Johnson v. Structured Asset Services, LLC

• Decision Date: 29 October 2004
• Docket Number: No. 05-03-00075-CV.,05-03-00075-CV.
• Citation: 148 S.W.3d 711
• Parties: Mark D. JOHNSON, Appellant, v. STRUCTURED ASSET SERVICES, LLC, Appellee.
• Court: Texas Court of Appeals

148 S.W.3d 711

Mark D. JOHNSON, Appellant, v. STRUCTURED ASSET SERVICES, LLC, Appellee.

No. 05-03-00075-CV.

Court of Appeals of Texas, Dallas.

October 29, 2004.

John M. Gillis, Dallas, for appellant.

Earl S. Nesbitt, Nesbit & Vassar, L.L.P., Addison, for Appellee.

Before Justices WHITTINGTON, LANG, and LANG-MIERS.

OPINION

Opinion by Justice LANG-MIERS.

This is an appeal from a judgment entered in an interpleader action involving structured settlement payments. Appellant Mark D. Johnson and appellee Structured Asset Services, LLC (Structured Asset) were the competing claimants. Johnson appeals the Final Judgment in favor of Structured Asset, awarding it funds that were placed in the registry of the court by Integrity Life Insurance Company, Inc., pursuant to a structured settlement agreement. Johnson argues that the trial court erred by concluding that he waived an anti-assignment provision in that agreement and that he was estopped from raising that provision as a defense, that the trial court erred in awarding all of the monthly payments to Structured Asset when only a portion of each payment had been assigned, and that the trial court erred by concluding that the underlying assignment was not against public policy. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellant Johnson filed and settled a lawsuit seeking recovery for injuries he sustained when he was struck by a car.¹ As part of the settlement, Johnson received a lump sum payment in the amount of $702,000 as well as future structured settlement payments as follows:

(1) $2,000 per month from December 1986 to November 1991 (sixty months);

(2) $2,500 per month from December 1991 to November 1996 (sixty months);

(3) $3,000 per month from December 1996 to November 2001 (sixty months);

(4) $3,500 per month from December 2001 to November 2006 (sixty months);

(5) $4,000 per month from December 2006 to November 2011 (sixty months);

(6) $4,500 per month from December 2011 to November 2016 (sixty months);

(7) $5,000 per month from December 2016 to November 2021 (sixty months); and

(8) $5,500 per month from December 2021 to November 2026 (sixty months).

The terms of the Settlement Agreement also provided that:

[s]aid payments cannot be accelerated, deferred, increased, or decreased by [Johnson] and no part of the payments called for herein or any assets of the Defendant and/or the Insurers is to be subject to the execution or any legal process for any obligation in any manner, nor shall [Johnson] have the power to sell or mortgage or encumber same, or in any part thereof, nor anticipate the same, or any part hereof, by assignment or otherwise.

The Home Insurance Company was obligated to make the future settlement payments to Johnson and purchased an annuity from Integrity to fund those payments. It assigned the obligation to make the payments and the ownership of the annuity to Equitable Life Assurance Society. Johnson approved that assignment. In December 1986, Integrity began making the monthly payments to Johnson.

In February 1998, Johnson saw a television commercial for Stone Street Capital, Inc., advertising that it would pay a lump sum in return for the assignment of future payments due under structured settlements. Johnson called the advertised 1-800 telephone number to learn more about it. Johnson submitted his Application for Sale of Periodic Payments and Stone Street responded with a written offer to purchase a portion of Johnson's future monthly payments. Johnson signed the letter, accepting the offer, and returned it to Stone Street. Stone Street agreed to pay Johnson $132,844 in exchange for Johnson's assignment of his future monthly payments as follows:

(1) $2,500 per month from March 1998 to November 2001 (forty-five months);

(2) $3,000 per month from December 2001 to November 2006 (sixty months); and

(3) $3,500 per month from December 2006 to February 2011 (fifty-one months).

These assigned monthly payments were $500 per month less than the total of each monthly payment due to Johnson under the structured settlement and did not include assignment of future payments after February 2011. Stone Street agreed to receive the total monthly payment and send Johnson the $500 due to him each month. Johnson signed the documents that Stone Street sent to him.²

Stone Street wired four payments totaling $130,344 to Johnson's bank account pursuant to the written wiring instructions.³ Johnson used $83,000 to buy a house and $17,000 or $18,000⁴ to complete the loan payments on his truck.

In March of 1998, Stone Street assigned the Annuity Payment Purchase Agreement with Johnson to Settlement Trust with Stone Street as servicer and agent for Settlement Trust.

On April 20, 1998, Equitable received a letter addressed to Integrity from Johnson changing the beneficiary of his policy to the "Mark D. Johnson Trust" with the address of 18351 Kuykendahl, No. 251, Spring, Texas 77379-8158, which is the address for Stone Street's lock box.⁵ The letter did not mention Johnson's assignment of the settlement proceeds to Stone Street. Equitable confirmed these changes and notified Integrity to make the change. Stone Street received the eleven monthly payments from April 1998 to February 1999 and sent $500 of each monthly payment to Johnson.

In February 1999, without contacting Stone Street, Johnson faxed a letter to Integrity directing that the monthly payments should go to his residence instead of to Stone Street's lock box. As a result, Johnson received four of the monthly payments from March to June 1999.⁶ In June 1999, Stone Street sued Johnson in the Circuit Court of Montgomery County, Maryland, in a case styled Stone Street Capital, Inc. v. Mark D. Johnson, Civil No. 200298. Johnson was personally served with the Maryland lawsuit on June 26, 1999. The Maryland court granted a Preliminary Injunction on July 7, 1999, ordering Johnson to stop redirecting any of the monthly payments to himself and directing Integrity to send the monthly payments to Stone Street's lock box in Spring, Texas. Johnson did not appear or take any action in the Maryland lawsuit and did not comply with the orders entered by the Maryland court. On July 24, 2000, the Maryland court entered a Default Judgment and Order against Johnson and awarded Stone Street damages and injunctive relief as well as the periodic monthly payments.⁷

Integrity attempted to comply with the Maryland Judgment by making the monthly payments to Stone Street. However, Johnson demanded that Integrity send him the monthly payments and threatened to sue if it ignored his instructions. Johnson also submitted a change of address form to the U.S. Postal Service directing that items sent to him care of Stone Street's lock box at 18351 Kuykendahl, No. 251, Spring, Texas 77379-8158 be sent to his residence at 95 Leesburg, Texas 75451. In June of 2002, Structured Asset took over Stone Street's position as servicer and agent for Settlement Trust.

Eventually, both Structured Asset and Johnson were demanding that Integrity send them the payments. As a result of these competing demands, Integrity filed this interpleader action on September 4, 2001, naming Johnson and Stone Street as interpleader defendants. Integrity also deposited $27,000, the sum of the annuity benefits subject to the competing claims, with the Clerk of the Court. On October 15, 2001, Johnson filed his Original Answer generally denying the allegations and asserting a general claim to the funds. On November 29, 2001, Structured Asset filed its Plea in Intervention and Original Cross Claim. Johnson did not oppose Structured Asset's intervention. Integrity filed its Non-Suit of Stone Street.

On July 12, 2002, Johnson filed his unverified First Amended Original Answer asserting several affirmative defenses. Johnson did not specifically plead contractual anti-assignment language as an affirmative defense.

At mediation, Johnson and Structured Asset settled with Integrity and agreed that Integrity would be dismissed with prejudice from the interpleader action.⁸

The settlement agreement between Johnson, Structured Asset, and Integrity left one issue remaining for the trial court to decide: Who was entitled to receive the interpleaded funds, Structured Asset or Johnson? On October 22, 2002, after a one day trial, the trial court rendered a Final Judgment in favor of Structured Asset awarding it all of the funds in the registry of the court, including any interest accrued on the funds, approximately $60,500, but less the $6,000 in attorneys' fees to be paid to Integrity. The Final Judgment also awarded Structured Asset the right to receive monthly payments as follows:

(1) $3,000 per month from August 19, 2002 to November 2006 (fifty-two months); and

(2) $3,500 per month from December 2006 to February 2011 (fifty-one months).

The trial court issued Findings of Fact and Conclusions of Law on November 19, 2002. Johnson appeals the Final Judgment entered in favor of Structured Asset.

II. ANTI-ASSIGNMENT PROVISIONS

In his first issue on appeal, Johnson argues that the trial court erred when it concluded that he waived the anti-assignment provision in the settlement agreement and that he was estopped from raising the anti-assignment clause as a defense. Structured Asset argues that this issue was waived because Johnson failed to raise it at trial, that he is estopped from relying on the anti-assignment clause, and that he waived his rights under that clause.

A. Standard of Review

The findings of fact are binding upon the parties and the appellate court because they are not challenged on appeal. Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 632 (Tex.App.-Dallas 1993, no writ); Kershner v. State Bar of Texas, 879 S.W.2d 343, 347-48 (Tex.App.-Houston [14th Dist.] 1994, writ denied). However, the appellate court may review the conclusions the trial court draws from or applies to the facts found to determine their correctness. Linton v....