In The Matter of DRB Capital LLC

Case Number

25CV04648

Case Type

Hearing Date / Time

Wed, 09/17/2025 - 10:00

Nature of Proceedings

First Amended Verified Petition for Approval of Structured Settlement Payment Rights

Tentative Ruling

For Petitioner DRB Capital, LLC: Juan C. Lozano, The Law Office Of Juan C. Lozano

                                   

For Real Party In Interest/Transferor Fallon Kelly a/k/a F.K: No appearance

RULING

For the reasons set forth herein, the verified first amended petition of DRB Capital, LLC, for approval of structured settlement payment rights is continued to November 19, 2025. On or before November 5, 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.

Background

The first amended verified petition (FAP) of DRB Capital, LLC, (DRB) for approval of structured settlement payment rights, filed on August 18, 2025, is the operative pleading. As alleged in the FAP:

Real party in interest Fallon Kelly a/k/a F.K. (Kelly) is an adult resident of the County of Santa Barbara who is over the age of 18. (FAP, ¶ 2.) Kelly entered into an agreement for the settlement of a claim for damages arising in connection with a tort claim. (FAP, ¶ 6.) The settlement provides for certain payments including those which are the subject of the FAP. (FAP, ¶ 8.)

Prudential Assigned Settlement Services Corporation (the Obligor) is an insurance company and the “Structured Settlement Obligor” as defined in Insurance Code section 10134, subdivision (k), which has a continuing periodic payment obligation to Kelly under the structured settlement agreement or a qualified assignment agreement. (FAP, ¶ 3.) Prudential Insurance Company Of America (the Annuity Issuer) issued an insurance contract used to fund the structured settlement payment obligations of the Obligor. (FAP, ¶ 4.) The underlying structured settlement that established the annuity at issue in the present case contained language that restricted or prohibited the right and/or power to assign the assigned payments in question. (FAP, ¶ 7.)

Kelly has agreed to sell, and DRP has agreed to purchase, certain payments as referenced within a proposed “Transfer Agreement” which “will be filed hereto.” (FAP, ¶ 9.) Upon the Court entering an order approving the “Transfer Agreement”, DRB will assign all its rights, title and interest in and to the proposed Transfer Agreement to its assignee, to be designated at the time of the hearing on the present matter. (FAP., ¶ 10.)

DRB generally alleges that the transfer complies with Insurance Code section 10134 et seq., does not contravene any statute or order, that Kelly has been advised in writing to seek independent professional advice regarding the transfer, that Kelly has either received that advice or waived the opportunity to receive the advice, that DRB has complied with notification requirements, that DRB provided Kelly with a compliant disclosure statement, that Kelly understands the terms of the transfer agreement and disclosure statement and does not wish to exercise Kelly’s right to cancel the Transfer Agreement, and that the Transfer Agreement complies with Insurance Code sections 10136, subdivision (c), and 10138. (FAP, ¶¶ 12-16.)

On August 18, 2025, the same date the FAP was filed, DRB filed a notice of the hearing on the FAP (the Notice).

The petition is unopposed.

Analysis

For all reasons discussed herein, the Court will continue the hearing on the present petition to permit DRB 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 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. The conclusory and general allegations of the FAP, which include no reference or citation to any matters in the record including the exhibits attached to the FAP, do not clearly identify or explain 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, the manner in which DRB has presented the FAP, without more, forces the Court to expend scarce judicial resources to search the record for relevant facts and evidence and to determine which may or do support each of the factors described above.

By way of example, the FAP asserts that the proposed transfer agreement “will be filed....” (FAP, ¶ 9.) It is unclear to the Court, from this allegation, whether the exhibits to the FAP includes the “Transfer Agreement” referenced in paragraph 9 of the FAP, or where among the exhibits attached to the FAP that agreement appears.

The Court must also find that the proposed transfer is in the best interest of Kelly. Wholly absent from the FAP are any facts or evidence, supported by any necessary or appropriate citations to the record, to permit the Court to conclude that the proposed transfer is in the best interests of Kelly.

Also absent from the conclusory FAP is information or evidence sufficient to show that Kelly has been advised in writing by DRB to seek independent professional advice regarding the proposed transfer; that Kelly has either received that advice or knowingly waived in writing the opportunity to receive that advice; that DRB has complied with all notice requirements; that DRB has provided Kelly with a compliant disclosure form; that Kelly understands the terms of the proposed transfer agreement or required disclosure statement; or that Kelly understands and does not wish to exercise their right to cancel the proposed transfer agreement.

The examples provided above are intended to be illustrative but not exhaustive of the deficiencies in the present petition which prevent the Court from making the express findings required under section 10139.5, and which require the Court to otherwise expend significantly more judicial resources than would otherwise be required under similar circumstances.

Though there exist sufficient grounds to deny the FAP for all reasons discussed above, the Court will instead continue the hearing on that petition to afford DRB an opportunity to file and serve a supplemental brief addressing the matters discussed herein. The supplemental brief must make a sufficient showing, on a point-by-point basis with reasoned factual and legal argument supported by specific citations to the record, why each factor set forth in subdivision (a) of section 10139.5 has been satisfied here. Further, as the Court expects that DRB’s supplemental brief will include citations or references to matters appearing in the record, including the exhibits attached to the FAP, those citations “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 supplemental brief must also include information and evidence which is sufficient to permit the Court to make the express written findings described above, including with respect to statutory notice and service requirements.

The Court will also require DRB to serve its supplemental brief, if any, on all interested parties as that term is defined in subdivision (g) of section 10134, to file proof of such service, and to give compliant notice of the Court’s ruling herein.