CAUSE NO. 2006-23366 SETTLEMENT FUNDING, LLC D/B/A PEACHTREE SETTLEMENT FUNDING vs. RAPID SETTLEMENTS, LTD.

, LTD. AND RSL FUNDING, LLC

Filed 12 March 2 P4:25 Chris Daniel - District Clerk Harris County ED101J016758620 By: daunshae n. willrich

IN THE DISTRICT COURT

OF HARRIS COUNTY, TEXAS 113TH JUDICIAL DISTRICT

RSL FUNDING, LLC AND RAPID SETTLEMENTS, LTD.S RESPONSE TO PEACHTREES 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 Fundings (Peachtree) Supplement to Traditional Partial Motion for Summary Judgment, and in support thereof states as follows: SUMMARY Peachtrees 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
1

In 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)

RSL Funding and Rapid and concluded that the August 2010 injunction was an unreasonable restraint on trade. Contrary to Peachtrees 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 agreementcourt approval as required under the Structured Settlement Protection Acthas not occurred. This Court should deny Peachtrees motion and grant RSL Fundings 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 Peachtrees 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.

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. 1516) 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 Peachtrees claim of tortious interference fails as a matter of law. (See Peachtrees 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 Fundings and Liquidating Marketings jurisdictional challenges and concluded that the Court had jurisdiction over both parties. (Ex. A at pp. 1214) The court then addressed the argument that the temporary injunction was overbroad. (Id. at pp. 1416) 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 Courts finding that Peachtree had established a probable 3

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, 86465 (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). Peachtrees contention that this Court now cannot address the merits of Peachtrees tortious-interference claim is simply wrong. As amply demonstrated in RSL Fundings and Liquidating Marketings response to Peachtrees partial motion for summary judgment (filed on November 10, 2010) and RSL Fundings 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, Peachtrees motion should be denied and RSL Fundings motion should be granted. But Peachtree is also wrong in asserting that the only other issues for the Court are whether RSL Fundings conduct was justified and the scope of any injunction. (See Peachtrees Supplement at p. 8) Peachtrees 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 4

Liquidating Marketing was not privileged or justified, RSL Funding and Liquidating Marketing further established in their response to Peachtrees 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 Peachtrees 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 Peachtrees 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 5

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, Peachtrees 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 Peachtrees motion and grant RSL Fundings 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 Peachtrees 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. 6

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 Rapids 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 Peachtrees 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 Fundings 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.

As set forth above, the Court should deny Peachtrees motion and grant RSL Fundings 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, Peachtrees supplement refers to additional parties who were not parties to Peachtrees Traditional Partial Motion for Summary Judgment. To the extent Peachtrees supplement seeks to add additional parties to that motion, RSL Funding and Rapid respectfully request that the Court strike Peachtrees 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 Peachtrees traditional partial motion for summary judgment and grant RSL Fundings 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 8

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.

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

10