RSL-3B-IL, Ltd. v. the Prudential Insurance Company of America and Prudential Structured Settlement Company F/K/A Prudential Property and Casualty Insurance Company of Holmdel, New Jersey
01-14-00482-CV
| Tex. App. | Sep 9, 2015Background
- RSL-3B-IL, Ltd. (RSL), through assignee Rapid Settlements, obtained a court order (the "Rapid Order") directing Prudential defendants to remit portions of structured settlement periodic payments to RSL, despite an earlier court-approved transfer to Settlement Capital Corporation (SCC) directing Prudential to pay the full periodic payments to SCC.
- Prudential and Prudential Structured Settlement Company (PSSC) refused RSL's breach of contract claim, filed an interpleader disclaiming interest in the funds, and sought judicial resolution of the conflicting orders.
- The parties attempted a stipulation and amended order to reconcile the conflict; RSL did not cooperate to resolve the dispute.
- After a jury trial, the trial court entered judgment for Prudential, awarded Prudential attorneys’ fees from the interpleaded funds, and allowed RSL to claim the remaining funds on the court registry.
- RSL appealed and moved for rehearing/en banc reconsideration, arguing (among other things) that the case was a collateral attack on the Rapid Order and misreading the Texas Structured Settlement Protection Act (SSPA).
- Prudential contends the breach claim fails because court orders are not contracts, the annuitant lacked enforceable rights in the annuity at the time of transfer, and the SSPA places transfer compliance responsibility on transferees (factoring companies), not obligors/issuers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether this proceeding was a collateral attack on the Rapid Order | RSL characterizes the action as a collateral attack on the Rapid Order (seeking to enforce it) | Prudential: RSL initiated the breach suit to enforce the Rapid Order; Prudential merely interpleaded funds—this is not a collateral attack | Court found this was not a collateral attack by Prudential; RSL brought the suit and sought enforcement of the Rapid Order, so collateral-attack characterization fails |
| Whether a court order can serve as a contract enforceable against Prudential | RSL relies on Rapid Order to ground a breach claim | Prudential: court orders lack contract elements and Prudential cannot be held liable on others’ transfer agreements | Breach claim failed; court orders do not create enforceable contracts against Prudential here |
| Whether the annuitant/assignee had enforceable rights in the annuity when the transfer occurred | RSL asserts it was assigned rights via Rapid/Transfer Agreement | Prudential: annuitant (Adegoke) had no enforceable interest in the annuity vis-à-vis Prudential at the time; transfers cannot impose new obligations on Prudential | Court affirmed that Prudential owed no payment obligation to Adegoke at transfer, so RSL’s claim against Prudential fails |
| Proper interpretation and application of the Texas SSPA (notice/participation and discharge of obligor/issuer) | RSL argues interested parties "must" file written responses and that discharge is only as to portions of payments | Prudential: SSPA entitles interested parties to respond but does not obligate them; SSPA puts compliance burden on transferee and discharges obligor/issuer as to transferred payments (including when transferee receives whole payments under a servicing arrangement) | Court upheld Prudential’s reading: no statutory duty to intervene, transferee bears compliance responsibility, and obligor/issuer are discharged with respect to transferred payments as implemented by the SCC order |
Key Cases Cited
- Transamerica Occidental Life Ins. Co. v. Rapid Settlements, Ltd., 284 S.W.3d 385 (Tex. App.—Houston [1st Dist.] 2008) (discussing legislative purpose of SSPAs to protect payees against factoring-company abuse)
- Johnson v. Structured Asset Servs., LLC, 148 S.W.3d 711 (Tex. App.—Dallas 2004) (noting concern over factoring-company abuse and SSPA protections)
- PNS Stores, Inc. v. Rivera, 379 S.W.3d 267 (Tex. 2012) (defining collateral attack as attempt to avoid effect of a judgment to obtain relief it bars)
- Sigmar v. Anderson, 212 S.W.3d 789 (Tex. App.—Austin 2006) (articulating collateral-attack concept)
- Sharp v. House of Lloyd, Inc., 815 S.W.2d 245 (Tex. 1991) (cautioning against statutory interpretations producing absurd results)