Matter of April Massey

Case Number

23CV04215

Case Type

Hearing Date / Time

Fri, 12/15/2023 - 10:00

Nature of Proceedings

Motion: Approval

Tentative Ruling

The petition is granted.

Background:

April Massey is currently 21 years old, has no minor children, and is not married. Massey is employed earning approximately $3,333.33 per month and does not have any court-ordered child support obligations. In 2004, when she was an infant, an action for the wrongful death was settled on her behalf by her mother, resulting in the sum of $301,780.00 being paid toward a structured settlement for her benefit. The settlement was funded by an annuity obtained from Brighthouse Life Insurance Company. As of the current time, the remaining payments from the structured settlement include semi-annual payments of $15,000 through February 1, 2025 and guaranteed lump sum payments including: (1) $25,000.00 on April 19, 2023; $50,000.00 on April 19, 2026; and $315,267.00 on April 19, 2032.The settlement was not for purposes of paying for future medical care or treatment, the payments were solely monetary in nature, and they were not intended to provide for necessary living expenses.

Massey currently seeks to transfer to petitioner Peachtree Settlement Funding, LLC (“Peachtree”) one lump sum of $50,000.00 due on April 19, 2026, and one lump sum of $315,267.00 due on April 19, 2032, in exchange for $166,525.00. The future payment has a discounted present value equal to $251,442.83, which value was calculated by applying a discount rate of 5% utilized by the IRS to value annuities in probate proceedings. The purchase price was calculated using a discount rate of 11.03%; in receiving the cash payment Ms. Massey will be paying the equivalent of an interest rate of 11.03% per year.  Ms. Massey is not being charged any fee for expenses. She was provided with and executed the California Disclosure Statement

Massey has completed two previous transactions with petitioner Peachtree. On May 26, 2022, in Santa Barbara Superior Court Case No. 22CV01404, Massey transferred five semiannual payment of $15,000.00 each, commencing August 1, 2022, through and including August 1, 2024, and one lump sum payment of $25,000.00 due on April 19, 2023, to Peachtree, in exchange for $80,000.00. On March 13, 2023, in Santa Barbara Superior Court Case No. 23CV00199, Massey transferred one payment of $100,000.00, commencing April 19, 2029, to Peachtree, in exchange for $45,000.00. She has not attempted any transactions to transfer her structured settlement payments which were denied by the court, dismissed, or withdrawn prior to a decision on the merits, within the last 5 years.

Massey declares that she is currently experiencing a financial hardship and intends to use the money she obtains from this transfer to pay for her expenses for her upcoming enrollment in graduate school. Over the summer, Massey experienced some medical issues and needed to pay for treatment and surgery out of pocket, which drained her personal funds and savings. Massey attempted to apply for federal student loans to pay for graduate school but was not approved. She needs the funds to pay for application fees and tuition. She will also need funds to pay for housing and relocation expenses. Massey does not have any other assets or credit resources to finance these needs.

Massey acknowledges that she was advised of her right to obtain independent legal or financial advice regarding the proposed transaction and has waived her right to do so. She has authenticated a copy of the waiver of the right to obtain such advice, which she executed. She declares that she understands the terms of the transfer agreement, including the terms set forth in the disclosure statement. She does not wish to exercise her right to cancel the agreement.

Analysis:

The transfer of structured settlement payments is authorized in California provided the transfer is first approved by the court.  Insurance Code Section 10139.5(a) provides:

“A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order based on express written findings by the court that:

“(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, in writing, the opportunity to receive that advice.

“(3)  The transferee has complied with the notification requirements pursuant to paragraph (2) of subdivision (f), 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 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 court finds that the transfer of the structured settlement payment rights is fair and reasonable and in the best interest of Massey.

In granting the petition, the court finds that the transfer complies with the requirements of Insurance Code section 10139.5 and other applicable laws, and that Massey understands the terms of the agreement. She has received the disclosure statement and declares that she understands the terms of the transfer agreement, including those set forth in the disclosure statement, which include the discounted present value of the payment she is seeking to transfer, and the equivalent interest rate she would be paying if the transfer payment was a loan. Massey was advised in writing to seek independent professional advice with respect to the transaction, but states that she has waived her right to do so.

The court also finds that the sale does not contravene any applicable law or order of any court or governmental authority.  Pursuant to Insurance Code Section 10139.5(i), the court shall retain continuing jurisdiction to monitor the implementation of the transfer agreement, if necessary.