval Petition:

The Approval Petition, which is verified by Mark, shows that Ellen is 37 years of age, and is a person with a disability. (Appr. Pet., ¶ 2 & p. 10.) The events that occurred between April 2019 and January 2020 at Sanctuary, are described in that petition as follows: “Ellen ... was a resident at Sanctuary.... She has autism, is bipolar, and has developmental delays. As relevant to the settlement here, [plaintiffs] ... have alleged that Sanctuary was negligent in poorly caring for Ellen leading to rapid weight gain by Ellen, resulting directly in Ellen suffering emotional distress.” (Appr. Pet., ¶ 5.) Ellen’s rapid and persistent weight gain of over 60 pounds caused emotional distress. (Appr. Pet., ¶ 6.)

The petition describes the care and treatment Ellen received for the injuries described in the petition, which includes a medically supervised weight loss program after Ellen’s discharge from Sanctuary. (Appr. Pet., ¶ 7.) Ellen has not recovered completely from the effects of the injuries described in the petition. (Appr. Pet., ¶ 8(b).) Though Ellen’s weight loss program is ongoing, Ellen has lost 30 pounds post-discharge from Sanctuary and will be on Ozempic for an indeterminable length of time. (Ibid.)

Attachment 8 to the petition includes medical reports generated when Ellen was admitted to Sanctuary and prior to Ellen’s discharge from Sanctuary, and the most current medical reports for Ellen. (Pet. at pdf p. 11.) The medical records dated April 16, 2019, show that Ellen weighed 141 pounds, and was diagnosed with, among other things, bipolar II, when Ellen was admitted to Sanctuary. (Appr. Pet., Attachment 8 at pdf pp. 13-14.) Medical records dated January 14 and 28, 2020, show that on these dates, Ellen weighed 204 and 205 pounds. (Appr. Pet., Attachment 8 at pdf p. 17.) Medical records pertaining to an office visit on July 9, 2025, show that Ellen was seen for a medical evaluation and a “Wegovy” injection on that date, was assessed or diagnosed with obesity and stagnant weight loss, and weighed 182 pounds. (Appr. Pet., Attachment 8 at pdf pp. 20-21 & 23.)

Petitioner asserts that he has made a careful and diligent inquiry and investigation into the facts and circumstances of the incident in which Ellen was injured, responsibility for the incident, and the nature, extent, and seriousness of Ellen’s injuries. (Appr. Pet., ¶ 9.) Petitioner understands that if the compromise proposed in the petition is approved by the court and consummated, Ellen will never be able to recover any more compensation from the settling defendants, even if her injuries turn out to be more serious than they now appear. (Ibid.)

Noted above, the amount offered in settlement of Mark and Ellen’s claims by all defendants in this matter totals $999,996, which will be paid by defendants’ insurance carrier, and of which $2 will be apportioned to Mark for his economic losses and other claims, and $999,996 will be apportioned to Ellen’s proposed special needs trust, subject to the court’s approval. (Appr. Pet., ¶ 10(a)-(c).) The reasons for this apportionment include that the claims asserted by Mark on behalf of Ellen focus on Ellen’s weight gain and resulting emotional distress caused by substandard care on the part of Sanctuary and its employees, and secondary claims that Ellen suffered from the same financial abuse as Mark. (See Appr. Pet., ¶ 11(b)(6) & Attachment 11b(6).) Mark has elected to forego greater participation in the settlement fund, for the benefit of Ellen. (Ibid.)

There are no medical expenses to be paid or reimbursed from settlement proceeds. (Appr. Pet., ¶ 12.) The amount of attorney’s fees for which court approval is requested totals $5,405. (Appr. Pet., ¶ 13(a).) Attachments to the petition state that Hatton and John A. McMahon have represented plaintiffs in this lawsuit. (Pet., Attachment 13a & 17a/c/f.) Though Mark has been paying the hourly fees for these attorney’s services and related costs, Mark is not seeking any reimbursement of these expenditures. (Ibid.)

Attorney Andrea Gee of Merhab Robinson & Clarkson set up a special needs trust for Ellen and drafted the related petition for its approval. (Appr. Pet., Attachment 13a & 17a/c/f.) Petitioner requests that the court authorize the special needs trust to pay for Gee’s services, in the amount of $5,405. (Ibid.)

The petition also includes a copy of the Special Needs Petition, which is supported by the Gee declaration in which Gee states that her office expended a total of 10.3 hours reviewing court files, conferencing with trial counsel and Gee’s client, gathering information about the costs of care for Ellen, drafting a “First Party Special Needs Trust”, and preparing the Special Needs Petition. (Appr. Pet., Attachment 18a(3)(e) [Special Needs Petition, Exh. D, ¶ 2].) These hours include 7.7 hours expended by Gee at the hourly rate of $550, and 2.6 hours expended by Cassidy Russell at the hourly rate of $450. (Id. at ¶ 3.) Gee states that she has 32 years of experience in probate, trusts, and conservatorships since 1992, and that attorney Russell is a senior associate with eleven years of experience in trusts and estates since 2016. (Ibid.)

In the Summary section (no. 16), the petition lists gross settlement proceeds of $999,996, from which attorney’s fees totaling $5,405 will be deducted, for a net balance of $994,591 in settlement proceeds available for Ellen.

As further detailed above, petitioner has been represented by Hatton and McMahon in preparing the petition. (Appr. Pet., ¶ 17(a)(2).) Petitioner and the attorneys have an agreement for services provided in connection with the claim giving rise to the petition. (Ibid.) Though the petition states that a copy of that agreement is attached to the petition, the court is unable to locate that agreement among the attachments to the petition. Information appearing in the petition indicates that Mark will pay attorney’s fees and costs through the dismissal of the action and will not seek reimbursement for attorney’s fees or expenses. (Appr. Pet., ¶ 17(c) & (f).)

The attorney did not become concerned with this matter, directly or indirectly, at the instance of a party against whom the claim is asserted or a party’s insurance carrier. (Appr. Pet., ¶ 17(d).) Though the petition states that the attorney is representing or employed by another party or insurance carrier involved in the matter, the petition fails to identify a carrier. (See Appr. Pet., ¶ 17(e).) Information appearing in the petition, as further discussed above, indicates that the person referenced in item no. 17(e) of the petition is Ellen.

There is a conservatorship of the estate of Ellen, which was filed as Superior Court of Orange County case no. A237175. (Appr. Pet., ¶ 18(a).) Petitioner proposes that the settlement proceeds not become part of the conservatorship estate, and requests authority to deposit or transfer the amount of $999,996 to the trustee of a special needs trust established pursuant to Probate Code section 3604, for the benefit of Ellen, the terms of which are specified in the Special Needs Petition. (Appr. Pet., ¶ 18(a)(3)(e).)

Petitioner asserts that there are no statutory liens under Probate Code section 3604, and refers the court to the Special Needs Petition. (Appr. Pet., ¶¶ 19 & 20.) Petitioner requests that the special needs trust, which will be administered as stated in that trust, pay for the services of attorney Gee. (Appr. Pet., ¶ 20.)

The supplemental brief:

In the declaration submitted in support of the supplemental brief, Mark states that the total amount paid to Sanctuary was approximately $115,000, and that the amount contributed by Ellen to Sanctuary’s billings was $8,250.50. (M. Shurtleff Decl., ¶ 2.) Mark has personally contributed amounts far in excess of $8,250.50 to cover Ellen’s daily living expenses, including amounts which are sufficient to eliminate any financial impact on Ellen from Ellen’s payments to Sanctuary, such that Ellen’s current net out-of-pocket loss resulting from her payment of the amount of $8,8250 to Sanctuary is now zero. (Ibid.)

Mark further states that the focus of this lawsuit as to Ellen has been on the failure by defendants to use reasonable care in caring for Ellen. (M. Shurtleff Decl., ¶ 3.) Mark further states that this matter has been ongoing since 2019, and that in order to get this settlement in place for Ellen, Mark has agreed to waive all of Mark’s claims. (Ibid.) Mark believes that the current settlement is fair, reasonable and in Ellen’s best interests. (Ibid.)

The supplemental brief is also supported by a declaration of plaintiffs’ counsel, Gregory M. Hatton, who states that this case has had two separate focuses of recovery, which include the financial abuse claims largely of Mark, and the negligence or neglect and emotional distress claims of Ellen. (Hatton Decl., ¶ 2.) Hatton asserts that financial claims of Ellen are comparatively negligeable and, together with all of Mark’s claims, are waived in favor of a settlement in Ellen’s favor focused solely on Ellen’s claims for negligence, neglect, and resulting emotional distress, the proceeds of which will be placed in a special needs trust to care for Ellen throughout her life. (Ibid.)

Hatton further explains that Ellen has health insurance through the plan, that Ellen was admitted to Sanctuary between April 2019 and January 2020, and that Mark agreed to pay the monthly amount with small contributions from Ellen’s funds. (Hatton Decl., ¶ 6.) Under this arrangement, AVA was to seek reimbursement for Mark and Ellen’s payments through Anthem, the claims administrator for the plan. (Ibid.)

Hatton asserts that the financial claims alleged in this lawsuit have focused mostly on obtaining reimbursement of money spent by Mark that Sanctuary and AVA were supposed to recover, and that a separate, lesser portion was for the recovery of the claimed shortfall of money due to Mark which was resolved by way of Anthem’s responses. (Hatton Decl., ¶ 8.) Hatton further asserts that Ellen’s financial claims comprised a minor fraction of the financial claims alleged in the complaint. (Hatton Decl., ¶ 9.)

According to Hatton, the amount to be allocated to Mark represents Mark’s economic losses and other claims, and the amount to be allocated to Ellen’s special needs trust represents only the physical and emotional harm suffered by Ellen. (Hatton Decl., ¶ 11.) Mark has waived all other claims, including the right to recoup attorney’s fees and costs Mark expended to litigate this matter. (Hatton Decl., ¶ 12.) Hatton contends that the settlement would not have been possible without Mark waiving his own financial abuse claims in favor of a settlement in Ellen’s favor by focusing on her negligence and emotional distress claims, which Hatton asserts is reasonable under these circumstances, and in Ellen’s best interests. (Hatton Decl., ¶ 16.)

The Special Needs Petition:

The Special Needs Petition is verified by Mark, and supported by the Gee declaration further described above.

In the Special Needs Petition, Mark seeks an order establishing “The Ellen P. Shurtleff 2025 Special Needs Trust” (the Trust), a copy of which is attached to the Special Needs Petition. (SNP, Exh. B.) Ellen is the proposed beneficiary of the Trust, which will be funded with the proceeds of the settlement at issue. (SNP at p. 2.)

Mark explains in the Special Needs Petition that Ellen is an adult who resides in Santa Ana, California. (SNP at p. 2.) Ellen is unmarried and has a disabling condition because of a developmental disability. (Ibid.) Ellen’s diagnoses include autistic disorder, bipolar II, attention deficit disorder, mental impairment, anxiety, depression and mild cerebral palsy, and her cognitive functioning is significantly impaired which adversely affects her ability to live independently and be employed. (Ibid.)

Ellen is eligible to, and does, receive public benefits under the Supplemental Security Income (SSI) program, which provides a modest monthly cash payment for food and shelter to persons who are both disabled as defined by federal law, and meet certain income and resource restrictions. (SNP at pp. 2-3.) Mark asserts that an unmarried individual with a qualifying disability is eligible for SSI if that person’s resources do not exceed $2,000 in any single calendar month. (SNP at p. 3.) A letter from the Social Security Administration is attached to the Special Needs Petition, showing that Ellen is the recipient of SSI. (Ibid. & Exh. A.)

Mark further asserts that Ellen is also eligible to and does receive Medi-Cal benefits to meet her basic needs. (SNP at p. 2.) These Medi-Cal benefits provide medical coverage to persons who fall within certain categories or meet medical and need-based eligibility tests, and require that the individual not have more than $2,000 in “countable assets.” (SNP at p. 3.)

Mark explains that if the proceeds of the subject settlement are provided directly to Ellen, this would eliminate Ellen’s continuing eligibility for SSI and Medi-Cal because the proceeds exceed $2,000. (SNP at p. 4.) In addition, because a benefits recipient who loses eligibility for SSI benefits is no longer “categorically eligible” for Medi-Cal, an outright distribution of the proceeds will disqualify Ellen from SSI until she has spent the proceeds down to below $2,000. (Ibid.) Mark asserts that the only way to preserve Ellen’s eligibility for SSI and the assets is to direct the assets to the Trust, which Mark contends is recognized under federal law in as a “safe harbor” trust. (Ibid.) Mark states that without the Trust, Elle’s special needs for supportive services, supplemental medical services, and other palliative care are unlikely to be met. (Ibid.)

Mark also asserts that Ellen has a long life expectancy. (SNP at p. 4.) During Ellen’s adult life, she has required varying levels of care and residential housing to meet her needs, and Ellen’s annual medications and medical provider bills significantly exceed the amount covered by her Medi-Cal insurance and are expected to rise as she gets older. (Ibid.) Mark states that funds will also be needed to pay for conservator or trustee fees, a case manager, an investment advisor, tax preparation, court accountings and investigations, clothes, recreation, telephone and internet access. (Ibid.)

Mark requests an order authorizing the proceeds from the settlement to be paid to the Trustee of the Trust, and requiring that Mark sign the Trust as grantor and trustee, and Ellen’s conservator. (SNP at p. 5.) Mark also requests that the court approve and direct the Trustee to pay the amount of $5,405 to Merhab, Robinson & Clarkson, Law Corporation, for the legal services rendered by Merhab, Robinson & Clarkson Law Group (MRC) to Ellen as further described above. (SNP at pp. 2 & 13.)

Analysis:

As noted in the Order described above, the requirement that a court approve any proposed compromise of a claim of any person described in Code of Civil Procedure section 372, subdivision (a)(3), “exist[s] to protect the best interests of” that individual. (Pearson v. Superior Court (2012) 202 Cal.App.4th 1333, 1338.)

“A petition for court approval of a compromise or covenant not to sue under Code of Civil Procedure section 372 must comply with rules 7.950 or 7.950.5, 7.951, and 7.952.” (Cal. Rules of Court, rule 3.1384(a).) The petition must “be verified by the petitioner and must contain a full disclosure of all information that has any bearing on the reasonableness of the compromise, covenant, settlement, or disposition. Except as provided in rule 7.950.5, the petition must be submitted on a completed Petition for Approval of Compromise of Claim or Action or Disposition of Proceeds of Judgment for Minor or Person With a Disability (form MC-350).” (Cal. Rules of Court, rule 7.950.)

The Approval Petition is verified by Mark and is submitted on the approved form. The Approval Petition also discloses the information described in California Rules of Court, rule 7.951(1) through (5). As to the information required by rule 7.951(6), the court finds that the Approval Petition substantially discloses the terms of the agreement between petitioner and his attorneys. For these reasons, the court finds the Approval Petition to be procedurally appropriate

The court has reviewed the Approval Petition and its attached documentation further described above, and the information appearing in the supplemental brief. The supplemental brief sufficiently addresses the court’s concerns and questions as further discussed in the Order set forth above, in regard to the reasonableness of the settlement, and the apportionment described in the Approval Petition.

The court finds that the $999,996 settlement made with all defendants in this matter, including the amount to be paid on Ellen’s behalf as further discussed above, is both reasonable and appropriate, and in Ellen’s best interests. The court further finds that the attorneys’ fees claimed by MRC to prepare the Trust and the Special Needs Petition ($5,405), and that the hourly rates of attorneys Gee and Russell described above, are both reasonable and appropriate under the circumstances present here.

Further, the court finds, based on the available information and evidence presented in the subject petitions, that Ellen has a disability that substantially impairs her ability to provide for his own care or custody and constitutes a substantial handicap, and that Ellen is likely to have special needs that will not be met without the Trust. The amount to be paid to the Trust as further discussed herein does not exceed the amount that appears reasonably necessary to meet the special needs of Ellen.

Probate Code section 3611 requires that notice of the time and place of the hearing on the Special Needs Petition, and a copy of that petition, be mailed to the State Director of Health Care Services, the Director of State Hospitals, and the Director of Developmental Services at the offices of each director in Sacramento. (Prob. Code, § 3611, subd. (c).) Information appearing the Special Needs Petition, and the proof of service of that petition, is sufficient to show compliance with this statute.

The court has also reviewed the terms of the Trust, a copy of which is attached to both the Approval Petition and the Special Needs Petition. The court finds that the Trust satisfies the requirements of Probate Code section 3604.

For all reasons discussed above, the court will grant the Approval Petition and the Special Needs Petition, and order that the balance of the proceeds of the subject settlement ($999,996) be paid or transferred to the trustee of the Trust as further discussed herein, which shall be subject to the continuing jurisdiction of the Court under Probate Code section 15000 et seq. All statutory liens in favor of the State Department of Health Care Services, the State Department of State Hospitals, and the State Department of Developmental Services, or any county or city and county in this state shall first be satisfied.

Further, the court will order that Mark shall execute the Trust, that Mark shall serve as the initial Trustee of the Trust, with bond set in the amount of $1,129,597, and that the Trustee named herein shall pay the amount of $5,405 to MRC, for legal services rendered as further discussed herein.

The Special Needs Petition also requests that the court authorize the Trustee to purchase mutual funds and United States government bonds with maturity dates later than 5 years, which petitioner asserts is not authorized under Probate Code section 2574. Based on the information presented in the Special Needs Petition with respect to the proposed purchase of mutual funds and United States government bonds with maturity dates of more than 5 years, the proposed transactions appear fair and feasible for the purpose of providing diversification and higher total returns, with minimal risk. (See SNP at pp. 9-10.) For these reasons, the court will grant the request and authorize the transactions proposed in the Special Needs Petition.

The court has reviewed each of the proposed orders submitted by petitioner on August 13, 2025. The court intends to sign the proposed order granting the Special Needs Petition. The court does not intend to sign the proposed order granting the Approval Petition, which includes an incorrect hearing date. Petitioner shall submit a corrected proposed order granting the Approval Petition which reflects the correct hearing date and otherwise conforms to the court’s ruling herein.

Mark or his counsel shall appear at the hearing on the subject petitions and be prepared to discuss any matters remaining for the court at this time.