Washington Square Financial, L.L.C. D/B/A Imperial Structured Settlements v. RSL Funding L.L.C.
418 S.W.3d 761
Tex. App.2013Background
- Bryce Hogan settled a personal-injury claim and was to receive 360 monthly annuity payments; in July 2010 he signed an "Absolute Sale and Security Agreement" to sell 120 payments of $500 each to Imperial for $26,507.25, subject to required court approval under the Texas Structured Settlement Protection Act (the Act).
- Imperial filed for court approval of the transfer; the agreement expressly conditioned Imperial’s obligation to complete the transaction on entry of a final, nonappealable court order approving the transfer and afforded Hogan a three-day cancellation right.
- RSL learned of the pending transfer, offered Hogan a higher lump sum, and Hogan ultimately entered into a transfer with RSL that the court later approved; Hogan cancelled with Imperial and the court approved the RSL transfer on September 13, 2010.
- Imperial sued RSL for tortious interference with Imperial’s transfer agreement (and sought injunctive and declaratory relief); RSL counterclaimed for declaratory and injunctive relief and later sought attorney’s fees under the UDJA.
- The trial court granted RSL’s summary-judgment motion, ruling an unapproved transfer agreement under the Act cannot support tortious-interference; later it denied RSL additional declaratory relief raised in its summary-judgment response and denied UDJA attorney’s fees. Both parties appealed.
Issues
| Issue | Plaintiff's Argument (Imperial) | Defendant's Argument (RSL) | Held |
|---|---|---|---|
| Whether a transfer agreement subject to the Act but not yet court-approved can constitute a contract for tortious interference | Transfer agreements are effective on execution (agreement language); court approval is a condition to performance, not formation; unenforceability alone is not a defense to tortious interference | Court approval is a statutory and/or contractual condition precedent; absent approval the agreement is unenforceable and cannot support tortious-interference | The court held unapproved transfer agreements are unenforceable on public-policy grounds and therefore cannot support tortious-interference claims |
| Whether RSL was justified in interfering because its offer bettered Hogan’s terms (public-policy defense) | Interference was unjustified because Imperial had a valid contract | RSL acted consistent with the Act’s protective purpose (best-interest inquiry); better offers can be justified while approval is pending | The court accepted the public-policy rationale that the Act’s protections preclude enforcing an unapproved transfer as a contract basis for tortious interference |
| Whether the trial court erred by refusing to grant declaratory relief requested later in RSL’s summary-judgment response | N/A (Imperial opposed new declarations) | RSL sought additional declarations that Imperial’s security interests, POAs, escrow practices, and servicing agreements are unenforceable encumbrances absent court approval | The court declined to grant those additional declarations: they were not pleaded as affirmative claims, raised no live case/controversy, and would have been advisory or moot |
| Whether RSL was entitled to attorney’s fees under the UDJA | N/A (Imperial opposed fees) | RSL argued its declaratory claims had independent effect and that fees were equitable | The court did not abuse discretion in denying fees: RSL’s declarations were essentially defensive/mirror-image of Imperial’s claim and lacked greater ramifications warranting fees |
Key Cases Cited
- Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74 (Tex. 2000) (elements of tortious interference)
- Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660 (Tex. 1990) (public-policy exception: unenforceable contracts on public-policy grounds cannot support tortious-interference claims)
- Clements v. Withers, 437 S.W.2d 818 (Tex. 1969) (general rule on unenforceability and tortious interference discussed)
- Trammell Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631 (Tex. 1997) (statutory public policy can preclude tortious-interference claims)
- In re Rapid Settlements, Ltd., 202 S.W.3d 456 (Tex. App.—Beaumont 2006) (transfer agreement not approved by court cannot enforce arbitration clause; consistent result)
- Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653 (Tex. 2008) (statutes may condition enforceability on satisfaction of judicially required conditions)
- Bocquet v. Herring, 972 S.W.2d 19 (Tex. 1998) (trial court discretion in awarding attorney’s fees under UDJA)
- Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419 (Tex. 2008) (equitable matters committed to trial court discretion can be addressed by summary judgment)