rsl-3b-il-ltd-v-the-prudential-insurance-company-of-america-prudential ( 2014 )

Opinion issued July 8, 2014.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00933-CV
———————————
RSL-3B-IL, LTD., Appellant
V.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
PRUDENTIAL PROPERTY AND CASUALTY INSURANCE
COMPANY OF HOLMDEL, NEW JERSEY N/K/A LM
PROPERTY AND CASUALTY INSURANCE COMPANY
AND SETTLEMENT CAPITAL CORPORATION, Appellees
On Appeal from the 269th District Court
Harris County, Texas
Trial Court Case No. 2012-12560
MEMORANDUM OPINION
This is an accelerated appeal of the trial court’s interlocutory order denying
a motion to stay pending litigation until the completed arbitration of a related
dispute. After RSL–3B–1L, Ltd. (RSL) filed its notice of appeal from the order
denying a stay of proceedings, the trial court entered a final judgment disposing of
all parties and claims in the suit before it. We dismiss the appeal as moot.
Background
The arbitration proceeding upon which the stay request was based is
between Olubumi Adegoke and RSL. The lawsuit underlying this appeal is a
breach of contract and interpleader action, arising out of two judicially-approved
factoring agreements. In the first factoring agreement, entered into in 1993 and
court-approved in January 2003, Adegoke’s mother, now deceased, agreed to
transfer to Settlement Capital Corporation (SCC) a portion of periodic payments
that she was entitled to receive under an annuity agreement with Prudential
Insurance Company of America and Prudential Property and Casualty Insurance
Company of Holmdel, New Jersey, now known as LM Property and Casualty
Insurance Company (collectively, Prudential).1 The trial court order approving the
agreement with SCC (the SCC order) included a servicing arrangement that
required Prudential “to deliver and make payable to [SCC]” the full amount of
each periodic payment. In the second factoring agreement, entered into in June
2004 and court approved in July 2004, Adegoke’s mother agreed to assign certain
1
The Structured Settlement Protection Act requires court approval for all direct or
indirect transfers of structured settlement payment rights in Texas. See TEX. CIV.
PRAC. & REM. CODE ANN. § 141.004 (West 2011).
2
future payments from the same annuity to Rapid Settlements, Ltd. The second
approval order directs Prudential to make these annuity payments to Rapid
Settlement’s designated assignee, RSL.
Faced with inconsistent obligations under the orders, Prudential suspended
the periodic payments. When RSL did not receive the periodic payments
transferred to it by Adegoke’s mother, it sued Prudential for breach of contract in
state district court. Prudential appeared and filed an interpleader action to resolve
the inconsistencies between its obligations under the SCC order and those under
the Rapid order. Later, after her mother’s death, Adegoke intervened in this case
in the trial court, suing RSL–3B–1L for breach of contract and claiming, as sole
heir, her right to the funds that her mother purportedly had assigned to RSL.
RSL responded to Adegoke’s intervention by moving to compel arbitration
of the claims between them, whereupon Adegoke nonsuited her claims against
RSL without prejudice to their refiling. The trial court granted RSL’s motion to
compel arbitration, but refused its request to stay the suit pending the arbitration.
At trial, the trial court directed a verdict in favor of Prudential on RSL’s
breach of contract claim, and submitted Prudential’s request for attorney’s fees to a
jury. Based on the jury’s finding, the trial court awarded Prudential its attorney’s
fees, and, in a later ruling, ordered that RSL recover the interpleaded funds less the
attorney’s fees, costs, and post-judgment interest due to Prudential. That later
3
ruling recites: “This judgment is final, disposes of all claims and all parties, and is
appealable. All other relief requested by any party not expressly granted herein . . .
is denied.”
Motion to Dismiss
Prudential has moved to dismiss RSL’s appeal based on two grounds:
untimeliness and mootness. We consider each ground in turn.
Untimeliness
We may extend the time to file a notice of appeal if, within fifteen days after
the deadline to file the notice of appeal, a party properly files a motion for
extension. See TEX. R. APP. P. 10.5(b), 26.3. A motion for extension of time is
necessarily implied when an appellant, acting in good faith, files a notice of appeal
beyond the time allowed by rule 26.1, but within the fifteen–day extension period
provided by Rule 26.3. See TEX. R. APP. P. 26.1, 26.3; Verburgt v. Dorner, 959
S.W.2d 615, 617–18 (Tex.1997).
A motion for extension to file a notice of appeal requires a reasonable
explanation. See TEX. R. APP. P. 10.5(b)(1)(C). A “reasonable explanation” is
“any plausible statement of circumstances indicating that failure to file within the
[specified] period was not deliberate or intentional, but was the result of
inadvertence, mistake or mischance.” Hone v. Hanafin, 104 S.W.3d 884, 886
(Tex. 2003) (quoting Meshwert v. Meshwert, 549 S.W.2d 383, 384 (Tex. 1977)).
4
We apply a liberal standard of review, under which “any conduct short of
deliberate or intentional noncompliance qualifies as inadvertence, mistake or
mischance.” Id. at 886 (quoting Garcia v. Kastner Farms, Inc., 774 S.W.2d 668,
670 (Tex. 1989)).
The trial court denied RSL’s request to stay the proceedings on October 2,
2013. In its motion to extend time to file its notice of appeal, RSL explained that it
did not timely file its notice of appeal because the arbitration proceeding was
initially scheduled so that it would conclude before the trial in this case began,
obviating the need for pursuing the stay. However, the arbitrator postponed the
final arbitration hearing, which had been scheduled to take place the day before the
trial setting. On the first day of trial, RSL renewed its request to stay the
proceedings until issuance of the arbitration award, and when that request was
unavailing, RSL filed its notice of appeal the same day.
Prudential has moved to dismiss the appeal, contending that RSL
deliberately delayed appealing the ruling because it hoped to keep the trial setting
and use the results of the arbitration proceeding to its tactical advantage. It notes
that RSL filed a notice of extension of time to file its notice of appeal rather than
filing the notice itself, and that it was aware of the deadline for filing an
interlocutory appeal. However, viewing RSL’s explanation liberally, as we must,
RSL explained its delay based on the unforeseen delay caused by the arbitrator,
5
who unexpectedly postponed the final hearing. We hold that RSL’s explanation
satisfies Rule 10.5(b). Because untimeliness does not warrant dismissal, we
consider Prudential’s contention that the appeal is moot.
Mootness
Prudential contends that, since RSL filed this appeal, the trial court entered
final judgment addressing the interpleaded funds and thereby disposed of the sole
remaining dispute among the parties. RSL responds that the judgment relied on by
Prudential is merely interlocutory. Relying on In re Gulf Exploration, LLC, RSL
claims that the trial court has not finally disposed of the trial court case because the
arbitration between RSL and Olumubi remains pending. See 289 S.W.3d 836,
840–41 (Tex. 2009) (orig. proceeding) (observing that, under Texas General
Arbitration Act, trial court may render various orders in furtherance of arbitration
when appropriate, including appointment of arbitrators and confirmation or vacatur
of award) (citing TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.086 & 171.087).
RSL’s contention supposes that, despite her nonsuit, Olumubi remains a party
before the trial court. According to RSL, its motion to compel arbitration, as a
pending claim for affirmative relief, rendered Olumubi’s notice of nonsuit
ineffective.
RSL–3B–1L relies on our decision in Quanto International Co. v. Lloyd,
897 S.W.2d 482 (Tex. App.—Houston [1st Dist.] 1995, orig. proceeding), which
6
held that a request to compel arbitration is an affirmative claim for relief under
Rule 162. Since we decided Quanto, the wisdom of that holding has been
questioned. See Gillman v. Davidson, 934 S.W.2d 803, 804–05 (Tex. App.—
Houston [1st Dist.] 1996, orig. proceeding) (en banc) (Hedges, J., joined by
Hutson-Dunn, O’Connor, and Andell, JJ., dissenting from decision to withdraw
leave to file for en banc rehearing as improvidently granted); see also In re Riggs,
315 S.W.3d 613, 615 n.2 (Tex. App.—Fort Worth 2010, orig. proceeding)
(disagreeing with Quanto). Assuming, however, that RSL’s motion to compel
arbitration constituted a claim for affirmative relief, it is not a live controversy in
the case: the trial court granted the requested relief before it entered its final
judgment. Further, Olumubi did not respond to RSL’s motion to compel
arbitration; she filed her notice nonsuiting her claims against RSL the day she
learned of the motion. See HARRIS CNTY. DIST. CT. LOC. R. 3.3.2 (“Failure to file a
response may be considered a representation of no opposition.”) The nonsuit
became effective, at the latest, upon Olumubi’s voluntary participation in the
arbitral process.
A nonsuit “renders the merits of the nonsuited case moot.” Travelers Ins.
Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). “Appellate courts are
prohibited from deciding moot controversies.” Nat’l Collegiate Athletic Ass’n v.
Jones, 1 S.W.3d 83, 86 (Tex. 1999). Mootness deprives this Court of jurisdiction.
7
Vally Baptist Med. Ctr. v. Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000). We hold
that we lack jurisdiction over RSL’s appeal.
Conclusion
We dismiss this appeal for lack of jurisdiction. TEX. R. APP. P. 42.3(a),
43.2(f).
Jane Bland
Justice
Panel consists of Justices Jennings, Bland, and Massengale.
8