RSL Funding v. AlfordAnnotate this Case
In 1994, defendant Felicia Alford, then a minor, settled a personal injury claim against certain insureds of defendant State Farm Fire. Under the settlement, State Farm Life was to deliver an annuity providing for guaranteed payments. In July 2012, Alford entered into a contract with RSL Funding, LLC under which she received $30,000 in exchange for a $50,000 portion of the payment due on August 11, 2016. RSL assigned its payment to Extended Holdings, Ltd. (EHL). The trial court approved the transfer, and State Farm did not contest the transfer. A year later, Alford entered into a second contract with RSL in which Alford agreed to assign to RSL $25,000 of the $100,000 payment due on August 11, 2016, and $25,000 of the payment of $151,558.80 due on August 11, 2021, in exchange for a current payment of $22,500. RSL filed a petition for approval of the transfer. State Farm filed an opposition to the petition, asserting, among other grounds, that: (1) the proposed transfer would violate a California Ins. Code, sec. 10139.5, subd. (e)(3)), which provided that an annuity issuer and settlement obligor may not be required to divide payments; and (2) the proposed transfer would materially increase State Farm’s burdens and risks. The trial court approved the transfer petition, and State Farm appealed. After review, the Court of Appeal concluded that the trial court’s order indeed violated section 10139.5(e), and State Farm did not forfeit its right to oppose that order. The Court reversed the trial court and remanded for further proceedings.