CAUSE NO. 2006-23366

SETTLEMENT FUNDING, LLC D/B/A PEACHTREE SETTLEMENT FUNDING vs. RAPID SETTLEMENTS, LTD. AND RSL FUNDING, LLC

§§§§§§§

IN THE DISTRICT COURT

OF HARRIS COUNTY, TEXAS

113TH JUDICIAL DISTRICT

RSL FUNDING, LLC AND RAPID SETTLEMENTS, LTD.’S RESPONSE TO PEACHTREE’S SUPPLEMENT TO TRADITIONAL PARTIAL MOTION FOR

SUMMARY JUDGMENT

Defendants RSL Funding, LLC and Rapid Settlements, Ltd. n/k/a Liquidating

Marketing, Ltd. (“Rapid”) file this response1 to Plaintiff Settlement Funding, LLC d/b/a

Peachtree Settlement Funding’s (“Peachtree”) Supplement to Traditional Partial Motion for

Summary Judgment, and in support thereof states as follows:

SUMMARY

Peachtree’s supplement in support of its motion for summary judgment is based on a

demonstrably false premise. Nearly one-and-a-half years after Peachtree obtained a

temporary injunction against its competitor, the Fourteenth Court of Appeals agreed with

1In addition to this Response, Rapid and RSL Funding incorporate by reference the following related documents

and their exhibits as if fully set forth herein: (1) RSL Funding, LLC and Rapid Settlements, Ltd.'s Response In Opposition to Peachtree's Motion for Summary Judgment; (2) RSL Funding, LLC's Motion for Partial Summary Judgment; (3) Rapid Settlements, Ltd.'s Sur-reply in opposition to Peachtree's motion for partial summary judgment and letter to the Court; (4)Rapid Settlements, Ltd.'s Reply to Settlement Funding, LLC d/b/a Peachtree Settlement Funding's Response to and Motion to Strike Rapid's Sur-Reply in Opposition to Peachtree's motion for partial summary judgment and letter to the court; (5) RSL Funding, LLC's and Rapid Settlements, Ltd.'s Joint Motion to Dissolve Temporary Injunction; (6) Defendants' Rapid Settlements, Ltd.'s and RSL Funding, LLC's Objections to Peachtree's Summary Judgment Evidence; (7) Letter to Judge Donovan dated June 16, 2011with exhibits, attached as Exhibit Q; (8) RSL Funding, LLC's Response to Peachtree's Motion to Strike; (9)

Filed 12 March 2 P4:25Chris Daniel - District ClerkHarris CountyED101J016758620By: daunshae n. willrich

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RSL Funding and Rapid and concluded that the August 2010 injunction was an unreasonable

restraint on trade. Contrary to Peachtree’s representation, the court of appeals deliberately

did not resolve the legal issue at the heart of the cross-motions for summary judgment:

whether a structured settlement transfer agreement is subject to a claim for tortious

interference when a condition precedent to that agreement—court approval as required under

the Structured Settlement Protection Act—has not occurred. This Court should deny

Peachtree’s motion and grant RSL Funding’s cross-motion.

Moreover, under the guise of “supplementing” its earlier motion, Peachtree introduces

a new plaintiff into the lawsuit: Peachtree Settlement Funding, LLC. According to Plaintiffs’

Second Supplemental Petition (filed on February 17, 2012), this new entity and Settlement

Funding, LLC “together hold the assets of the original Plaintiff Settlement Funding, LLC

d/b/a Peachtree Settlement Funding.”2 At a minimum, the introduction of a new plaintiff

raises genuine issues of fact with respect to which entity, if any, currently owns the claims

alleged against RSL Funding and Rapid and which entity, if any, allegedly suffered damages

as a result of any conduct by RSL Funding or Rapid. For this additional reason, the Court

should deny Peachtree’s motion or, in the alternative, grant a continuance for the parties to

conduct additional discovery.

Peachtree is not entitled to judgment as a matter of law.

2 See Plaintiffs’ Second Supplemental Petition, attached hereto as Exhibit B.

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On January 10, 2012, the Fourteenth Court of Appeals reversed the temporary

injunction that was entered in August 2010. (See Ex. A) The appellate court concluded that

the injunction requested by Peachtree was “overbroad” and went “far beyond simply

preserving the status quo of the underlying dispute,” resulting in “an unreasonable restraint

on trade.” (Id. at pp. 15–16) Accordingly, that court reversed the injunction.

Peachtree erroneously asserts that the court of appeals ruling somehow “foreclosed”

the argument being advanced by RSL Funding and Rapid Settlements, Ltd., n/k/a Liquidating

Marketing, Ltd. (“Liquidating Marketing”) that Peachtree’s claim of tortious interference

fails as a matter of law. (See Peachtree’s Supplement to Traditional Motion for Summary

Judgment at p. 2) Peachtree claims that “[i]t was determined that the Court did not abuse its

discretion in finding that [Peachtree] pleaded a cause of action for tortious interference with

existing contracts and established a probable right to relief there from.” (Id. at p. 5) But the

appellate court made no such determination. The court of appeals initially addressed RSL

Funding’s and Liquidating Marketing’s jurisdictional challenges and concluded that the

Court had jurisdiction over both parties. (Ex. A at pp. 12–14) The court then addressed the

argument that the temporary injunction was overbroad. (Id. at pp. 14–16) The court

concluded that the injunction went far beyond the intended purpose of a temporary injunction

(preserving the status quo) and needed to be reversed. (Id.)

Although the court of appeals mentioned that RSL Funding and Liquidating

Marketing also challenged this Court’s finding that Peachtree had established a probable

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right to relief on its tortious interference claim, the court did not address this issue at all. To

the contrary, the court noted it “may not review the merits of the underlying litigation on

appeal from a temporary injunction order.” (Id. at p. 12) See also 8100 N. Freeway Ltd. v.

City of Houston, 329 S.W.3d 858, 864–65 (Tex. App.—Houston [14th Dist.] 2010, no pet.)

(refusing to address a merits-based challenge to the issuance of a temporary injunction and

noting that “a temporary injunction is not a ruling on the merits”). Peachtree’s contention

that this Court now cannot address the merits of Peachtree’s tortious-interference claim is

simply wrong.

As amply demonstrated in RSL Funding’s and Liquidating Marketing’s response to

Peachtree’s partial motion for summary judgment (filed on November 10, 2010) and RSL

Funding’s cross-motion for partial summary judgment (filed on October 21, 2011), Peachtree

cannot recover as a matter of law on its claim for tortious interference because court approval

under the Structured Settlement Protection Act is “a condition precedent to the formation of

an enforceable contract.” In re Rapid Settlements, Ltd., 202 S.W.3d 456, 461 (Tex. App.—

Beaumont 2006, pet. denied). Accordingly, Peachtree’s motion should be denied and RSL

Funding’s motion should be granted. But Peachtree is also wrong in asserting that the only

other issues for the Court are whether RSL Funding’s conduct was justified and the scope of

any injunction. (See Peachtree’s Supplement at p. 8) Peachtree’s motion asks the Court to

enter a permanent injunction against RSL Funding and Liquidating Marketing. In addition to

showing that Peachtree failed to establish the existence of any contract subject to interference

and that Peachtree failed to conclusively establish that the conduct of RSL Funding and

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Liquidating Marketing was not privileged or justified, RSL Funding and Liquidating

Marketing further established in their response to Peachtree’s motion that (1) Peachtree failed

to conclusively establish that the conduct of RSL Funding and Liquidating Marketing was a

proximate cause of any alleged injury to Peachtree; (2) Peachtree is stopped from asserting a

claim for tortious interference; and (3) Peachtree is prohibited from obtaining an injunction

by the doctrine of unclean hands.

Furthermore, the permanent injunction sought by Peachtree is improper as to Rapid

because there has been no showing of the requisite element of probable injury. An injunction

will not be issued unless it is shown that the respondent will otherwise engage in the activity

enjoined. State v. Morales, 869 S.W.2d 941, 946-47 (Tex. 1994). To establish a right to

injunctive relief, a plaintiff must establish that the harm is imminent, the injury would be

irreparable, and the applicant has no other adequate legal remedy. Henderson v. KRTS, Inc.,

822 S.W.2d 769, 773 (Tex. App.—Houston [1st Dist.] 1992, no writ). A showing of

imminent harm was impossible because Rapid is no longer a direct competitor of Peachtree’s

in the marketplace for the purchase of future structured settlement payments and it has not

conducted such business since 2008. Thus, Peachtree cannot and did not prove that Rapid

intends to harm Peachtree or that any such harm is imminent. See EMSL Analytical, Inc. v.

Younker, 154 S.W. 3d 693, 697 (Tex. App.—Houston [14th Dist.] 2004, no pet.). Peachtree

failed to prove that but for an injunction, Rapid will otherwise interfere with Peachtree’s

alleged contracts. State v. Morales, 869 S.W.2d 941, 946-47 (Tex. 1994) (holding that

injunction will not be issued unless it is shown that the respondent will otherwise engage in

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the activity enjoined). Since Rapid has been out of business since 2008, it cannot and will

not engage in any conduct Peachtree seeks to enjoin by permanent injunction. Peachtree has

failed to make the requisite showing of imminent harm and irreparable injury for a permanent

injunction to lie. Thus, Peachtree’s motion for summary judgment should be denied for this

additional reason.

Motion for Continuance

For the foregoing reasons, as well as those set forth in the other pleadings and

evidence before the Court, the Court should deny Peachtree’s motion and grant RSL

Funding’s motion for partial summary judgment. In the alternative, RSL Funding and Rapid

respectfully request that the Court continue the summary judgment hearing to permit RSL

Funding and Rapid to conduct additional discovery before ruling on Peachtree’s motion. As

noted above, on the same day Peachtree filed its “Supplement,” Peachtree added an

additional plaintiff (Peachtree Settlement Funding, LLC) and alleged that this new entity

“hold[s] the assets” of the original plaintiff, Settlement Funding, LLC d/b/a Peachtree

Settlement Funding. (See Ex. B) RSL Funding and Rapid should be permitted an

opportunity to conduct discovery regarding this new entity to determine, among other things,

(1) whether Peachtree ever had standing to bring this lawsuit; (2) which entity, if any, has a

valid interest in the alleged claims; (3) which entity, if any, has a valid claim for damages as

a result of the alleged conduct of RSL Funding and Rapid; and (4) whether this new plaintiff

is a necessary party that should have been joined earlier.

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In addition, Peachtree has yet to produce any documents in response to valid

discovery requests from both Rapid and RSL Funding. Peachtree attempts to justify its

failure to respond on the parties’ efforts to negotiate an agreed protective order. However,

Peachtree itself insisted that Rapid would not be a party to any agreed protective order;

accordingly, Peachtree has no excuse for refusing to produce documents in response to

Rapid’s requests. With respect to RSL Funding, Peachtree has used these negotiations as

nothing more than a shield to protect itself from having to produce any documents. RSL

Funding first sent a draft proposed protective order in November 2010; Peachtree did not

respond in any way until ten months later. More recently, at a hearing on December 5, 2011,

the Court indicated it would enter a one-line protective order if the parties could not agree.

At Peachtree’s insistence, the parties negotiated further over the next two days, at which

point the parties narrowed their area of disagreement to a single paragraph. Peachtree then

abruptly cut off all discussions until over two months later, insisting for the first time (nearly

fifteen months after the first draft was sent) that RSL Funding’s CEO and longstanding

corporate representative could not have access to any documents produced by Peachtree.

Peachtree has not negotiated in good faith. Finally, although both Rapid and RSL Funding

have offered for deposition every witness requested by Peachtree, Peachtree refused to

present its corporate representative until March 7, 2012, two days before the hearing on the

parties’ cross-motions for summary judgment.

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As set forth above, the Court should deny Peachtree’s motion and grant RSL

Funding’s motion for partial summary judgment. Alternatively, the Court should grant a

continuance to allow RSL Funding and Rapid to take additional discovery.

Motion to Strike

As noted above, Peachtree’s supplement refers to additional parties who were not

parties to Peachtree’s Traditional Partial Motion for Summary Judgment. To the extent

Peachtree’s “supplement” seeks to add additional parties to that motion, RSL Funding and

Rapid respectfully request that the Court strike Peachtree’s pleading and not consider it for

any purpose.

Prayer

For the foregoing reasons, as well as those set forth in the pleadings before the Court,

RSL Funding and Liquidating Marketing respectfully request that the Court deny Peachtree’s

traditional partial motion for summary judgment and grant RSL Funding’s motion for partial

summary judgment. In the alternative, RSL Funding and Rapid respectfully request that the

Court grant their motion for continuance and motion to strike.

Respectfully submitted,

/s/ Michael Choyke Michael Choyke State Bar No. 00793504

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WRIGHT & CLOSE, LLP Three Riverway, Suite 600 Houston, Texas 77056 Telephone: (713) 572-4321 Facsimile: (713) 572-4320 choyke@wrightclose.com Attorneys for RSL Funding, LLC /s/ John R. Craddock (w/permission) John R. Craddock State Bar No. 04969800 E. John Gorman State Bar No. 08217560 THE FELDMAN LAW FIRM LLP Two Post Oak Central 1980 Post Oak Blvd., Ste. 1900 Houston, TX 77056 Telephone: (713) 850-0700 Facsimile: (713) 850-8530

Attorneys for Rapid Settlements, Ltd.

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CERTIFICATE OF SERVICE

The undersigned certifies that a copy of the foregoing instrument was served upon the

attorneys of record for in accordance with Rule 21a, Texas Rules of Civil Procedure, on this

2nd day of March, 2012.

L. Bradley Hancock Christopher Johnsen GREENBERG TRAURIG 1000 Louisiana, Suite 1800 Houston, TX 77002

/s/ Michael Choyke Michael Choyke