Rapid Settlements, Ltd.'s v. Symetra Life Ins. Co.

• Citation: 271 P.3d 925
• Decision Date: 23 February 2012
• Docket Number: No. 29743–8–III.,29743–8–III.
• Court: Court of Appeals of Washington
• Parties: In re RAPID SETTLEMENTS, LTD.'S Application for Approval of Transfer of Structured Settlement Payment Rights, RSL–3B–IL, Ltd., Appellant, v. SYMETRA LIFE INSURANCE COMPANY and Symetra Assigned Benefits Services Company, Respondents.

271 P.3d 925

In re RAPID SETTLEMENTS, LTD.'S Application for Approval of Transfer of Structured Settlement Payment Rights, RSL–3B–IL, Ltd., Appellant,

v.SYMETRA LIFE INSURANCE COMPANY and Symetra Assigned Benefits Services Company, Respondents.

No. 29743–8–III.

Court of Appeals of Washington, Division 3.

Feb. 23, 2012.

Matthew William Daley, Witherspoon, Kelley, Davenport & Toole, Spokane, WA, E. John Gorman, The Feldman Law Firm, LLP, Houston, TX, for Appellant.

Medora Marisseau, Johanna M. Coolbaugh, Karr Tuttle Campbell, Seattle, WA, for Respondents.

BROWN, J.

¶ 1 RSL–3B–IL, Ltd. (3B) appeals a trial court's CR 60(b) decision to allow Symetra Life Insurance Company and Symetra Assigned Benefit Services Company (collectively Symetra) a set off against 3B in a transfer of settlement payment rights arrangement. It mainly contends the trial court erred in deciding 3B was the alter ego of Rapid Settlements, Ltd. (RSL) (now known as Liquidating Marketing, Ltd.), the named “transferee” under the Washington Structured Settlement Protection Act (SSPA), chapter 19.205 RCW, and Symetra's judgment debtor. We reject 3B's due process, alter ego, Texas law, merger, and full faith and credit arguments. Accordingly, we affirm and deny 3B's equitable attorney fee request.

BACKGROUND AND PROCEDURAL FACTS

¶ 2 Symetra Life and Symetra Assigned are Washington corporations. Symetra Assigned is a structured settlement obligor, assuming the obligation to make periodic payments under a structured settlement agreement. Symetra Life is an annuity issuer, issuing annuity contracts to fund the obligation of the structured settlement obligor to a payee under the structured settlement agreement. Under SSPA, the payee is usually a tort victim entitled to receive tax-free payments under a structured settlement. RCW 19.205.010(8). Historically, structured settlement agreements prohibited payees from accelerating, selling or assigning payments, in order to preserve favorable tax treatment. In 2001, Washington enacted the SSPA to allow payees to transfer some or all periodic payments in exchange for a lump sum. The SSPA requires the transferee to comply with specified notifications, disclosures, and processes designed to protect the payee and interested parties and allow the court to determine whether a transfer is in the payee's best interests. Liability for compliance is on the transferee. RCW 19.205.060(6).

¶ 3 RSL is a Texas limited partnership that purchases payments from payees. RSL has filed transfer applications in Washington seeking approval of transfers it entered with payees, including William Thompson and Nicholas Reihs, both Washington residents. In July 2004, RSL and Mr. Thompson contracted for Mr. Thompson to transfer one of his future payments for a lump sum payment from RSL. Rapid Settlements, 134 Wash.App. at 331, 139 P.3d 411. On October 26, 2004, RSL filed the Thompson application in King County Superior Court. Id. Symetra opposed the Thompson application because the proposed transfer failed to meet SSPA requirements. Id.

¶ 4 During argument on the Thompson application, counsel for RSL stated, “The only liability, it is the transferee, Rapid, that bears all of the responsibility.” Clerk's Papers (CP) at 640. Following this hearing, the King County Superior Court agreed RSL had not complied with the SSPA and dismissed the Thompson application without prejudice. Rapid Settlements, Ltd. v. Symetra Life Ins. Co., 134 Wash.App. 329, 332, 139 P.3d 411 (2006). Symetra then successfully petitioned under RCW 19.205.040 for attorney fees and costs, receiving $7,927.50. Id. RSL unsuccessfully appealed and Division One of this court awarded Symetra fees on appeal. Id. at 335–36, 139 P.3d 411. The Washington Supreme Court denied RSL's petition for review and awarded Symetra additional fees. Rapid Settlements Ltd. v. Symetra Assigned Benefits Serv. Co., 160 Wash.2d 1015, 161 P.3d 1027 (2007). On October 31, 2008, the King County Superior Court entered a still unsatisfied judgment of $39,287.04 for Symetra.

¶ 5 RSL successfully refiled the Thompson application for approval of transfer of structured settlement payments in Cowlitz County. RSL changed the designated beneficiary to 3B and assignment payment to 3B. Meanwhile, Symetra continued to seek payment from RSL and domesticated the judgment to RSL's principal place of business, Texas, and issued interrogatories to RSL to identify RSL property. On March 17, 2009, RSL, through its representative, Stewart Feldman, issued objections and responses to Symetra's postjudgment interrogatories. RSL claimed it owned no property in Texas. Symetra was then unsuccessful in garnishing RSL's bank account because RSL's assets were held under the name of another RSL entity.

¶ 6 On November 19, 2004, RSL filed the Reihs application with the Benton County Superior Court, seeking to purchase a structured settlement payment from Mr. Reihs. The underlying court-approved structured settlement included a $60,000 guaranteed payment due to Mr. Reihs on September 2, 2012. The Reihs application sought approval of a transfer agreement under which Mr. Reihs would sell his $60,000 future lump sum payment to RSL in exchange for a $20,000 payment to Mr. Reihs upon court approval. RSL filed and served notice upon Symetra. On January 12, 2005, Symetra objected, arguing the Reihs application violated the SSPA.

¶ 7 On March 18, 2005, RSL filed an amended application including an amended transfer agreement signed on March 1, 2005, by Mr. Reihs and Mr. Feldman on behalf of RSL. It partly states Mr. Reihs “hereby sells, assigns, and transfers to Rapid Settlements all of Assignor's right, title, and interest (including all benefits and rights relating thereto).... Rapid Settlements hereby purchases and accepts such assignment and transfer of the Assigned Payment(s).” CP at 25. Symetra unsuccessfully objected to RSL's amended application. On May 12, 2005, the court approved the transfer.

¶ 8 On June 2, 2010, Symetra requested a CR 60(b) modification of the May 2005 order with the Benton County Superior Court, serving its motion on RSL. Symetra renoted the motion twice, first at the request of counsel for RSL, and then at the request of 3B's counsel. On July 2, 2010, 3B moved to intervene. The record shows no request for evidentiary hearing, to present witnesses, for a continuance, or for a jury trial. 3B did not object to Symetra's evidence in support of its motion.

¶ 9 3B argued RSL “ceased doing business several years ago.” CP at 410. Yet, in July 2010, the Texas Secretary of State listed RSL as “[i]n existence.” CP at 421, 425. As recently as January 2010, RSL was aggressively litigating an action in Texas in order “to thwart the execution of a valid judgment against [RSL].” CP at 234. In addition, RSL engaged in litigation throughout 2010. See, e.g., Rapid Settlements, Ltd. v. Shcolnik, No. H–10–1366, 2010 WL 4639070, 2010 U.S. Dist. LEXIS 118792 (S.D.Tex. Nov. 8, 2010); In re RSL Funding, LLC & Rapid Settlements, Ltd., No. 14–10–01111–CV, 2010 WL 4685385, 2010 Tex.App. LEXIS 9157 (Ct.App.Tex. Nov. 18, 2010); Hartford Life Ins. Co. v. Rapid Settlements, Ltd., No. 14–09–00169–CV, 2010 WL 3721868, 2010 Tex.App. LEXIS 7774 (Ct.App.Tex. Sept. 23, 2010).

¶ 10 Symetra's declaration testimony establishes a writ of execution served January 19, 2010, on RSL at the same business address shared by RSL and 3B. The name on the door was solely “Rapid Settlements, Ltd.” CP at 242. The employees present stated they were solely “Rapid” employees. CP at 241–43. Numerous documents such as checks and operations manuals were found there bearing solely RSL's name.

¶ 11 3B argued no set off should be made because no mutuality of obligation existed between 3B and RSL, and it was denied due process without discovery time. The trial court granted the set off, reasoning RSL, not 3B, was the transferee, thus Symetra's obligation ran solely to RSL. The court found substantial evidence supported finding RSL and 3B were “one in the same,” supporting mutuality of obligation. Report of Proceedings at 20. 3B unsuccessfully requested reconsideration and then appealed.

ANALYSIS

A. Due Process

¶ 12 The issue is whether 3B was afforded due process in the proceedings below. 3B contends Symetra never served 3B with process, denying 3B's opportunity to be heard.

¶ 13 We review this CR 60 motion ruling for an abuse of discretion. Vance v. Offices of Thurston County Comm'rs, 117 Wash.App. 660, 671, 71 P.3d 680 (2003). “ ‘Discretion is abused when it is exercised on untenable grounds or for untenable reasons.’ ” Luckett v. Boeing Co., 98 Wash.App. 307, 309–10, 989 P.2d 1144 (1999) (quoting Lane v. Brown & Haley, 81 Wash.App. 102, 105, 912 P.2d 1040 (1996)). The applicability of the constitutional due process guaranty is a question of law we review de novo. Post v. City of Tacoma, 167 Wash.2d 300, 308, 217 P.3d 1179 (2009).

¶ 14 3B was not a party to the underlying action and had no interest in the proceedings because it was not the transferee. Symetra's obligation ran to RSL. Thus, 3B was not entitled to service of the notice of the motion to revise the 2005 order. Even so, on June 4, 2010 a copy of the motion was faxed and mailed to Mr. Feldman, 3B's registered agent and CEO. In Washington, as reasoned below, this forestalls 3B's fair play and substantial justice arguments associated with lack of notice or service.

¶ 15 In Lenzi v. Redland Ins. Co., 140 Wash.2d 267, 276, 996 P.2d 603 (2000), the insureds sought a declaration that their underinsured motorist insurer was bound to pay a default judgment that had been entered against an uninsured tortfeasor. Id. The insurer argued it had merely received a mailed copy of the summons and complaint for the suit against the tortfeasor, and was not actually “served” with the pleadings so it had not received “perfected” notice. Id. at 275, 996 P.2d 603. The court reasoned receipt of the summons and...