Feldman/Matz Interests, L.L.P. v. Settlement Capital Corp.

140 S.W.3d 879, 2004 Tex. App. LEXIS 6153, 2004 WL 1555207
CourtCourt of Appeals of Texas
DecidedJuly 13, 2004
Docket14-03-01139-CV, 14-03-01103-CV
StatusPublished
Cited by58 cases

This text of 140 S.W.3d 879 (Feldman/Matz Interests, L.L.P. v. Settlement Capital Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Feldman/Matz Interests, L.L.P. v. Settlement Capital Corp., 140 S.W.3d 879, 2004 Tex. App. LEXIS 6153, 2004 WL 1555207 (Tex. Ct. App. 2004).

Opinions

MAJORITY OPINION

WANDA McKEE FOWLER, Justice.

In this consolidated mandamus action and accelerated interlocutory appeal, we not only have to decide if the Federal Arbitration Act or the Texas Arbitration Act applies, but also if the trial court had to refer the entire case — including the plaintiffs request for injunctive relief against the defendants — to arbitration. For the reasons discussed below, we conclude that the Federal Arbitration Act applies and that the trial judge should have referred all of the case, including the in-junctive relief request, to arbitration. As a result, we dismiss the appeal and conditionally grant the petition for writ of mandamus.

[881]*881BACKGROUND

Settlement Capital Corporation purchases structured settlement payment rights and, in some cases, makes loans secured by its customers’ rights to future payments. In Texas, as in many other states, transfers of structured settlement rights requires court approval. See Tex. Civ. Prac. & Rem.Code §§ 141.001-141.007 '(the “Structured Settlement Protection Act”). In October of 2001, Settlement Capital executed a legal services agreement with Stewart A. Feldman & Associates, L.L.P., to represent it in obtaining court approval of its transactions. The agreement identified the scope of services as the following:

We have been retained to assist Settlement Capital Corp. in obtaining court approval of structured settlement transfers in accordance with the Texas Civil Practice & Remedies Code. In this regard, the litigation services and other work will be provided in accordance with and at the rates set forth in the attached Guidelines on Firm Administration and Billing.

The Guidelines on Firm Administration and Billing included these arbitration provisions:

Should any dispute arise out of or in conjunction with the attorneys’ fees and/or costs and/or expenses of the legal work performed for you or your affiliates by The Law Offices of Stewart A. Feldman & Associates, L.L.P. or its agents or principals, we agree to submit any and all such fee disputes that cannot be settled by good faith negotiation between the parties exclusively to the Houston Bar Association’s Fee Dispute Committee for binding and nonap-pealable resolution.
With respect to any and all other disputes or claims between us whatsoever related to or arising out of our services, we agree that either of us may submit the same to a nationally recognized, neutral, arbitration association (eg., AAA, JAMS, etc.) for final, binding and nonap-pealable resolution pursuant to its single arbitrator, expedited arbitration rules. While we fully expect (and hope) that any dispute will be resolved directly between us, the State Bar of Texas investigates and prosecutes professional misconduct of Texas attorneys. Should you have any questions, the Office of the General Counsel of the State Bar will provide you with information regarding the Bar’s procedures. If the first arbitration organization which receives a written demand for arbitration of the dispute from either of us does not complete the arbitration to finality within four months of the written demand, either party then may file a written demand for arbitration of the dispute with another nationally recognized, neutral, arbitration association, with the prior arbitration association then being immediately divested of jurisdiction, subject to a decision being rendered by the replacement arbitration association -within four months of the written demand being filed with the replacement arbitration association. The decision of the arbitrators shall be final in all respects and shall be non-appealable. Any person may have a court of competent jurisdiction enter into its record the findings of such arbitrators for all purposes including for the enforcement of such award. We look forward to working with you.

Kent M. Hanszen signed the agreement on behalf of the Feldman law firm; Matthew T. Bracy, Settlement Capital’s in-house counsel, signed for Settlement Capital. Thereafter, the Feldman law firm assisted Settlement Capital in obtaining court approval of numerous structured settlement purchases and other litigation matters.

Sometime after this, Stewart Feldman set up a company named Rapid Settle[882]*882ments that apparently does much, if not all, of the same work as Settlement Capital. After learning about Rapid Settlements, Settlement Capital filed a lawsuit against the Feldman law firm, Stewart A. Feldman, individually, Rapid Management Corp., and Rapid Settlements, Ltd. (collectively, “Feldman”). It alleged that Stewart Feldman secretly set up Rapid Settlements to directly compete with Settlement Capital in the business of buying structured settlement cash flows, using confidential marketing, business, and legal information obtained from Settlement Capital, a client of the Feldman law firm. Among other things, Settlement Capital alleged that, in early 2003, Stewart Feld-man surreptitiously set up an internet domain name for Rapid Settlements and incorporated Rapid Management Corp. with his wife and him as directors. In turn, Settlement Capital alleged, Rapid Management Corp. became the general partner of Rapid Settlements, Ltd., whose president, Scott D. Shcolnik, was an employee of the Feldman law firm. Settlement Capital further alleged that Rapid Settlements surreptitiously operates out of the Feldman law firm’s offices, employs members of the firm’s staff to conduct its business, and markets to and solicits Settlement Capital’s current and former customers.

Settlement Capital’s causes of action included breach of fiduciary duty and unfair competition; it later supplemented its petition to add a claim for legal malpractice. It also sought an application for a temporary restraining order, temporary injunction, and permanent injunction. The same day Settlement Capital filed its lawsuit, it obtained a temporary restraining order against Feldman and “their agents, servants, employees, representatives, and those in active concert or participation with them.” The temporary restraining order enjoined the defendants from doing the following:

1. Removing, retaining, duplicating, misappropriating, using, disclosing, or communicating any confidential, privileged, and/or proprietary information, documents, or software belonging to [Settlement Capital];
2. Soliciting, marketing, buying, pool-' ing, and/or securitizing of structured settlement payment rights- from or to current or former customers of [Settlement Capital] or any other person or entity.

The temporary restraining order also set Settlement Capital’s application for a temporary injunction for a hearing on October 2, 2003.

Three days before the hearing, on September 29, 2003, Feldman filed a motion to compel arbitration and stay proceedings. On October 1, 2003, the trial judge delivered her ruling on the motion to all parties by fax as follows: “denied in part as to temp. inj. hearing.” Feldman immediately filed a petition for writ of mandamus, an emergency motion to stay the underlying proceedings, and an appeal. On October 2, this Court terminated and stayed the temporary injunction hearing until we reached a decision on the petition for writ of mandamus or until we entered further orders.

’ ANALYSIS

Settlement Capital does not dispute that its legal services agreement with the Feld-man law firm contains a valid and enforceable arbitration provision.

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Cite This Page — Counsel Stack

Bluebook (online)
140 S.W.3d 879, 2004 Tex. App. LEXIS 6153, 2004 WL 1555207, Counsel Stack Legal Research, https://law.counselstack.com/opinion/feldmanmatz-interests-llp-v-settlement-capital-corp-texapp-2004.