Settlement Funding LLC v. RSL Funding, LLC
| Decision Date | 12 March 2014 |
| Docket Number | Civil Action No. H–12–2044. |
| Citation | 3 F.Supp.3d 590 |
| Parties | SETTLEMENT FUNDING LLC, et al., Plaintiffs, v. RSL FUNDING, LLC, et al., Defendants. v. JLL Partners, INC., et al., Third–Party Defendants. |
| Court | U.S. District Court — Southern District of Texas |
OPINION TEXT STARTS HERE
Lawrence Bradley Hancock, Greenberg Traurig LLP, Elizabeth D. Alvarado, Shannon Martin et al., Houston, TX, for Plaintiffs.
Michael Alan Choyke, Wright & Close LLP, John Robert Craddock, John Robert Craddock, The Feldman Law Firm LLP, Houston, TX, for Defendants.
ORDER ADOPTING MAGISTRATE JUDGE'S MEMORANDUM, RECOMMENDATION, AND ORDER
Having reviewed the Magistrate Judge's Memorandum, Recommendation, and Order dated February 25, 2014,1 the court is of the opinion that said Memorandum, Recommendation, and Order should be adopted by this court.
It is, therefore, ORDERED that the Memorandum, Recommendation, and Order is hereby ADOPTED by this court.
The Clerk shall send copies of this Order to the respective parties.
v.
v.
J.G. Wentworth S.S.C. Limited Partnership, et al.,
Third–Party Defendants.
Pending before the court 1 are Plaintiff Settlement Funding, LLC's (“Settlement Funding”) Motion for Partial Summary Judgment on its tortious-interference claim (Doc. 115); Settlement Funding's Motion to Strike Defendants Rapid Settlements, Ltd., (“Rapid”) and RSL Funding, LLC's (“RSL”) (collectively, “the RSL Parties”) Response to the Motion for Partial Summary Judgment (Doc. 128), and the RSL Parties' Motion to Extend Time (Doc. 133). 2 The court has considered the motions, every response and reply, all other relevant filings, and the applicable law. For the reasons set forth below, the court RECOMMENDS that Settlement Funding's Motion for Partial Summary Judgment be DENIED. Settlement Funding's Motion to Strike is DENIED and the RSL Parties' Motion to Extend Time is GRANTED.
This action involves disputes over business practices between factoring companies competing in the secondary market of acquiring structured settlement payment rights.3
In 2006, Settlement Funding d/b/a Peachtree Settlement Funding (“Settlement Funding”) 4 initiated this lawsuit in the 113th District Court of Harris County, Texas, to enjoin Rapid from enforcing an arbitration provision in an agreement for Rapid's purchase of the structured settlement payments of a Georgia resident, Simmie Bernard King (“King”).5 Two similar cases were consolidated into the King case, and, after judgment was entered in the King action and one of the consolidated actions, those two cases were severed from the main action and remain in state court.6
On August 13, 2010, Settlement Funding filed a supplemental petition, in which it named both Rapid and RSL as defendants.7 Among other claims, Settlement Funding alleged that the RSL Parties failed to maintain corporate formalities and engaged in willful and intentional interference with multiple assignment agreements of structured settlement payments.8 Settlement Funding contemporaneously sought a temporary restraining order, a temporary injunction, and a permanent injunction.9
On August 24, 2010, after a hearing, the court granted Settlement Funding's request for a temporary injunction and ordered:
RSL and/or its agents shall not interfere with [Settlement Funding's] contracts, including but not limited to the case of In re: Transfer of Structured Settlement Payment Rights by Michale M. Parenti; Cause No. 2009–46111 in the District Court of Harris County, Texas, 157th Judicial District. RSL and/or its agents shall not search court filings to find structured settlement agreements with [Settlement Funding] that are pending approval and shall not approach any of [Settlement Funding's] existing customers or enter into any agreements with them.10
The court stated that the temporary injunction was to remain in effect until trial, which the court set for October 25, 2010.11
The RSL Parties appealed the order, raising five points of error. See Rapid Settlements, Ltd. v. Settlement Funding, LLC [hereinafter Rapid v. Settlement Funding], 358 S.W.3d 777, 787 (Tex.App.-Houston [14th Dist.] 2012, no pet.). In an opinion dated January 10, 2012, the Fourteenth Court of Appeals reversed the lower court's order as to scope only, finding the temporary injunction overbroad, and remanded it for a new hearing. Id. at 781, 790. The opinion stated, “We agree that this temporary injunction goes beyond simply preserving the status quo pending a trial on the merits.” Id. at 790. The court found that the temporary injunction imposed “an unreasonable restraint on trade” due to its breadth. Id. The record does not reflect that the state court ever held a new hearing on the breadth of the temporary injunction.
In March 2012, RSL filed an amended counterclaim, asserting claims against J.G. Wentworth S.S.C. Limited Partnership, JGWPT Holdings, LLC, (“JGWPT”), David Miller (“Miller”), and JLL Partners, Inc., (“JLL”) for the first time. 12 Those parties were served on June 7, 2012, filed special appearances in state court, and, on July 6, 2012, removed the action to this court.13 At the time of removal, J.G. Wentworth Originations, LLC, had been named in a pleading filed in late June 2012 but had not yet been served.14
In early 2013, the parties offered to resubmit motions for partial summary judgment that had been filed in state court but were not in the record before this court.15 In February and March of 2013, the parties submitted twenty-nine documents that originally had been filed in state court.16 This court was concerned that it could not determine which motions that were still germane had not been resolved by the state court and that cases across the nation had addressed similar issues in the more than two years since Settlement Funding originally filed its motion for partial summary judgment on tortious interference.17 The court recommended that all of the motions pending at the time of removal be denied and ordered any motion for partial summary judgment on the issue of tortious interference be filed within thirty days of the filing of the court's order adopting the recommendation.18
The recommendation was adopted on June 17, 2013, and, on July 17, 2013, Settlement Funding filed the pending motion for partial summary judgment on tortious interference.19 In September 2013, the court adopted the undersigned's recommendation that JGWPT, Miller, and JLL be dismissed for lack of personal jurisdiction.20 In October 2013, the Settlement Funding Plaintiffs filed two more motions for partial summary judgment that remain pending.21
Michale Parenti (“Parenti”) contacted Settlement Funding in 2009 to inquire about selling a portion of his structured settlement.22 The transaction was completed and approved by a state court as required by the Texas Structured Settlement Protection Act 23 (“TSSPA”).24 For almost a year thereafter, Chad Masten (“Masten”), an account executive for Settlement Funding, contacted Parenti about once a month.25 In late June 2010, Parenti called Masten to arrange another transfer of payments from his structured settlement.26On July 5, 2010, Parenti and Settlement Funding executed a second Absolute Assignment Agreement (“2010 Agreement”).27 Settlement Funding applied for state court approval of the 2010 Agreement.28
Jim Kelly (“Kelly”), senior account executive for RSL, contacted Parenti after locating, in the Harris County court records, the pending application and the attached 2010 Agreement.29 Kelly, who understood the documentation to mean that Parenti could cancel the transfer agreement at any time prior to court approval without penalty, contacted Parenti to offer a competing bid. 30 This method (searching court records for transfer-approval applications submitted by RSL's competitors) was one of several used by RSL to locate potential clients.31
In some cases, if approval ha[d] not already been obtained, and if RSL believe[d] the lump sum payment being offered by one of its competitors [was] less than the fair market value of the future payment stream, RSL [possibly would] offer a proposed transferor (the payee under the annuity) more money to transfer the payments to it before the court enter[ed] an order approving the sale of the future payments.32
Kelly's competing bid was a “substantial amount” more than what Settlement Funding was offering.33 The Parentis followed up on Kelly's offer by visiting RSL's office and meeting with Kelly and one of RSL's attorneys. 34 While there, the Parentis executed a transfer agreement with RSL. 35 On July 22, 2010, Nicola Parenti, Parenti's wife, called Masten and informed him that she and Parenti wanted to cancel the 2010 Agreement. 36 Jim Gregory (“Gregory”), director of purchasing for Settlement Funding, contacted Parenti and confirmed that Parenti wanted to cancel the 2010 Agreement so that he could enter a transfer agreement with another company.37 Parenti testified that he concluded, on his own and after careful consideration, that Settlement Funding's offer was not competitive.38
Settlement Funding sent a cease-and-desist letter to RSL regarding the Parenti transfer, one of several cease-and-desist letters Settlement Funding sent to the RSL Parties attempting to stop them from contacting customers with whom Settlement Funding had entered transfer agreements.39 Parenti claimed, as of August 17, 2010, that Settlement Funding had “threatened and harassed” him and “attempt[ed] to intimidate and threaten [him], calling [him] repeatedly, to get [him] to come back.” 40
According to Jason Sutherland (“Sutherland”), Settlement Funding's vice president of legal affairs, an application for court approval of an agreement...
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