Wash. Square Fin., LLC v. RSL Funding, LLC

Decision Date30 January 2014
Docket NumberNos. 14–12–00683–CV, 14–12–00702–CV.,s. 14–12–00683–CV, 14–12–00702–CV.
Citation418 S.W.3d 761
PartiesWASHINGTON SQUARE FINANCIAL, LLC d/b/a Imperial Structured Settlements, Appellant/Cross–Appellee, v. RSL FUNDING, LLC, Appellee/Cross–Appellant.
CourtTexas Court of Appeals

OPINION TEXT STARTS HERE

Ina M. Berlingeri, Jesus Cuza, Fort Lauderdale, FL, L. Bradley Hancock, Houston, for appellant.

John R. Craddock, Houston, for appellee.

Panel consists of Justices CHRISTOPHER and DONOVAN.

OPINION

TRACY CHRISTOPHER, Justice.

Personal-injury claims are frequently resolved through structured settlements in which the injured party releases his claim in exchange for the right to a stream of payments, often funded through an annuity. Factoring companies offer to pay the claimant a discounted lump sum in exchange for all or a portion of this income stream. To help protect claimants from the potential for overreaching by such companies, the Texas legislature enacted the Texas Structured Settlement Protection Act (“the Act”), which provides that no transfer of the right to structured-settlement payments shall be effective unless it has been approved in advance in a final court order based on certain express findings. SeeTex. Civ. Prac. & Rem.Code § 141.004 (West 2011).

Here, factoring company Washington Square Financial, LLC d/b/a Imperial Structured Settlements (Imperial) sued rival factoring company RSL Funding, LLC (RSL) for tortious interference with a transfer agreement that had not yet been approved in a final court order. In the central issue before us, we conclude that because the transfer agreement had not been approved by the court, its enforcement would violate public policy, and thus, the trial court did not err in granting summary judgment against the plaintiff factoring company on its tortious-interference claim.

Although the RSL defeated Imperial's tortious-interference claim, it argues on appeal that the trial court erred in denying its own counterclaim for declaratory judgment and in failing to award it attorney's fees available under the Uniform Declaratory Judgments Act. We conclude that in requesting a declaration that its own transfer agreement was legally enforceable, RSL did not seek affirmative relief but merely raised defenses to the plaintiff's tortious-interference claim. Because the summary judgment eliminating that claim effectively granted RSL all the relief to which it was entitled and the trial court did not abuse its discretion in declining to award attorney's fees, we affirm the judgment of the court below.

I. Factual and Procedural History

As a result of the settlement of a personal-injury claim, Bryce Hogan agreed to a structured settlement under which an annuity company was to pay him 360 monthly payments of $2,336.00 beginning in February 2008. In July 2010, Hogan agreed to sell his right to a portion of these payments to Imperial. Hogan and Imperial memorialized the proposed transfer by executing an agreement titled “Absolute Sale and Security Agreement” (“the transfer agreement”). Under the agreement's terms, Imperial agreed to pay Hogan $26,507.25 in exchange for the right to receive 120 payments of $500.00. The transfer agreement was to take effect on the date Hogan signed it “or on such later date prescribed by applicable law.” The transfer agreement also provided that Imperial's “obligation to complete this transaction” and to pay Hogan was conditioned upon, among other things, Hogan's receipt of a final, non-appealable court order authorizing the transfer of the payments to Imperial. Under the transfer agreement, Hogan had the right to cancel, “without penalty or further obligation,” within the first three business days after the agreement was signed. The parties also agreed that the transfer agreement was governed by and interpreted in accordance with Texas law, and that the agreement incorporatedthe contents of a disclosure statement required by the Act. To comply with the Act's requirement that any transfer of structured-settlement-payment rights must be approved in advance by court order, Imperial filed the transfer agreement in court along with an application for court approval of the transfer and notice of a hearing.

At some point, Imperial's competitor RSL learned of the agreement by reviewing court records. Brian Heath, a senior account executive of RSL, offered Hogan $3,500.00 more for the same payments that Hogan had agreed to sell to Imperial. Hogan did not immediately accept the offer; instead, he informed Imperial about Heath's visit and forwarded to Imperial the documentation Heath had provided to him. That same day, Imperial sent RSL a letter directing it to cease and desist from tortiously interfering with Imperial's contract with Hogan.

Hogan, however, was still interested in RSL's offer. The week after Imperial sent RSL a cease-and-desist letter, Hogan called Heath to learn more about RSL's offer. After additional discussions, RSL offered Hogan $32,000.00 for the payments—$5,692.75 more than Imperial had offered. Hogan authorized RSL to send a letter notifying Imperial that Hogan no longer wished to sell his structured-settlement payments to Imperial and that he was canceling the transfer. At the same time, Hogan and RSL entered into a sales agreement in which Hogan proposed to sell to RSL the same rights to structured-settlement payments that Hogan had previously proposed to sell to Imperial. According to RSL, Imperial attempted to “bully” Hogan into changing his mind by disparaging RSL and by claiming that Hogan could be held legally liable for canceling his agreement with Imperial. Hogan did not change his mind, however, and the court approved the transfer to RSL on September 13, 2010.

In the meantime, Imperial sued RSL for tortious interference with an existing contract, citing Imperial's transfer agreement with Hogan. Imperial also sought temporary and permanent injunctive relief against RSL from “ongoing and predatory tactics and/or approaching any other of Imperial's customers or soliciting business from them.” In an amended petition, Imperial asked the trial court to declare that court approval is a condition precedent to a valid transfer; that a transfer agreement pending court approval is subject to tortious interference; and that no provision under the Act excuses tortious interference.

RSL answered and asserted counterclaims for temporary and permanent injunctive relief to prevent Imperial from interfering with RSL's contract with Hogan, as well as various declarations relating to the respective rights of parties involved in the transfer of structured-settlement rights.1

In the interest of judicial economy, the trial court directed the parties to file cross-motions for summary judgment to address the issue of whether Imperial's transfer agreement with Hogan was the type of contract that could support a tortious-interference cause of action. In response, Imperial filed a motion for partial summary judgment on its tortious-interference and declaratory-judgment claims, and RSL filed a cross-motion for summary judgment on its counterclaims for declaratory relief.

On June 14, 2011, the trial court denied Imperial's motion and granted RSL's cross-motion, effectively agreeing with RSL that Imperial's transfer agreement with Hogan, which had not yet been approved by a court, was not the type of contract that would support a tortious-interference claim. With one exception not relevant to this appeal, all of RSL's requests for declaratory relief that were raised in its live pleading were also included in its motion for summary judgment and impliedly included in the trial court's order granting the motion.2 The order, however, did not dispose of RSL's requests for injunctive relief or its request for attorney's fees under the Uniform Declaratory Judgments Act (“the UDJA”).

After this ruling, RSL filed a motion asking the trial court to render final judgment (a) in accordance with the court's earlier ruling on cross-motions for summary judgment, (b) on RSL's claims for permanent injunctive relief, and (c) on RSL's claim for attorney's fees and costs under the UDJA. The trial court denied the motion.

Imperial then moved for final summary judgment. In its motion, Imperial acknowledged that the earlier summary-judgment ruling disposed of RSL's claims for declaratory relief, and it asked the trial court to render judgment denying RSL's requests for injunctive relief, attorney's fees, and costs. In response, RSL represented that it sought several declarations that Imperial's agreements with its customers are unenforceable encumbrances under the Act. The declarations described in RSL's summary-judgment response differ from those in RSL's live pleadings and on which the trial court had already ruled.

On June 29, 2012, the trial court granted Imperial's motion and signed a final judgment denying RSL injunctive relief, attorney's fees, and costs. In the judgment, the trial court further stated that with the exception of the declaratory relief that had already been impliedly granted, RSL's requests for declaratory relief addressed matters that RSL lacked standing to raise, or for which no case or controversy was presented, or that were moot. Both parties have appealed.

II. Issues Presented

Imperial appeals the trial court's June 14, 2011 order denying its motion for partial summary judgment and granting RSL's cross-motion for summary judgment on Imperial's claims relating to tortious-interference. In its first issue, Imperial contends that, as a matter of law, transfer agreements subject to the Act can support a claim for tortious interference regardless of whether the agreement has been approved by the court. In its second issue, Imperial argues that the trial court erred in denying Imperial's motion for summary judgment because (a) there is no genuine issue of material fact on the elements of the claim, (b) RSL was not justified in interfering with the...

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