RSL-3B-IL, Ltd. v. Prudential Insurance Co. of America, 470 S.W.3d 131

Background

Erica Adegoke (annuitant) originally entered a structured settlement funded by Prudential.
In Jan 2003 Adegoke sold a portion of certain monthly payments to Settlement Capital Corporation (SCC); the Texas court approved a transfer order directing Prudential to pay SCC the full monthly payments and requiring SCC to remit any remainder to Adegoke.
In Nov 2003 Adegoke sold the remaining portion of those same monthly payments to Rapid Settlements (assigned to RSL); the later transfer order directed Prudential to pay RSL the portion remaining after SCC’s share.
The two transfer orders on their faces conflicted: one required Prudential to send 100% of the same monthly payments to SCC; the other required Prudential to send a portion of those same payments to RSL.
Prudential suspended payments, interpleaded the funds, and RSL sued for breach of contract and declaratory relief; trial court granted a directed verdict for Prudential on breach and awarded Prudential attorney’s fees from the interpleaded funds; the court also severed Adegoke’s claims against RSL.

Issues

Issue	Plaintiff's Argument (RSL)	Defendant's Argument (Prudential)	Held
1. Was RSL entitled to recover on a breach-of-contract claim against Prudential?	RSL argued the second transfer order made it Prudential’s transferee and Prudential breached by failing to pay RSL the assigned portion.	Prudential argued the earlier SCC order discharged it as to those payments; the second order could not create a new obligation because the payments had already been transferred.	Court: Directed verdict for Prudential; no evidence Prudential owed payments to Adegoke/RSL after SCC order.
2. Did the Nov. 2003 order effect a valid transfer enforceable against Prudential under the SSPA?	RSL contended the annuitant retained the right to sell remaining payments and the later order effectuated that transfer.	Prudential contended the second order contravened the earlier order and SSPA (which forbids requiring an annuity issuer to divide periodic payments).	Court: Second order contradicted the first and SSPA; it did not create enforceable transfer against Prudential.
3. Was Prudential entitled to recover attorney’s fees from the interpleaded funds?	RSL argued Prudential’s filing was declaratory relief thinly disguised as interpleader and any delay in depositing funds precluded fees.	Prudential argued it was an innocent stakeholder in reasonable doubt about whom to pay and timely interpleaded/deposited funds; interpleader fees are proper.	Court: Interpleader appropriate; trial court did not abuse discretion in awarding Prudential reasonable attorney’s fees.
4. Was severance of Adegoke’s claims proper?	RSL argued Adegoke’s claims against RSL were intertwined with the interpleader dispute and should not be severed.	Prudential and court noted Adegoke’s claims did not present a live controversy at severance and Prudential was discharged by SCC order; claims were separable.	Court: Severance was within trial court’s broad discretion and proper.

Key Cases Cited

City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency standard for directed verdicts/no-evidence review)
Prudential Ins. Co. of Am. v. Fin. Rev. Servs., Inc., 29 S.W.3d 74 (Tex. 2000) (standards for directed verdict when defenses are conclusively established)
Texaco, Inc. v. LeFevre, 610 S.W.2d 173 (Tex. App.—Houston [1st Dist.] 1980, no pet.) (interpleader may reconcile conflicting court orders without collateral attack)
Transamerica Occidental Life Ins. Co. v. Rapid Settlements Ltd., 284 S.W.3d 385 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (annuity issuers have a unique interest in preventing conflicting transfer orders)
State Farm Life Ins. Co. v. Martinez, 216 S.W.3d 799 (Tex. 2007) (addressing timeliness and effect of interpleader/deposit on fee recovery)