Hartford Life Ins. Co. v. Solomon

• Decision Date: 16 November 2012
• Docket Number: No. 11 C 2209.,11 C 2209.
• Citation: 910 F.Supp.2d 1075
• Parties: HARTFORD LIFE INS. CO. and Hartford Ins. Co. of Illinois, Plaintiffs, v. Deborah J. SOLOMON, in her capacity as the Independent Administrator of the Estate of David A. Solomon, 321 Henderson Receivables L.P., J.G. Wentworth Originations, LLC, J.G. Wentworth, Inc., and J.G. Wentworth Structured Settlement Funding II, LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

910 F.Supp.2d 1075

HARTFORD LIFE INS. CO. and Hartford Ins. Co. of Illinois, Plaintiffs,

v.Deborah J. SOLOMON, in her capacity as the Independent Administrator of the Estate of David A. Solomon, 321 Henderson Receivables L.P., J.G. Wentworth Originations, LLC, J.G. Wentworth, Inc., and J.G. Wentworth Structured Settlement Funding II, LLC, Defendants.

No. 11 C 2209.

United States District Court,

N.D. Illinois,

Eastern Division.

Nov. 16, 2012.

William A. Chittenden, III, Craig Michael Bargher, Jennifer Susan Stegmaier, Chittenden, Murday & Novotny, LLC, Chicago, IL, Katherine A. Scanlon, Seiger Gfeller Laurie, LLP, West Hartford, CT, for Plaintiffs.

Angelika Maria Kuehn, Law Offices of Angelika Kuehn, Oak Park, IL, Guy Delson Geleerd, Jr., Coughlin & Geleerd, LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION

JOHN F. GRADY, District Judge.

Before the court are the parties' briefs on the question of our subject-matter jurisdiction over counterclaims and cross-claims filed by interpleader defendant Deborah J. Solomon in her capacity as the independent administrator of the Estate of David A. Solomon (hereinafter, the “Estate”). For the reasons explained below, we conclude that we do not have subject-matter jurisdiction over the Estate's claims pursuant to the Rooker–Feldman doctrine. Because we cannot entertain the Estate's claims, we will exercise our discretion to dismiss this interpleader action.

BACKGROUND

In 1995, David Solomon settled a personal injury lawsuit with the defendant in that case and his insurer (interpleader plaintiff Hartford Insurance Company of Illinois (hereinafter, “Hartford Illinois”)) for an upfront payment and Hartford Illinois's promise to pay an additional $45,000 on March 31, 2011. ( See Release and Settlement Agreement, dated May 9, 1995, attached as Ex. A to Def.'s Counterclaim & Cross-claim.) Shortly after the parties executed the settlement agreement, Hartford Life Insurance Company (hereinafter, “Hartford Life”) ¹ agreed to pay the settlement amount to Solomon on Hartford Illinois's behalf pursuant to an annuity contract. ( See Annuity Contract, dated May 15, 1995, attached as Ex. B to Def.'s Counterclaim & Cross-claim.) Both the settlement agreement and the annuity contract provided that David Solomon's estate would receive the $45,000 payment in the event of his death prior to March 31, 2011. ( See Release and Settlement Agreement ¶ 5; Annuity Contract at 5 (annuity application identifying the “Estate of David Solomon” as the “Beneficiary”).) The settlement agreement further provided that the payment “shall not be subject to assignment, transfer or encumbrance, except as provided herein.” ( See Release and Settlement Agreement ¶ 9.) There is no other provision in the settlement agreement dealing with assignment, transfer, or encumbrance.

In June 2004, Solomon agreed to sell the right to receive the $45,000 payment to cross-defendant 321 Henderson Receivables, L.P. (“321 Henderson”). ² ( See Purchase Agreement, dated June 8, 2004, attached as Ex. D. to Def.'s Counterclaim and Cross-claim.) Pursuant to the Illinois Structured Settlement Protection Act, 215 ILCS 153/1 et seq., 321 Henderson petitioned a state court to approve the transfer. ( See Petition Seeking Approval of a Transfer of Structured Settlement Payment Rights, attached as Ex. E to Def.'s Counterclaim and Cross-claim.) David Solomon and Hartford participated in the state-court proceeding initiated by 321 Henderson's petition. ( See Order Approving Transfer, dated Oct. 29, 2004, attached as Ex. F to Def.'s Counterclaim & Cross-claim.) The order approving the transfer directed Hartford to make the $45,000 payment to 321 Henderson:

ORDERED that Hartford Life Insurance Company and Hartford Insurance Company of Illinois (collectively “Hartford”) shall make payment of: One lump sum payment in the amount of $45,000.00 on or about 3/31/2011, (the “Assigned Payment”) to Transferee [321 Henderson]....

ORDERED that the death of the Payee prior to the due date of the last of the Assigned Payment shall not affect the transfer of the Assigned Payment from Payee [David Solomon] to 321 Henderson Receivables, L.P., and Payee understands he is giving up his rights, and the rights of his heirs, successors and/or beneficiaries, to the Assigned Payment....

ORDERED that this order is binding on any and all successors of the Payee, of other protected parties, and of the Transferee....

( Id. at 3, 5.) After David Solomon died on April 3, 2008, the Estate filed in probate court citations to recover assets (namely, the $45,000 payment that Hartford had promised to pay Solomon) against the defendants in this case, among others. ( See Estate's Counterclaim and Cross-claim ¶ 18); see also Illinois Probate Act, 755 ILCS 5/16–1 (authorizing such citations to be served on persons the administrator believes to be controlling personal property belonging to the estate). The Estate's theory is that the payment was not transferrable in light of the settlement agreement's anti-assignment clause, and that the order approving the transfer was tainted by 321 Henderson's false statement that David Solomon had no dependents. ( See Estate's Counterclaim ¶¶ 33–34, 39–40; Estate's Cross-claim ¶¶ 26, 28.)

Shortly after the Estate filed its petition in the probate court, Hartford initiated this interpleader action. In connection with its complaint, Hartford sought and obtained an ex parte restraining order that effectively stayed the citation proceedings. See28 U.S.C. § 2361 (authorizing such restraining orders). The Estate answered Hartford's interpleader complaint and filed a counterclaim and a cross-claim against Hartford and Wentworth, respectively. The Estate's three-count counterclaim asserts claims for breach of the settlement agreement (Count I, against Hartford Illinois), breach of the annuity contract (Count II, against Hartford Life), and breach of an alleged duty to apprise the state court of the settlement payment's non-transferability (Count III, against both Hartford parties). The Estate's two-count cross-claim asserts a claim for breach of an alleged duty to inform the state court that the payment was non-transferable and that David Solomon had dependents (Count I), and asks us to “invalidate” the transfer on that basis (Count II). After Hartford and Wentworth filed dispositive motions, we raised the issue of our subject-matter jurisdiction under the Rooker–Feldman doctrine and requested briefs on that issue. ( See Order, dated Mar. 21, 2012, Dkt. 55.) We have reviewed the parties' submissions and we are prepared to rule.

DISCUSSION

A. Rooker–Feldman 's Impact on Solomon's Counterclaims and Cross-claims

The Rooker–Feldman doctrine is premised on the Supreme Court's exclusive federal-appellate jurisdiction over state-court judgments. See Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 283, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005) (citing 28 U.S.C. § 1257). The doctrine applies to “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Id. at 284, 125 S.Ct. 1517. It bars claims asking “a federal court to overturn an adverse state court judgment,” and claims that are “inextricably intertwined” with such a judgment. Brown v. Bowman, 668 F.3d 437, 442 (7th Cir.2012) (citation and internal quotation marks omitted). “Once it is determined that a claim is inextricably intertwined, we must then inquire whether ‘the plaintiff [did or] did not have a reasonable opportunity to raise the issue in state court proceedings.’ If the plaintiff could have raised the issue in state court, the claim is barred under Rooker–Feldman.” Id. (quoting Brokaw v. Weaver, 305 F.3d 660, 667 (7th Cir.2002)) (internal citation omitted).

Count II of the Estate's cross-claim against Wentworth explicitly asks us to “invalidate” the transfer that the state court approved. ( See Estate's Cross-claim at 22 (asking us to “[i]nvalidate any purported transfer of the Annuity Contract or the right to receive payment thereunder”).) As for the Estate's other claims, we indicated in our order raising the Rooker–Feldman issue that were inclined to find that those claims are “inextricably intertwined” with the state-court judgment:

Counts I and II of the Estate's counterclaim allege that Hartford breached the settlement agreement, and the annuity contract, by not paying the Estate $45,000 on March 31, 2011. It is difficult to see how we can rule in the Estate's favor on this issue without “review[ing] and reject[ing]” the state-court's order approving the transfer to Wentworth. Exxon, 544 U.S. at 284, 125 S.Ct. 1517. The Estate's claims do not appear to allege an injury “independent” of the judgment: Solomon could not have transferred the payment without the state court's approval. See215 ILCS 153/15; see also Kelley v. Med–1 Solutions, Inc., 548 F.3d 600, 605 (7th Cir.2008) (“Because defendants needed to prevail in state court in order to capitalize on the alleged fraud, the FDCPA claims that plaintiffs bring ultimately require us to evaluate the state court judgments.”). The Estate also contends that Hartford and Wentworth misled the state court, arguing that they breached their duty to inform the court that the settlement payment was (according to the Estate) non-transferrable and that Solomon had minor children. ( See Def.'s Counterclaim & Cross-claim at 15–18 (Count III against Hartford), 18–22 (Counts I and II against Wentworth).) In Kelley, our Court of Appeals rejected the plaintiff's argument that the defendants' alleged misrepresentations to the state court supported a claim independent of the state court's judgment. See id. (“We could not determine that defendants' representations and requests related to attorney fees violated the law without determining that the state court erred by issuing...