Symetra Life Insurance v. Rapid Settlements, Ltd.
775 F.3d 242
5th Cir.2014Background
- Symetra and Rapid are participants in the structured settlement market and dispute SSPAs compliance, fees, damages, and injunctive relief after a long litigation history.
- SSPAs require disclosure and court approval of transfers of structured settlement payment rights; noncompliant transfers trigger potential fee liability.
- Rapid employed a sham arbitration scheme to transfer annuitants’ future payments, circumventting SSPAs, leading to Symetra’s enforcement actions.
- Symetra sought, among other things, statutory attorneys’ fees under the SSPAs, damages for tortious interference, and an injunction to stop further transfers via arbitration.
- The district court denied SSPAs-based attorneys’ fees in part, awarded damages for the Gross arbitration-related case, and entered a permanent injunction.
- On appeal, the Fifth Circuit reverses the denial of some SSPAs-based fees, affirms the damages and the permanent injunction, and remands for segregating fees and further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| SSPAs entitlement to federal-litigation fees | Symetra: fees follow SSPAs violations and may be recovered in federal litigation. | Rapid: SSPAs fees apply only after a transfer and only for state proceedings; federal fees not recoverable here. | SSPAs authorize recovery of some fees tied to specific transfers; remanded for segregating recoverable fees. |
| Damages for tortious interference fees | Symetra may recover Indiana-litigation fees as damages resulting from Rapid’s acts. | Rapid challenges whether such fees were properly incurred or recoverable in damages. | damages award affirmed as proper where fees were natural and proximate consequences of Rapid’s acts. |
| Permanent injunction regarding first-refusal rights | Court correctly required explicit court approval of first-refusal rights as encumbrances under transfers. | SSPAs do not require explicit court listing of first-refusal rights; forms suffice. | Affirmed the district court’s interpretation; explicit court-ordered inclusion of first-refusal rights is required. |
Key Cases Cited
- DP Solutions, Inc. v. Rollins, Inc., 353 F.3d 421 (5th Cir. 2003) (state law governs fee award and reasonableness in diversity cases; litigation exception discussed)
- Cosmopolitan Eng’g Grp., Inc. v. Ondeo Degremont, Inc., 149 P.3d 666 (Wash. 2006) (American Rule and fee availability under statutes; applies to Washington law)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (attorney’s fees recoverable under certain theories; segregation obligation for mixed claims)
- Texas Beef Cattle Co. v. Green, 883 S.W.2d 415 (Tex. App. 1994) (Texas damages/attorneys’ fees principles (cited for related reasoning))
- Baja Energy, Inc. v. Ball, 669 S.W.2d 836 (Tex. App. 1984) (single wrongful act may support damages for attorney’s fees under tortious interference)
- American Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321 (5th Cir. 2008) (reasonableness standard for attorney’s fee awards in tort claims)
- In re Rapid Settlements Ltd.’s Application for Approval of Structured Settlement Payment Rights, 136 P.3d 765 (Wash. App. 2006) (Washington view on first-refusal rights as encumbrances)
- RSL Funding, LLC v. Aegon Structured Settlements, Inc., 384 S.W.3d 405 (Tex. App. 2012) (definition of transfer under SSPAs and recoverability implications)