Woodbridge et al. v. Genex (5/13/14)

A case about intervention and a small story illustrating the decline of modern times.

Thomas won one million dollars in the lottery. He elected to take the money as an annuity. That is not in theory the optimal solution but, like structured settlements,  protects people against themselves. But it can’t protect them from the sharks who nowadays swim up to recipients of annuities and structured settlements and tempt them with a cash sale (the opinion says that Thomas was approached by several of them; it calls them “structured settlement companies,” which is what we used to call the outfits that sold them rather than the vultures that buy them).  (Lawyers used to spend considerable time, thought, and effort creating structures to protect the financially unsophisticated, the naïve, and the juvenile; we used to be able to protect the weak. Today there is, for every lawyer’s tv commercial, a commercial enticing the foolish to undo the lawyer’s work.) Thomas sold his million dollars to Genex for $428,128. But then he changed his mind, tried to cancel the deal, and sold instead to Woodbridge for $430,000. (Yes, Thomas arguably breached a contract and undeniably bought himself trouble for 1872 bucks, about .4% of the principal involved; so, you see, there really is a reason why some people should use annuities and structured settlements and why the law shouldn’t let them be taken advantage of on the basis of some pro-forma paperwork.)

But when Thomas and Woodbridge filed their paperwork Genex moved to intervene arguing that it had an interest in the money and that approving the sale would impair its right to recover it. The argument comes from Rule 24, which requires for intervention an intervenor’s interest in the property and threatened impairment of its ability to protect its interest (in addition to a timely motion and the lack of a party who will protect that interest). The trial court denied the motion and entered judgment approving the transfer. Genex then filed a Rule 60(c) motion, which the court denied. The Court of Appeals affirms.

A mere contingent interest in the property is not enough. The requirement (however notional) of court approval for the transfer of the annuity makes Genex’s interest contingent upon that approval. And failing to intervene would not prevent Genex from suing the parties involved.

Genex argued that it had filed a UCC-1 but the court says that it did not in fact have a security interest, again because its interest was contingent.

Because Genex had no right to intervene it also was not entitled to Rule 60 relief even “assuming for purposes of argument that a nonparty may move for relief from judgment under Rule 60.”

(link to opinion)