Matter of Brian McAdams

Case Number

25CV01390

Case Type

Hearing Date / Time

Fri, 06/13/2025 - 10:00

Nature of Proceedings

Petition for Approval for Transfer of Payment Rights

Tentative Ruling

For the reasons set forth herein, the verified petition of J.G. Wentworth Originations, LLC, for approval of transfer of payment rights is continued to August 1, 2025. On or before July 18, 2025, petitioner shall file and serve a supplemental brief, if any, setting forth each of the matters further described herein, in compliance with this ruling. Petitioner shall also give notice of the court’s ruling herein.

Background:

On March 4, 2025, petitioner J.G. Wentworth Originations, LLC (Petitioner) filed a verified petition pursuant to Insurance Code section 10134 et seq., for approval of the transfer of certain structured settlement payment rights of Brian McAdams (McAdams). As alleged in the petition:

McAdams entered into a settlement in connection with a personal injury claim which provides for periodic structured settlement payments of $270,000 on August 1, 2037, and of $300,000.00 on August 1, 2042, with no future payments. (Pet., ¶¶ 3-4; p. 4, ll. 7-8; Section VI, ¶ 2.) Symetra Life Insurance Company (the Symetra Life) issued an insurance contract used to fund the structured settlement payments.  (Pet., ¶ 5.) Symetra Assigned Benefits Service Company (Symetra Benefits) is the "structured settlement obligor” with respect to the structured settlement payments. (Pet., ¶ 6.)

McAdams has agreed to sell, and Petitioner has agreed to purchase, the structured settlement payments described above pursuant to a “California Purchase Contract” (the Purchase Contract), a copy of which is attached to the petition as exhibit A. (Pet., ¶ 7 & Exh. A.) Petitioner seeks the court’s approval to effectuate the transfer of the payments set forth in the Purchase Contract. (Pet., ¶ 9.)

On March 7, 2025, Petitioner filed a notice of the hearing on the Petition (the Notice).

On March 28, 2025, Petitioner filed errata to section III, paragraph 10, and section VI, paragraph 10, of the petition, an amended exhibit A to the petition, and a declaration of McAdams (the McAdams Declaration) in support of the petition.

Also on March 28, 2025, Petitioner filed a proof of service (the POS) of the Notice, the petition, the McAdams Declaration, the amended exhibit A to the petition, and the errata. In the POS, Petitioner states, under penalty of perjury, that these documents were served on McAdams, Symetra Life, and Symetra Benefits by regular and overnight mail on March 28, 2025.

On May 2, 2025, Petitioner filed an amended exhibit D to the petition which consists of an affidavit of McAdams (the Affidavit).

Court records reflect that no opposition to the petition has been filed.

Analysis:

For all reasons discussed herein, the court will continue the hearing on the present petition to permit Petitioner to submit supplemental briefing sufficiently addressing the matters further discussed below.

“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 the 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.” (Ins. Code, § 10139.5, subd. (a); see also 321 Henderson Receivables Origination LLC v. Sioteco (2009) 173 Cal.App.4th 1059, 1066 (321 Henderson).) (Note: Undesignated statutory references shall be to the Insurance Code unless otherwise stated.)

Generally, the court approval process governed by Insurance Code section 10136 et seq. (the Structured Settlement Transfer Act or Act) “requires: (1) disclosures to the transferor of the structured settlement payment rights, (2) notice to the Attorney General, and (3) court approval[,]” and requires the filing of a petition “in the county in which the transferor resides for approval of the transfer, attaching copies of the petition, the transfer agreement, the disclosure form, the annuity contract, any qualified assignment agreement and the structured settlement agreement, a list of the names and ages of the transferor’s dependents, notice of the court hearing date, and notice of a right to respond....After consideration of the petition and its attached documents, any written support or opposition by interested parties, and any evidence presented at the hearing, the court grants or denies the petition.” (321 Henderson, supra, 173 Cal.App.4th at pp. 1065-1066.) To grant the petition for approval, the court must make the express findings set forth above. (Id. At p. 1066.) 

The express written findings required to grant the present petition must be supported by facts and evidence appearing in the record. From the present record, it is unclear which facts or evidence support each of the factors set forth above, why any particular facts or evidence are sufficient to permit the court to make each of the findings described above, and where these matters are located in the record. Moreover, based on the manner in which Petitioner has presented the petition and the ostensibly supporting documents including the McAdams Declaration and Affidavit, the court is forced to expend scarce judicial resources to search the record for relevant facts and evidence and to determine which of these facts and evidence may support each of the factors described above.

By way of example, the court must find that the proposed transfer is in the best interest of McAdams. Petitioner fails to explain which facts or evidence support this finding, and why.

Furthermore, assuming without deciding that there exists evidence to support an express finding that the proposed transfer is in the best interest of McAdams, it is unclear where in the record this evidence appears. By way of example, the petition includes allegations regarding McAdams’ age, employment status, and conclusory allegations regarding a general “hardship situation” faced by McAdams. (Pet. at p. 4, ll. 10-18; p. 6, l. 27; p. 8, ll. 3-4 & 22 [generally stating that McAdams if facing a “hardship situation”].) The petition also includes general allegations regarding the nature of the structured settlement payments which are the subject of the Purchase Contract. (Pet. at p. 4, ll. 7-9 & p. 7, ll. 6-24.)

Additional facts are set forth in the separately filed McAdams Declaration, including with respect to McAdams’ retirement, money collected by McAdams from “SSI”, the original structured settlement agreement, and the manner in which McAdams intends to use proceeds from the proposed transaction. (McAdams Decl., ¶¶4 & 8.) These facts do not appear in the petition.

The record also includes what appears to be contradictory information. For example, though McAdam states in the McAdams Declaration that the original structured settlement is attached as exhibit D to the Petition, that settlement is not attached to the petition as exhibit D. (McAdams Decl., ¶ 4; Pet. Exh. D [single page stating “to be provided”].) In addition, McAdams asserts in the McAdams Declaration that if the proposed transaction is approved, McAdams will still collect annuity payments of $210,000 in 2027, and $240,000 in 2032. (McAdams Decl., ¶ 11.) In the petition, Petitioner asserts that there are no future payments to be made under the original settlement agreement. (Pet., ¶ 2.) Absent further information, the court is unable to resolve these contradictory assertions which, on their face, appear to be relevant to the issue of whether the proposed transfer is in McAdam’s best interest.

The Affidavit includes additional facts which also do not appear in the petition or the McAdams Declaration, including with respect to the terms of the original settlement agreement, the tort action giving rise to the structured settlement payments, whether there exists a conservator, guardian, or trust agreement, and the interested parties, among other things.

Also absent from the record is sufficient reasoned argument showing, with appropriate citations to the record, why the “California Disclosure Statement” attached to the petition as exhibit B complies with section 10136, or why the Purchase Contract complies with the requirements of sections 10136 and 10138, as required by subdivision (a)(3) of section 10139.5.

The examples provided above are intended to be illustrative but not exhaustive. For all reasons discussed above, the court is presently unable to make the express written findings required under section 10139.5 without expending significantly more judicial resources than would otherwise be required under similar circumstances. Therefore, the court will continue the hearing on the petition to permit Petitioner to file and serve a supplemental brief explaining, on a point-by-point basis with sufficient reasoned argument and specific citations to the record, why each factor set forth in subdivision (a) of section 10139.5 has been satisfied here. All references to any exhibits appearing in any supplemental brief that may be filed by Petitioner, including the petition, its exhibits, or declarations, “must reference the number or letter of the exhibit, the specific page, and, if applicable, the paragraph or line number.” (Cal. Rules of Court, rule 3.1113(k).) The evidence, information, and arguments presented in Petitioner’s supplemental brief must be sufficient to permit the court to make the express written findings described above.

The court will also require Petitioner to serve its supplemental brief, if any, on all interested parties as that term is defined in subdivision (g) of section 10134, and to give appropriate notice of the court’s ruling herein.