FinServ Casualty Corp et al v. Settlement Funding LLC et al

Filing 276

ORDER ADOPTING MEMORANDUM AND RECOMMENDATIONS re: 265 Memorandum and Recommendations, granting in part and denying in part 152 MOTION for Partial Summary Judgment On Plaintiffs' Claims For Piercing The Corporate Veil/Alter Ego, Sham T o Perpetrate A Fraud, and Partnership Liability, granting in part and denying in part 162 MOTION for Partial Summary Judgment , sustaining in part 270 Objection Memorandum and Recommendation. Joint Pretrial Order due by 4/29/2016. Docket Call set for 5/16/2016 at 2:30 PM in Courtroom 9B before Judge Sim Lake. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

United States District Court
Southern District of Texas

ENTERED
March 30, 2016

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

FINSERV CASUALTY CORP., on
behalf of itself and as agent
for A.M.Y. PROPERTY & CASUALTY
INSURANCE CORPORATION;
RSL FUNDING LLC; and
THE FELDMAN LAW FIRM, LLP,

David J. Bradley, Clerk

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§
§
§

Plaintiffs,

CIVIL ACTION NO. H-10-0264

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§
§
§
§
§
§

v.
SETTLEMENT FUNDING, LLC,
Defendant.

ORDER ADOPTING MAGISTRATE JUDGE'S
MEMORANDUM AND RECOMMENDATION

Pending

before

the

court

are

Settlement

Funding,

LLC's

Objections to the Magistrate Judge's February 29, 2016, Memorandum
and

Recommendation

(Docket

Entry

No.

270)

and

Defendants'

Objections to Magistrate Judge's Memorandum and Recommendation (Dkt

# 265)

(Docket Entry No. 271).

The latter was filed by the Feldman

Parties' 1 and presents only one objection, which is directed to one
nondispositive ruling on the admissibility of evidence.
A

district

judge

must

consider

timely

objections

magistrate judge's order on a nondispositive matter.

1

to

a

Fed. R. Civ.

The "Feldman Parties" are Plaintiffs Rapid Settlements, Ltd.,
Rapid Management Corp., RSL Funding, LLC, Stewart A. Feldman,
FinServ Casualty Corp., A.M.Y. Property & Casualty Insurance
Corporation, and The Feldman Law Firm, LLP.

!!
II

P.

72(a).

The court will "modify or set aside any part of the

order that is clearly erroneous or is contrary to law."
also 28 U.S.C.

§

636(b) (1) (A).

Additionally,

Id.; see

the district judge

must review de novo any portions of the magistrate judge's proposed
findings and recommendations on dispositive matters to which the
parties have filed specific, written objections.
P. 72 (b); 28 U.S.C.

See Fed. R. Civ.

636 (b) (1) (C).

§

In the Memorandum and Recommendation (Docket Entry No. 265),
the Magistrate Judge sustained Settlement Funding's objection to
the Feldman Parties' exhibit entitled "Inter-Creditor Agreement" on
the basis that the Feldman Parties failed to overcome Settlement
Funding's assertion that the document was not produced until it was
submitted in 2015 as an exhibit in support of the Feldman Parties'
dispositive motions. 2
Parties'

objections

In connection with the filing of the Feldman
to

the Memorandum and Recommendation,

submitted deposition testimony dated March 5,
line

of

inquiry

regarding

specifically conceded
previous day.

3

that

the
the

2010,

Inter-Creditor
document

they

reflecting a

Agreement

that

had been produced the

Thus, the court finds that the Feldman Parties have

overcome Settlement Funding's assertion about the production of the
Inter-Creditor Agreement.

2

See Mem. & Recommendation Dated Feb. 29, 2016 pp. 19-20.

3

See Docket Entry No. 271-2, Ex. B to Defs.' Objs. to Mag.
J.'s Mem. & Recommendation (Dkt # 265), Dep. of Stewart Feldman
Dated Mar. 5, 2010 pp. 71-72, 257.
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Settlement Funding notes, in their response to the objection,
that

the

Magistrate

Judge

ruled

on

only

one

objections to the Inter-Creditor Agreement.

of

their

three

Settlement Funding

also objected to the document as hearsay and not the best evidence.
In the Feldman Parties' motion, they cited to the document, along
with the Fourth Amended and Restated Factoring Loan Agreement, as
evidence
Management

that

FinServ

Corp.

Casualty

("Rapid")

Corp.

("FinServ")

entered into

and

Rapid

"interest -bearing loan

agreements with security interests and promissory notes." 4

The

Inter-Creditor Agreement stated in its recitals that the agreement
was pursuant to the First Amendment to the Fourth Amended and
Restated Factoring Loan Agreement and Promissory Note entered into
by FinServ, Rapid, and a host of other entities. 5
that

the

Feldman

precisely what
hearsay.
Agreement

Parties

the document

However,
is

did

not

the

the

cite

stated,

court

best

not

and,

agrees

evidence

the

document

therefore,

that
of

The court finds

the

the

to

prove

it is not

Inter-Creditor

existence

of

loan

agreements between FinServ and Rapid and cannot be relied on for
that purpose.

4

Docket Entry No. 152, Defs.' Traditional Mot. for Partial
Summ. J. on Pls.' Cls. for Piercing the Corp. Veil/Alter Ego, Sham
to Perpetrate a Fraud, & P'ship Liability p. 20.
Although the
title of the motion refers to "Defendants," it was filed by the
Feldman Parties.
5

See Docket Entry No. 154-3, Ex. Q to Defs.' Traditional Mot.
for Partial Summ. J. on Pls.' Cls. for Piercing the Corp.
Veil/Alter Ego, Sham to Perpetrate a Fraud, P' ship Liability,
Inter-Creditor Agreement.
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The

Feldman

Parties'

objection

to

the

Magistrate

Judge's

ruling on Settlement Funding, LLC's evidentiary objection to the
Inter-Creditor Agreement is SUSTAINED IN PART.

The Inter-Creditor

Agreement is admissible but not for the purpose of proving the
existence of loan agreements between FinServ and Rapid.
With

regard

to

Settlement

Funding's

objections

to

the

Magistrate Judge's dispositive recommendations, the court reviewed
de

novo

the

Recommendation.

challenged

portions

of

the

Memorandum

and

The court is of the opinion that the remainder of

said Memorandum and Recommendation should be ADOPTED.
With the above modification, it is ORDERED that the Memorandum
and Recommendation is hereby ADOPTED by this court.
The court ORDERS that the complete Joint Pretrial Order be
filed by April 29, 2016.
at

2:30

p.m.,

in

Docket Call will be held on May 6, 2016,

Courtroom

9-B,

9th

Floor,

United

States

Courthouse, 515 Rusk Avenue, Houston, Texas 77002.
SIGNED at Houston, Texas, this the 30th day of March, 2016.

7

SIM LAKE
UNITED STATES DISTRICT JUDGE

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