Metropolitan Life Insurance Company and Metropolitan Tower Life Insurance Company v. Structured Asset Funding, LLC D/B/A 123 LumpSum, Andrew Jonathan Settlement Fund, LLC, and Bradley Turpin.
501 S.W.3d 706
| Tex. App. | 2016Background
- Bradley Turpin received structured-settlement periodic payments funded by Met Tower (qualified assignment) and MetLife (annuity), plus a separate Prudential annuity, after a 2002 personal-injury judgment.
- Turpin sold portions of his future payments to factoring companies previously; in 2015 he applied to sell $1,850 of 174 monthly Metropolitan payments to Structured Asset Funding, LLC ("LumpSum") for $175,000 (later increased to $190,000).
- LumpSum assigned its rights to Andrew Jonathan Settlement Fund, LLC (a bankruptcy-remote assignee/servicer); the proposed transaction included a servicing arrangement under which Metropolitan would pay the full Term Payments to Andrew Jonathan, which would retain the assigned portion and remit the remainder to Turpin.
- The Galveston County court approved the transfer (after appointing an independent financial consultant) and included findings required by the Texas Structured Settlement Protection Act; Turpin signed and approved the order, expressly acknowledging the servicing arrangement.
- Metropolitan appealed, arguing the court impermissibly rewrote contractual payee provisions, lacked authority to designate a payment agent or compel indirect division of payments, and erred by taxing court costs against Metropolitan.
- The court affirmed approval of the transfer and servicing arrangement, held the trial court did not abuse discretion in finding the transfer in Turpin’s best interest, but modified the judgment to tax court costs against LumpSum (the transferee) rather than Metropolitan.
Issues
| Issue | Plaintiff's Argument (Turpin/LumpSum) | Defendant's Argument (Metropolitan) | Held |
|---|---|---|---|
| Whether the trial court impermissibly rewrote governing contracts by ordering payments to assignee/servicer | Court approval order is part of the "terms of the structured settlement" under the Act and may direct payment to transferees/assignees | Trial court cannot alter unambiguous contractual payee provisions and cannot rewrite the qualified assignment/annuity | Overruled: statutory authority under the Act lets the court approve transfers and include payment directions in the court order; not a contract-rewriting issue |
| Whether court erred designating Andrew Jonathan as Turpin’s payment agent | Turpin expressly authorized the servicing/agency arrangement; evidence and signed order support designation | No evidence of an agency agreement; Metropolitan cannot be compelled to recognize third-party agent | Overruled: sufficient evidence and Turpin’s written consent in the order authorized Andrew Jonathan as Turpin’s payment agent |
| Whether approving a servicing arrangement circumvents anti-division provision ( §141.005(4) ) prohibiting obligor/issuer from being required to divide periodic payments | Servicing arrangement is a permissible transfer/assignment under the Act; legislature excluded transferees/assignees from the anti-division prohibition and distinguished "indirect" payments where intended | The court effectively forced Metropolitan to accomplish indirectly what §141.005(4) forbids directly (split payments) | Overruled: Act’s text and precedent permit transferee/assignee-mediated distributions; prohibition applies to obligor/issuer being required to divide payments, not to transferee/assignee arrangements approved by court |
| Whether trial court properly taxed costs against Metropolitan | Transferee bears responsibility for satisfying statutory conditions and obtaining court approval; costs should be taxed to transferee | Trial court shifted costs to obligor/issuer despite statutory allocation | Sustained: court erred; judgment modified to tax costs against LumpSum (transferee) per §141.007(f) |
Key Cases Cited
- Lippincott v. Whisenhunt, 462 S.W.3d 507 (Tex. 2015) (statutory construction principle: give effect to legislature's intent and plain language)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for reviewing legal and factual sufficiency of evidence)
- RSL-3B-IL, Ltd. v. Prudential Ins. Co. of Am., 470 S.W.3d 131 (Tex. App.—Houston [1st Dist.] 2015) (interpreting protections for obligor/issuer under structured-settlement statute)
- In re Rains, 473 S.W.3d 461 (Tex. App.—Amarillo 2015) (contrasting approach on court authority to approve transfers; discussed but not followed)
- Transamerica Occidental Life Ins. Co. v. Rapid Settlements, Ltd., 284 S.W.3d 385 (Tex. App.—Houston [1st Dist.] 2009) (describing statutory purpose to protect payees from factoring-company overreaching)
- Fox v. Robison, 229 S.W. 456 (Tex. 1921) (principle against circumventing statutory requirements indirectly)