Woodbridge Structured Funding filed a petition for approval of a transfer of payments in U.S. District Court for the Western District of Texas ( see link at the bottom of this post). When the US Department of Justice received the Complaint, it sent Woodbridge's counsel a summary of the current state of the law (below), and Woodbridge voluntarily dismissed the complaint before an Answer or motion was filed Download Dulaney-Woodbridge 11-PLNonsuit
Apparently the following message from The United States was persuasive…
"We believe it would be in your client’s best interest to dismiss this action before the United States and Genworth are forced to respond. As you know, the United States has sixty days to respond under Rule 12(a)(2), FRCP. It appears from the “Application,” which is not a recognized pleading under the Federal Rules of Civil Procedure, that Ms. Dulaney has entered into a contract with your client that would require a change of payee from Ms. Dulaney to your client. However, Ms. Dulaney had no legal authority to enter into any agreement that would require the United States to change the payee of the annuity contract. The federal case law on this point is uniformly in favor of the United States.
- Settlement Funding v. Rose Garcia, 533 F. Supp. 2d 685, 694 (D. Tex. 2006) affirmed by..
- Settlement Funding, LLC v. Transamerica Occidental Life Ins. Co., 555 F.3d 422 (5th Cir. 2009); Transamerica Assur. Corp. v. United States, 423 F. Supp. 2d 691, (D. Ky. 2006), affirmed by...
- TransAmerica Assur. Corp. v. Settlement Capital Corp., 489 F.3d 256, 264 (6th Cir. 2007).
Factoring companies have attempted different arguments and courts to challenge the law, none of which succeeded.
- Metro. Life Ins. Co. v. Muldoon, No. 06-2026, 2009 U.S. Dist. LEXIS 18353 (D. Kan. 2009)
- Annuity Transfers, Ltd. v. United States, 86 Fed. Cl. 173 (Fed. Cl. 2009);
- Metro. Life Ins. v. United States, 2008 U.S. Dist. LEXIS 61756 (N.D.N.Y 2008);
- In the Matter of the Application of Rapid Settlements, Ltd. For Approval of Transfer of Payment Rights of Richard Gregory Holder Case No. CIV-04-645-L, (W.D. Okl. 2004).
Other companies in your client’s industry have come to this conclusion and voluntarily entered into adverse consent decrees in which they admit that a factoring transaction on a U.S.-owned annuity is not authorized by the applicable contracts or existing law, and have promised to refrain from future attempts. See, e.g., American International Life v. United States, et al., No. 07-7358 (E.D. Penn 2010); Met. Life v. United States, et al., No. 1:08-CV-0022 (N.D.N.Y. 2009); Transamerica v. United States, No. 3:08-CV-663-S (W.D.KY 2009).
We request that you discuss these cases with your client and urge them to dismiss this action immediately. Otherwise, we will have no choice but to defend this action on every available legal theory and to consider all appropriate counterclaims against your client and cross claims against Ms. Dulaney and the other members of her family that agreed to hold the United States harmless under the settlement agreement they entered into with the United States in settlement of their Federal Tort Claims Act claims.
Thank you for your attention to this matter."
Whether or not you agree with the United States' position, its victories in this area have been comprehensive. Francis Scott Key could not have said it better..
"Whose broad stripes and bright stars through the perilous fight, O’er the ramparts we watched, were so gallantly streaming?"