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Saucier v. Aviva Life and Annuity Co.

United States District Court, Fifth Circuit

November 4, 2013

BENNY RAY SAUCIER, Plaintiff,
v.
AVIVA LIFE AND ANNUITY COMPANY Defendant/Counter-Plaintiff.
v.
BENNY RAY SAUCIER, RSL FUNDING, LLC, and RSL-5B-IL, LTD. Counter-Defendants.

MEMORANDUM OPINION AND ORDER DENYING COUNTER-DEFENDANTS RSL FUNDING, LLC, AND RSL-5B-IL, LTD.'S REQUEST TO COMPEL ARBITRATION, AND DIRECTING PARTIES TO SHOW CAUSE WHY INTERPLED FUNDS SHOULD NOT BE DISBURSED

HALIL SULEYMAN OZERDEN, District Judge.

This matter is before the Court on remand from the United States Court of Appeals for the Fifth Circuit to "determine in the first instance whether any issues or claims decided by the state court are entitled to preclusive effect" and to "determine whether RSL is entitled to compel arbitration under 9 U.S.C. § 3." Op. [50] at 11. Plaintiff Benny Ray Saucier and Counter-Defendants RSL Funding, LLC, and RSL-5B-IL, Ltd., have filed Memorandum Briefs [56], [57], Responses [58], [59], and Replies [62], [63], in support of their respective positions on these issues. The Court, having considered the pleadings on file, the briefs and arguments of the parties, and relevant legal authorities, finds that the RSL entities are precluded from compelling arbitration and that their request to do so should be denied. The Court further finds that, in accordance with Federal Rule of Civil Procedure 56(f)(3), because it appears that there may be no genuine dispute of material fact surrounding the issue of entitlement to the interpled funds in the registry of the Court such that summary judgment in Plaintiff Benny Ray Saucier's favor may be warranted, the parties will be directed to show cause within 20 days of entry of this Order why such funds should not be disbursed to Plaintiff Benny Ray Saucier.

I. FACTS AND PROCEDURAL HISTORY

A. Factual Background

This case stems from a dispute over entitlement to the proceeds of a structured settlement annuity funded by Commercial Union Insurance Company for the benefit of Plaintiff Benny Ray Saucier ["Plaintiff" or "Saucier"] and held by Defendant Aviva Life and Annuity Company ["Aviva"]. Compl. [1-1] at ¶¶ 1, 5; Aviva's Countercl. [4] at 1. Saucier alleges in the Complaint that two lump sum payments are owed him under the annuity contract. He maintains that $150, 000.00 was payable to him on August 30, 2010, and that he is due to receive another $200, 000.00 payment on August 30, 2015. Compl. [1-1] at ¶ 5.

Saucier originally entered into a transfer agreement with Woodbridge Investments LLC ["Woodbridge"] to sell the two remaining payments to Woodbridge. After the Chancery Court of Harrison County, Mississippi, First Judicial District, approved this transfer under the Mississippi Structured Settlement Protection Act, Miss. Code § 11-57-11, et seq. ["MSSPA"], Woodbridge was unable to pay the consideration approved in the transfer order. In the Matter of Transfer of Structured Settlement Payment Rights by Benny Ray Saucier, No. 2011-CA-01036-COA, 2013 WL 1197889, at *1-*2 (Miss. Ct. App. 2013) [" In re Saucier "]. Woodbridge then referred Saucier to RSL Funding LLC and RSL-5B-IL Ltd. [collectively, "RSL"].

In early 2009, Saucier entered into an amended transfer agreement with RSL, such that RSL would receive the two remaining payments from Aviva in exchange for the payment of $212, 000.00. Id. On February 6, 2009, the Harrison County Chancery Court entered an Order granting RSL's motion for entry of an amended transfer order. Chancery Court Order [62-2] at 4-5. On March 12, 2009, the Chancery Court entered an Amended Order Approving of Transfer of Structured Settlement Rights which authorized RSL's purchase of Saucier's annuity pursuant to the MSSPA. Chancery Court Am. Order [62-3] at 3-5; see also Compl. [1-1] at ¶¶ 7-8; In re Saucier, 2013 WL 1197889, at *3.

B. The State Court Litigation

On June 11, 2009, Saucier filed a motion to set aside the Chancery Court's Amended Order Approving of Transfer, which the Chancery Court granted in an Order dated September 8, 2009. Compl. [1-1] at ¶ 8; Chancery Court Order [62-4] at 1; In re Saucier, 2013 WL 1197889, at *4. In setting aside the transfer, the Chancery Court found that RSL had failed to comply with the provisions of the MSSPA and that RSL did not give Saucier notice of the hearing on RSL's motion for entry of an amended transfer order. Chancery Court Order [62-4] at 1; In re Saucier, 2013 WL 1197889, at *4. Saucier and RSL have been embroiled in litigation regarding ownership of the annuity payments ever since. Compl. [1-1] at ¶¶ 7-15. While this state court litigation was ongoing, on July 12, 2010, Saucier requested that Aviva remit the $150, 00.00 payment due on August 30, 2010. Id. at ¶ 15. According to Saucier, Aviva would not release the funds because of the then pending appeal of the Chancery Court order. Id.

In an opinion entered on March 26, 2013, the Court of Appeals of Mississippi affirmed the June 17, 2011, order of the Chancery Court which denied RSL's attempt to stay the Chancery Court proceedings to refer the matter to arbitration and granted a permanent injunction prohibiting arbitration. In re Saucier, 2013 WL 1197889, at *7. A more detailed account of the highly complicated procedural history of this litigation in the state courts is available in the Mississippi Court of Appeals' opinion in In re Saucier, 2013 WL 1197889, at *1-*7.

C. Federal Court Proceedings

The parties have also appeared before this Court multiple times in litigation related to the annuity payments. In addition to the case currently before the Court, RSL filed a complaint [1] for interpleader, discharge, injunction, and attorney's fees on May 11, 2009, in RSL Funding, LLC, and RSL-5B-IL v. Benny Ray Saucier, 1:09cv300-HSO-JMR (S.D.Miss.). The Court sua sponte dismissed this matter on January 27, 2010, for lack of jurisdiction. RSL then filed a complaint [1] in RSL Funding, LLC, and RSL-5B-IL v. Benny Ray Saucier and Internal Revenue Serv., 1:10cv145-LG-RHW (S.D.Miss.), for interpleader, discharge, injunction, and other relief on March 31, 2010. The matter was sua sponte dismissed without prejudice on November 1, 2010, pursuant to Federal Rule of Civil Procedure 4(m) for failure to serve the defendants within 120 days of filing the complaint.

Saucier initiated the present litigation by filing a Complaint against Aviva in the Chancery Court of Harrison County, Mississippi, First Judicial District, on or about August 16, 2010, seeking a declaration of the rights of the parties. Compl. [1-1] at ¶¶ 15-16. Aviva removed the case to this Court on August 27, 2010, invoking diversity jurisdiction, pursuant to 28 U.S.C. § 1332. Notice of Removal, at p. 2. Saucier originally sought interest payments, attorney fees, and costs arising out of Aviva's alleged failure to timely comply with the annuity contract, and an award of "punitive or other damages, whether contractual or extra-contractual, arising out of or relating to [Aviva's] failure to timely tender to Saucier the August 30, 2010, disbursement under the annuity contract in question...." Id.

On August 30, 2010, Aviva filed an Answer and Counterclaim for Interpleader [4], and a Motion for Interpleader [5]. Aviva sought to interplead the $150, 000.00 payment into the registry of this Court for adjudication of the inconsistent claims to the funds, pursuant to 28 U.S.C. § 1335(a)(2), and to join RSL Funding, LLC, and RSL-5B-IL, Ltd., as interpleader ...


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