by Structured Settlement Watchdog
Time for a quick update on the Genex Capital structured settlement investment litigation in Arizona, an important case to follow for investors in structured settlement payment rights or, contemplating making investments in other people's structured settlements (or parts thereof), and their advisers. If you are an injury victim who is evaluating whether or not to apportion your settlement recovery to a structured settlement, this article is not for you, unless your settlement planner is recommending that you invest in other people's structured settlement payment rights.
In my June 11, 2022 blog, I reported that the Court in its June 9, 2022 under advisement ruling, declined to enter a partial summary judgment in favor of Defendants against Genex Capital Corporation in its lawsuit against New England Annuity Associates, Bulbrook-Drislane, Seeley Capital Management Inc., Income Stream Funding Partners, LLC, John Bulbrook/Jane Doe Bulbrook, and Christopher Seeley (collectively, “Defendants”)
1. The Court found that Genex Capital presented sufficient evidence demonstrating that factual disputes remain as to what damages Genex may have suffered. As a result, the Court declined to enter summary judgment on the issue of damages. The Court found that Defendants have not shown an absence of any genuine issue of material fact regarding causation. Based on its conclusions, the Court declined to enter summary judgment on the issue of damages or causation of damages.
2. The Court found that the Keefer Plaintiffs are entitled to a declaration that they are the owners of and have the right to receive payments arising from the Payment Streams and that Genex has no material right, title, or interest in the Keefers’ Payment Streams.
The Court further reasoned that although the RPA (Genex Receivables Purchase Agreement) is clear regarding the Keefers’ interest in the Payment Streams, the RPA is equally clear regarding restrictions on reassignment. Section 3.4 of the RPA states: “Buyer shall not have the right to further assign or sell the Receivable and must keep the Receivable for the balance of its term unless otherwise expressly approved by Genex.” Statement of Facts, Ex. 1, RPA § 3.4. The Court found that Genex is entitled to a declaration that the RPA does not permit reassignment of the Receivables without Genex’s consent, but denied all other relief.
Following the June 9, 2022 under advisement ruling, Genex Capital requested reinconsideration of the ruling. Subsequently the Court requested New England Annuity Associates Defendants to file a response. New England Defendants filed an amended counterclaim in July to which Genex has filed a response.
The latest is that local counsel of record for Genex Capital Corporation and its CEO Roger Proctor filed to withdraw as counsel.
Pursuant to Rule 5.3(a)(2)(B)(ii) of the Arizona Rules of Civil Procedure, Timothy J. Eckstein, Jeffrey B. Molinar, William D. Furnish and BriAnne N. Illich Meeds of the firm Osborn Maledon, P.A. move to withdraw as counsel of record for Genex Capital Corporation and Roger Proctor. The undersigned attorneys seek an Order granting their withdrawal on the ground that the clients failed substantially to fulfill an obligation to the lawyer regarding the lawyers’ services and has been given reasonable warning that the lawyers will withdraw unless the obligation is fulfilled.
On September 13, 2022, The Court granted the Motion of Timothy J. Eckstein, Jeffrey B. Molinar, William D. Furnish and BriAnne N. Illich Meeds of the firm Osborn Maledon, P.A. to withraw as Counsel for Genex Capital Corporation and Roger Proctor.
GENEX CAPITAL CORPORATION, a Delaware corporation; Plaintiff,
SEELEY CAPITAL MANAGEMENT,
INC., a Massachusetts corporation; et al.,
RICHARD L. KEEFER and VICKI L.
KEEFER, et al.,
GENEX CAPITAL CORPORATION, a
Delaware corporation; et al.,
AND RELATED COUNTERCLAIMS.
Case No. CV2020-004958
(Consolidated with CV2020-013796 and
Why You Should Follow the Arizona Litigation
The Arizona litigation is perhaps the most significant case about the limitations and transactional risks of investing in structured settlement payment rights. It is well worth taking the time to understand what has happened with the investors.
For years such receivables (structured settlement payment rights) have been marketed to investors across the secondary and tertiary markets as if they were annuities, in some cases even insinuating, with a disclaimer, that such investors might have the same statutory protections as those who buy real annuities. Today 37 states, who have adopted the 2017 revisons to the Life & Health Guaranty Associations Model Act (#520) have zero protection for investors in the event of the insolvency of the obligor of the factored structured settlement receivable
See Section 3A(5(c) of the 2017 Revisions tp the LIfe & Health Guaranty Associations Model Act (#520) which expressly excludes "a person who acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective".
Genex Capital CEO Roger Proctor has done the structured settlement industry and consumers a substantial service in earlier responsive court filings by defining investments by the investors in this case, particularly when subject to a payment servicing agreement, as a "subset" or "the lesser subset" of payment rights.
[from 1/3/2022 Decl. of Roger Proctor in Response to Seeley Defendants' Motion for Partial Summary Judgment (at #56) IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA
GENEX CAPITAL CORPORATION, a Delaware corporation; Plaintiff, vs. SEELEY CAPITAL MANAGEMENT, INC., a Massachusetts corporation; et al., Defendants. AND RELATED COUNTERCLAIM; RICHARD L. KEEFER and VICKI L. KEEFER, husband and wife; et al., Plaintiffs,vs. GENEX CAPITAL CORPORATION, a Delaware corporation; et al., Defendants. Case Nos: CV2020-004958 CV2020-013796 (Consolidated) at #1]