The payee changed his mind about selling his settlement payment rights, and the factoring company provided the court with no proof of service on interesting parties and included a prohibited provision in its proposed contract, so a California court recently issued a ruling rejecting a proposed transfer of structured settlement payment rights.
Orange County, California, Superior Court Judge Robert J. Moss issued a May 18, 2018 tentative order denying the petition for court approval, under the California Structured Settlement Protection Act, of a transfer of structured settlement payment rights by a payee, C. Bollinger, to factoring company J.G. Wentworth Originations, LLC.
Judge Moss said that the payee “informs court that he’s changed his mind and wants proceedings to stop.”
Judge Moss continued with a tentative ruling, determining as follows:
- J.G. Wentworth’s “petition suffers from several service defects.”
- While the court had been provided with proof of service of the notice of hearing and petition on only the Orange County Department of Child Support Services, J.G. Wentworth provided “no proof of service on any other interested parties, including the payment obligor BHG Structured Settlement, Inc. (BHG) and the payee . . . .”
- In addition, “[t]here is also no proof of service of the notice and petition on the California Attorney General, as required under [California] Ins. Code, § 10139(a), and no proof of service of the requisite notice to payee’s attorney of record at the time the structured settlement, as required under [California] Ins. Code, § 10139.5(f)(2)(L).”
- In addition, said Judge Moss, J.G. Wentworth’s proposed transfer agreement “contains a prohibited provision at section 4G on page 6, where it reads, ‘Under no circumstances will We [the purchaser] be liable for any consequential damages.'” This is because a provision of the California Structured Settlement Protection Act, California Insurance Code § 10138(a)(2) “prohibits the inclusion of any provision that ‘requires the seller to . . . hold harmless the buyer, in any claim or action brought by the seller or on the seller’s behalf contesting the sale for any reason,’ and Ins. Code, § 10136(d) provides that the transfer agreement may not violate Ins. Code, § 10138.”
In addition to the above reasons, Judge Moss also said that the response to the petition by the annuity issuer, Berkshire Hathaway Life Insurance Company of Nebraska’s (BHLN), “shows the payee would be able to obtain a better deal through the hardship exchange program offered by BHG and BHLN’s affiliate . . . .”
The case is captioned In Re: C. Bollinger, Case No. 30-2018-00985797-CU-PT-CJC, Superior Court, Orange County, Calif. (Calif. Super. Ct. May 18, 2018) (Minute Order)