by Structured Settlement Watchdog
A Texas appeals dissolved and reversed a temporary injunction against structured settlement purchasing company RSL Funding LLC that had prevented RSL from competing with Peachtree Settlement Funding over clients throughout the United States.
The injunction was originally issued in a dispute in which Peachtree Settlement Funding alleged that RSL gazumped it by offering Peachtree's customers more money than Peachtree was willing to offer for their structured settlement payments. RSL had allegedly obtained the client information via public records of court filings. RSL readily admitted to offering customers more money for their annuity payments than the now J.G. Wentworth affiliate Peachtree Settlement Funding was offering. “We plead guilty as charged!” commented RSL senior account executive Rudy Ramirez, in a February 7, 2012 press release.
Initially Peachtree convinced a Houston trial judge that RSL’s gazumping violated Texas law. At Peachtree’s request, the state court judge, granted a nationwide injunction against RSL, preventing it from offering a better deal to sellers of annuities. Texas legal commentators were not surprised when the Texas appellate court disagreed with the former trial judge and reversed the trial court in a recent opinion noting that Peachtree’s actions were “an unreasonable restraint on trade” (1) and anti-competitive. Peachtree and RSL are competitors in the secondary market for structured settlement payment rights. Each is in the business of buying future income streams from settlement recipients in exchange for a cash lump sum.
In what appears to be an important win for structured settlement annuitants who find themselves in need of liquidity down the road and cannot tap other sources, the Texas appellate court upheld the annuity recipient's right to shop around and continue seeking competitive offers, apparently allowing competitors to figuratively, "cut in during the middle of a dance" . And in the instant decision, the Texas appellate court upheld the right of RSL Funding (and other factoring companies for that matter) to make competitive offers to prospective sellers of structured settlements.
The structured settlement watchdog has written about opportunitistic low hanging fruit grabbing in the factoring industry when factoring companies come in with a high teens above market discount rates and serve to prey on sellers of structured settlement payment rights who do not shop around due to desperation or ignorance. That is fine under the lemonade stand metaphor for the free market system. Charge what they will the consumer buys the most expensive cup because it is the first, the most prominent, or he/she is too damn thirsty to walk any further to see if there is a better price. The other side of this story is that when it comes to the business of factoring in the State of Texas, "it really ain't over, until it's over"
1.The full text of the 14th Court of Appeals opinion can be found at www.leagle.com/xmlResult.aspx?page=11&xmldoc=In%20TXCO%20... . See also the full text of the opinion at Rapid Settlements, Ltd v. Settlement Funding, LLC, 2012 Tex. App. LEXIS 156 (Tex. App. Houston 14th Dist. Jan. 10, 2012).