Matter of Isabella Pagan

Case Number

24PR00178

Case Type

Hearing Date / Time

Mon, 04/22/2024 - 08:30

Nature of Proceedings

Minor's Compromise

Tentative Ruling

Probate Notes:

Appearances required, including the minor. (CRC 7.952.)

The following must be submitted:

Further Briefing re: viability of “inchoate wrongful death”.  Inchoate wrongful death is a nuanced claim that appears to be in the seminal stages of legal academic development. There are no definitions for the term in any legal treatise, dictionary, or caselaw.  A Westlaw search reveals only 4 cases nationwide have ever used the term, one case being the California case of Wilson v. John Crane, Inc. (2000) 81 Cal.App.4th 847, which only used the term to describe an outcome summarized for a citation to Aetna Casualty & Surety Co. v. Superior Court (1980) 114 Cal.App.3d 49, which did not use the term in its opinion.  (Wilson v. John Crane, Inc. at p. 861.)

Therefore, Petitioner must brief the following questions the Court will have at the hearing:

1. How are damages calculated which stem from a speculative future event that is not legally likely to occur?

2. What authority can this Court rely upon to allow the compromise of a claim held by a minor, when the damages to that minor are currently unknowable?

New proposal for structured settlement, or further briefing.  The proposed settlement violates Local Rule 1735, and includes a payout date far past the minor’s 18^th birthday. It is the policy of this court to place funds in a blocked account.  (Local Rule 1735—“Absent a showing of good cause, it is the policy of the Court to order all funds disbursed to a minor be deposited into a blocked account.”)

While the petition is marked at item 18b(3) as a request that the balance “be invested in a single-premium deferred annuity, …” what in fact is described in attachment 18b(3) is not a single-premium deferred annuity, but rather a structured settlement annuity. 

For many courts, a structured settlement annuity may be the preferred option when the remaining balance is a significant amount, and where sufficient time remains before the minor reaches the age of majority so that the annuity is a prudent investment. (See, e.g., Urbatsch & Hall, Settling a Minor’s Lawsuit: A Procedural and Practical Primer (July, 2012), retrieved March 22, 2023 from https://www.plaintiffmagazine.com/recent-issues/item/settling-a-minor-s-lawsuit-a-procedural-and-practical-primer.)  

On the other hand, there are significant concerns with such a disposition of the balance. The funds under consideration belong to the minor. They do not belong to the parent, the guardian ad litem, or the court. While the minor may currently lack legal capacity to control the property, it still belongs to the minor. “Juveniles are entitled ‘to acquire and hold property, real and personal’ (Estate of Yano (1922) 188 Cal. 645, 649); and ‘a minor child's property is his own . . . not that of his parents.’ (Emery v. Emery (1955) 45 Cal.2d 421, 432; see also Civ.Code, §202.” (In re Scott K. (1979) 24 Cal.3d 395, 405.) The Civil Code §202 cited in Scott K. is now Family Code §7502 (“The parent, as such, has no control over the property of the child.”) 

While the Court understands the desire of the parent or guardian ad litem to maximize the return on investment, or to prevent an immature 18-year-old from squandering funds, those considerations are subservient to the autonomy that the claimant/minor will have once the age of majority is reached. When viewed as a whole, the statutory scheme for managing property belonging to a minor is to protect the property during minority, and to give it to the owner upon attainment of majority. That legislative intent is made clear in Sections 3612 and 3613, where the legislature limited the court’s jurisdiction to make orders controlling the property of a person over the age of 18 who is not disabled.   

Minor’s Compromise petitions are both required and governed by §3600, et seq., of the Probate Code. Section 3602 governs the disposition of what remains after the Court orders the payment of expenses, costs, and fees (Prob. Code §3601.) As with all protective proceedings, the goal is the best interest of the person to be protected, but the protection of those best interests must be done within the structure provided by the Probate Code. 

In the case of money or property paid or delivered pursuant to compromise or judgment for minor or disabled person, the code provides several options. Each of those options makes the minor’s property available to the minor upon the age of majority.

The “ single-premium deferred annuity” is allowed by statuted. (Prob. Code §3611(b).) However, a “Single-Premium Deferred Annuity,” in this context, is defined by statute. Probate Code §1446 provides:  

“’Single-premium deferred annuity’ means an annuity offered by an admitted life insurer for the payment of a one-time lump-sum premium and for which the insurer neither assesses any initial charges or administrative fees against the premium paid nor exacts or assesses any penalty for withdrawal of any funds by the annuitant after a period of five years.” 

While Section 1446 does not specify that the annuitant has access to the funds at the age of 18, the practical effect is not significantly different. It is seldom financially advantageous to purchase an annuity if the payout is fewer than five years away, making annuities generally a less desirable alternative for a minor over the age of 13. The result would be that the minor has full access to those funds at age 18.  

Furthermore, the annuity allowed under Section 3611(b) is far less restrictive than the typical structured settlement annuity (SSA). The SSA simply does not allow the annuitant access to the funds except as allowed by the structure imposed in the annuity contract. That’s the situation that leads to television commercials showing people yelling “It’s my money, and I want it NOW.” The danger of a young adult selling a structured annuity for pennies on the dollar is substantial, because that young adult’s parents or guardian ad litem decided years ago to restrict the annuitant’s access to their own money.  

Attorney’s Fees.  ¶13 instructs: “If fees are requested, attach as Attachment 13a a declaration from the attorney explaining the basis for the request, including a discussion of applicable factors listed in rule 7.955(b) of the Cal. Rules of Court. Include a copy of any written attorney fee agreement in Attachment 13a.”  There is no written agreement on file for the minors in this case, and judging from the 40% contingency fee in father’s case, the fee is too large for a minor’s compromise.