RSL Funding, LLC v. Pippins

499 S.W.3d 423, 59 Tex. Sup. Ct. J. 1528, 2016 Tex. LEXIS 616, 2016 WL 3568134
CourtCourt of Appeals of Texas
DecidedJuly 1, 2016
DocketNo. 14-0457
StatusPublished
Cited by85 cases

This text of 499 S.W.3d 423 (RSL Funding, LLC v. Pippins) 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
RSL Funding, LLC v. Pippins, 499 S.W.3d 423, 59 Tex. Sup. Ct. J. 1528, 2016 Tex. LEXIS 616, 2016 WL 3568134 (Tex. Ct. App. 2016).

Opinion

PER CURIAM

The trial court and appellate decisions underlying this interlocutory appeal predate, but implicate, our decision in Kennedy Hodges, L.L.P. v. Gobellan, 433 S.W.3d 542 (Tex.2014). There we said that “a party who litigate[s] one claim with an opponent d[oes] not substantially invoke the litigation process for a related yet distinct claim against another party with whom it had an arbitration agreement.” Id. at 545 (citing In re Serv. Corp. Int’l, 85 S.W.3d 171,175 (Tex.2002)).

Here, one of the parties, petitioner RSL Funding, LLC (RSL), has arbitration agreements with three individuals—Che-veze Pippins, Daniel Morris, and Donna O’Brien (collectively, Individuals)—who are parties .and owned annuity contracts they agreed to sell to RSL or its designee. However, neither RSL nor the Individuals have arbitration agreements with the companies that are also parties and wrote the annuity contracts—Metropolitan Life Insurance Company, MetLife Insurance Company of Connecticut, and MetLife Investors USA Insurance Company (collectively MetLife). RSL sued MetLife and the Individuals in the County Court at Law No. 4 of Harris County (CCL) for a declaratory judgment after MetLife refused to honor contracts by which the Individuals sold their annuities. The parties also ended up in a district court suit involving the same subject matter. At first the individuals were aligned with RSL, but, later, disputes arose between them. RSL initiated arbitration with the Individuals and sought to stay the CCL ■ suit pending its completion. The CCL denied the motion and RSL pursued this interlocutory appeal. The court of appeals affirmed, holding RSL waived its right to arbitrate by its litigation conduct involving both the Individuals and MetLife. 424 S.W.3d 674, 685-87 (TexApp.-Houston [14th Dist.] 2014). In a footnote, the appeals court said it would also affirm because RSL did not challenge a separate ground on which the trial court could have denied the motion. Id. at 687 n. 24.

We conclude that RSL did not waive its right to arbitrate by litigation conduct, but nevertheless affirm.

The Individuals owned annuities issued by MetLife. The annuity contracts do not contain, and are not subject to, arbitration agreements. Each of the Individuals assigned their annuities to RSL in exchange for immediate lump-sum payments and executed bills of sale to RSL Special-IV, Ltd. (RSL Special). The assignments1 included clauses providing for dispute arbitration pursuant to the Federal Arbitration Act (FAA). See 9 U.S.C. § 3. MetLife was not a party to the assignments, objected to them, and refused to honor them. MetLife’s refusal to honor the assignments precipitated RSL’s suing MetLife and the Individuals in the CCL in June 2011, seeking a declaratory judgment that its agreements with the Individuals were binding on MetLife. RSL attached affidavits from the Individuals to its petition. In the affidavits, the Individuals averred that they had sold and assigned their annuities to RSL, “its successors, and/or its assigns” and stated that if a dispute arose as to the binding nature of the assignment, they joined RSL in seeking “a declaratory judgment ... that the [assignment documents] are valid and binding on all parties to this [427]*427action, [and] , that MetLife be ordered to irrevocably make the Assigned Payments otherwise due me, now to RSL Funding or its assignee.”

Pippins, in July, and Morris, in August, informed RSL they'were terminating their agreements with RSL so they could reassign their annuity rights. In September, RSL moved the CCL to order Pippins to arbitrate based on his seeking to cancel his agreement and, in a separate motion, to have MetLife make any payments due under the policies either to Marla Matz, RSL’s assignee, or into the registry of the court. Those motions were followed shortly by MetLife filing a counterclaim against RSL and cross-claims against the Individuals for declaratory judgment and seeking to interplead funds owed under the annuity contracts. In October, the CCL ordered MetLife to deposit funds into the registry of the court as they became due under the contracts, and neither RSL nor the Individuals allege MetLife has failed to comply with the order.

In November 2011, the Individuals filed counter- and cross-claims alleging that RSL breached its contract to pay the full lump sums due and MetLife breached its contract and its fiduciary duty and acted in bad faith by blocking the assignments to RSL. The Individuals sought transfer of the CCL suit to district court on the basis that damages alleged in their counter- and cross-claims exceeded the CCL’s jurisdiction. RSL supported their motion to transfer the CCL case, but the court denied it. The Individuals nonsuited their CCL claims on November 30, 2011, and sued both RSL and MetLife in Harris County district court the same day. As to RSL, the Individuals claimed they sold their annuities to RSL and it breached the contract by failing to pay the full lump sum agreed to. On December 1, 2011, RSL nonsuited its claims against the Individuals as well as MetLife in the CCL and sought dismissal of-MetLife’s claims that were pending in there. On January 19, 2012, RSL cross-claimed against MetLife in the-district court suit for declaratory judgment and breach of contract as to the various annuities and agreements; it made no claim against the Individuals.

RSL filed a plea to the jurisdiction in the CCL based on the amount in controversy. It also filed a motion for summary judgment' in the CCL as to MetLife’s obligation to honor Pippins’s assignment of his annuity, alleging MetLife’s corporate representative had conceded in a deposition that MetLife must follow Pippins’s instructions to redirect payments.

On January 30, 2012, the Individuals moved the CCL to distribute to them the payments MetLife had made into its registry. RSL responded in mid-February by (1) initiating arbitration proceedings with Pippins and O’Brien because they were attempting to exercise control over money belonging to RSL, and (2) moving the CCL for a stay of the CCL proceedings pending completion of arbitration. The motion for a stay was denied. Meanwhile,- MetLife moved for abatement in the district court.

In March, RSL added Morris as a party to the arbitration it was seeking and moved the CCL to reconsider a stay of its proceedings pending completion of arbitration. The Individuals countered by opposing RSL’s motion and requesting the CCL to stay the arbitration proceedings. The parties’ eventful journey in the trial courts, for the most part, came to a temporary end when the district court abated its case; the CCL denied RSL’s' plea to the jurisdiction; the CCL refused to abate the suit pending there; the CCL stayed arbitration; and RSL filed .this interlocutory appeal.

A divided court of appeals affirmed. 424 S.W.3d at 687. Referencing Perry [428]*428Homes v. Cull, 258 S.W.3d 580 (Tex.2008), the appeals court held that RSL, through its actions in the trial courts, had impliedly waived its rights to arbitrate with the Individuals by substantially invoking 'the judicial process and that both MetLife and the Individuals had been prejudiced. 424 S.W.3d at 686.

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Cite This Page — Counsel Stack

Bluebook (online)
499 S.W.3d 423, 59 Tex. Sup. Ct. J. 1528, 2016 Tex. LEXIS 616, 2016 WL 3568134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rsl-funding-llc-v-pippins-texapp-2016.