Woodbridge Structured Funding, LLC v. Arizona Lottery
235 Ariz. 25
| Ariz. Ct. App. | 2014Background
- Thomas won a $1,000,000 Arizona Lottery prize and elected 25 annual $40,000 annuity payments; he later negotiated lump-sum assignment deals.
- On June 8, 2012, Thomas signed an agreement assigning the remaining annuity payments to Genex for $428,148 but attempted to rescind the same day; Genex disputed the rescission and filed a UCC-1 financing statement on June 19.
- On June 9, 2012, Thomas executed an assignment with Woodbridge for $430,000; Thomas and Woodbridge filed an A.R.S. § 5-563 approval action seeking court approval of that assignment and submitted the statutory affidavit required for approval.
- The trial court granted summary judgment approving the Woodbridge assignment; Genex then filed suit against Thomas and Woodbridge (breach/tortious interference) and moved to intervene in the approval action and to consolidate the matters.
- The trial court denied Genex’s motion to intervene and its Rule 60 motion for relief from judgment; Genex appealed.
Issues
| Issue | Plaintiff's Argument (Genex) | Defendant's Argument (Thomas/Woodbridge) | Held |
|---|---|---|---|
| Whether Genex had an interest sufficient to intervene as of right under Ariz. R. Civ. P. 24(a) | Genex claimed a contractual right and a perfected/secured interest in the Lottery Payments from the June 8 agreement and UCC-1 filing, so the approval would impair Genex’s rights | Thomas/Woodbridge argued Genex’s interest was contingent because lottery annuities require court approval under A.R.S. § 5-563, and Genex had no enforceable security interest or court order | Denied: Genex’s interest was contingent and not a direct legal interest; no enforceable attached security interest existed, so intervention of right was not available |
| Whether Genex’s UCC-1 filing created an enforceable security interest superior to others | Genex argued the UCC-1 perfected its security interest in the annuity rights | Defendants argued attachment requires debtor signature, value given, and rights in collateral; Genex had not given value and thus lacked attachment | Denied: Attachment did not occur because Genex did not give value; UCC-1 alone did not create an enforceable security interest |
| Whether the trial court abused discretion by denying Rule 60(c) relief based on alleged misrepresentation/omission | Genex argued omission of its prior agreement was a material misrepresentation that would justify vacating the approval order under Rule 60(c)(3) | Defendants argued Genex lacked standing and the omission did not amount to Rule 60 relief; the approval process and affidavit satisfied statutory prerequisites | Denied: Even assuming a nonparty could seek Rule 60 relief, Genex had no right to intervene and the omission did not warrant relief |
| Whether Genex could obtain consolidation or permissive intervention (argued below) | Genex sought consolidation and alternative permissive intervention under Rule 24(b) | Defendants contested timeliness, good faith, and lack of direct interest | Not reached on appeal: consolidation denial not challenged on appeal; permissive intervention not pursued on appeal |
Key Cases Cited
- Planned Parenthood Ariz., Inc. v. Am. Ass’n of Pro-Life Obstetricians & Gynecologists, 227 Ariz. 262 (App. 2011) (sets four-part test for intervention of right)
- Dowling v. Stapley, 221 Ariz. 251 (App. 2009) (denial of timely request for intervention reviewed de novo; distinguishes contingent vs. direct interests)
- Weaver v. Synthes, Ltd. (U.S.A.), 162 Ariz. 442 (App. 1989) (mere possible or contingent equitable effect insufficient for intervention)
- First Nat. Bank of Ariz. v. Carbajal, 132 Ariz. 263 (discusses enforceability and priorities of security interests)
- MasterCard Int’l Inc. v. Visa Int’l Serv. Ass’n, Inc., 471 F.3d 377 (2d Cir. 2006) (denial of intervention does not prevent a claimant from separately litigating breach of contract harms)