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321 Henderson Receivables Origination LLC v. Ramos

March 18, 2009


APPEAL from a judgment of the Superior Court of Fresno County. Aldolfo M. Corona, Judge. (Super. Ct. No. 06CECG02305).

The opinion of the court was delivered by: Ardaiz, P.J.




In this appeal from an Order Denying Petition for Approval of Transfer of Structured Settlement Payment, appellant, 321 Henderson Receivables Origination LLC (hereinafter Henderson), contends that the superior court exceeded its authority in issuing the order. For the following reasons, we reverse.*fn1


A.General Background

Henderson, an indirect subsidiary of J.G. Wentworth, LLC, is a factoring company. Factoring companies engage in the business of paying people who have received a structured settlement annuity because of a successful tort claim of a lump sum payment and, in exchange, the right to some or all of the structured settlement annuity payments is transferred to the factoring company. Henderson earns a profit, in part, by paying these persons a lump sum payment that is less than the discounted face value of the annuity payments. Partially in response to then-pending federal legislation that would provide favorable tax treatment to structured settlement transfers that were court approved, California enacted a law, the Structured Settlement Transfer Act (hereinafter SSTA), that requires: (1) disclosures to the seller of the structured settlement payment rights, (2) notice to the Attorney General, and (3) court approval. (See Ins. Code, §§ 10136 et seq.)*fn3

The court approval process requires the factoring company to file 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. (§ 10139.5, subd. (c).)

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. In order to grant the petition for approval, the court must expressly find: (1) the transfer is in the best interest of the transferor, taking into account the welfare and support of the transferor‟s dependents; (2) the transferor has been advised in writing to seek independent professional advice and either has received that advice or knowingly waived it; (3) the transferor has received the disclosure form; (4) the transfer agreement complies with sections 10136 and 10138; (5) the transfer does not contravene any applicable statute or court order; (6) the transferor reasonably understands the terms of the transfer agreement and disclosure form; and (7) the transferor understands his or her right to cancel and does not wish to do so. (§ 10139.5, subd. (a).)

The transfer agreement is effective only upon approval in a final court order. (§ 10139.5, subd. (a).) The court that approves the transfer retains "continuing jurisdiction to interpret and monitor the implementation of the transfer agreement.." (§ 10139.5, subd. (f).) A transfer that is not court approved and does not comply with the requirements of the SSTA is void. (§ 10137.)

Since the SSTA court approval requirement went into effect, California courts have approved thousands of structured settlement transfers; Henderson alone has obtained judicial approval of more than 2,000 structured settlement payment transfers throughout California. However, beginning in March of 2008, several superior court judges in Fresno County began to deny petitions for court approval of structured settlement payment transfers based upon actual or perceived misconduct on the part of factoring companies and concerns that the transfers could violate the anti-assignment provisions in the annuity contracts and underlying settlement agreements. Henderson has appealed 11 of these orders. This Court has consolidated those appeals.

B. In re Lisa Ramos Petition

On July 14, 2006, Henderson filed a petition for approval of the transfer of some but not all structured settlement payments that Ms. Ramos was to receive pursuant to an annuity issued by Monumental Life Insurance Company. The petition was approved by Judge Bruce M. Smith on or about September 7, 2006. In his minute order, Judge Smith expressly found that "[t]he petition and attachments thereto are in compliance with Cal. Ins. Code § 10134 et seq. [the SSTA]." Judge Smith‟s minute order directed Henderson to submit a formal proposed order approving the transfer.

Pursuant to the court‟s order, Henderson filed a detailed proposed stipulation and order for approval of the transfer, setting forth the terms of the parties‟ agreement as well as the disclosures provided to Ms. Ramos. In the order, the court made the express written finding that "[t]he transfer of the structured settlement payment rights is fair and reasonable and in the best interest of [Ms. Ramos]." Henderson, Ms. Ramos, the annuity company (Monumental Life), and the settlement obligor (Aegon), signed the stipulation and order, expressly consenting to the transfer of the payments under the annuity. Judge Smith signed the order on September 13, 2006.

Nearly two years later, in June 2008, Armando and Maricelda Cerroblanco, acting in propria persona, filed a petition for transfer of a settlement annuity payment of $50,000 allegedly due to Ms. Ramos on May 16, 2009 (hereinafter the Cerroblanco Petition). The Cerroblanco Petition named Henderson as the "Annuity Issuer" and was served on Henderson‟s former counsel, Mr. Ahtirski, who represented Henderson in the earlier 2006 Henderson petition. The Cerroblanco Petition was filed in the wrong county because Ms. Ramos had moved from Fresno to Tulare County. (See, § 10139.5, subd. (c)(1) [petition to be filed in county of payee‟s residence].) The Cerroblancos also improperly filed their petition under the earlier case number for the 2006 Henderson petition. The case was assigned to Judge Adolfo M. Corona.

Although the Cerroblancos mailed a copy of their petition to Henderson‟s former counsel, Henderson alleged that it did not learn of the Cerroblanco Petition until the afternoon of July 14, 2008. According to Henderson, its current counsel, Reed Smith, in the course of monitoring the status of other SSTA petitions pending before the Fresno Superior Court, ...

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