RSL Funding, LLC v. Rodriguez

Filing 18

MEMORANDUM AND ORDER entered GRANTING #17 AMENDED MOTION Amended MOTION for Relief from Judgment. (Signed by Judge Lee H Rosenthal) Parties notified.(leddins, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
RSL FUNDING, LLC,
Plaintiff,
VS.
JESUS RODRIGUEZ, SR.,
Defendant.

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CIVIL ACTION NO. H-13-941

MEMORANDUM AND ORDER
The plaintiff, RSL Funding, LLC (“RSL”), moves under Federal Rule of Civil Procedure
60(b) for relief from this court’s order denying the motion to confirm an arbitration award entered
against the defendant, Jesus Rodriguez, Sr. That award would transfer the income stream from a
structured settlement Rodriguez holds from Rodriguez to RSL. In exchange, RSL would pay
Rodriguez a lump sum much smaller, even accounting for present-value reduction, than the futureincome stream. (Docket Entry No. 1, Ex. 1 at 1).
On June 6, 2013, this court denied RSL’s motion to confirm the arbitration award because
RSL did not demonstrate that it had complied with the Texas Structured Settlement Protection Act’s
(“SSPA”) requirements for transfer. (Docket Entry No. 11). No one at that time challenged subjectmatter jurisdiction. RSL asks this court to vacate that order for lack of subject-matter jurisdiction.
(Docket Entry No. 17).
Based on the motion, the pleadings, and the applicable law, this court grants RSL’s motion,
vacates the June 6, 2013 order, and dismisses the suit with prejudice. The reasons for this ruling are
explained below.

I.

Background
On May 3, 2013, RSL, a Texas limited liability company, moved to confirm an arbitration

award transferring Rodriguez’s structured settlement future-payment rights to RSL. (Docket Entry
No. 1). RSL’s motion stated that this court had subject-matter jurisdiction. (Id. at 1). The transfer
had been approved by the 164th Judicial District Court of Harris County, Texas on January 18, 2013,
but the approval was for a significantly larger lump-sum payment to Rodriguez. Following that
approval, RSL alleged that Rodriguez had provided inaccurate information about his health.
(Docket Entry No. 3, Ex. 3 at 1). RSL invoked the arbitration clause in the transfer agreement.
There is no evidence that Rodriguez was represented in the arbitration, picked the arbitrator, or
participated in person. (See Docket Entry No. 3, Ex. 4). The arbitrator entered an award requiring
the transfer to RSL but reduced Rodriguez’s lump-sum payment from $25,000 to $15,000. (Id.).
This court denied, without prejudice, RSL’s motion to confirm the arbitration award because
RSL did not show that the state court reviewed the reduced lump-sum payment or considered
whether the modified agreement complied with the Texas SSPA. (Docket Entry No. 10). On June
6, 2013, this court entered an order denying the motion to confirm and administratively closed the
case to permit state-court review under the Texas SSPA of the award amending the transfer
agreement. (Docket Entry No. 11).
On July 5, 2013, RSL filed what it styled as an unopposed motion1 to alter or amend the June
6, 2013 order under Rule 59(e) of the Federal Rules of Civil Procedure. (Docket Entry No. 12).
RSL argued that alteration or amendment of the order was appropriate. Because no court had
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Rodriguez is unrepresented and, consistent with his prior positions, has not participated in either the state or
federal court proceedings.

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approved the modified transfer agreement and considered whether it complied with the SSPA’s
requirements, this court denied RSL’s Rule 59 motion. On November 22, 2013, RSL filed a Rule
60(b) motion seeking relief from the June 6, 2013 order and later amended that motion. (Docket
Entry Nos. 15, 17).
II.

Analysis
RSL stated in its motion to confirm the arbitration award that this court had subject-matter

jurisdiction. (Docket Entry No. 1 at 1). RSL now contends that the June 6, 2013 order must be
vacated and the case dismissed for lack of jurisdiction. (Docket Entry No. 17 at 4). The FAA does
not provide a basis for federal subject-matter jurisdiction. Vaden v. Discover Bank, 556 U.S. 49, 59
(2009). The FAA “is something of an anomaly in the realm of federal legislation: It bestows no
federal jurisdiction but rather requires for access to a federal forum an independent jurisdictional
basis of the parties’ dispute.” Id. (internal quotations and alterations omitted). “[T]here must be
diversity of citizenship or some other independent basis for federal jurisdiction.” Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983). Neither is present here.
RSL and Rodriguez are both Texas citizens for jurisdiction purposes. See 28 U.S.C. § 1332;
Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 248 (5th Cir. 2011); see also Docket Entry
No. 1, Exs. 1, 3 at ¶ 4. The legal issues other than those arising under the FAA are state-law issues.
Cf. Vela v. Manning, 469 F. App’x 319, 321 (5th Cir. 2012) (unpublished) (recognizing that contract
claims arise under state law). Because there is no independent basis for federal jurisdiction, the
court lacks subject-matter jurisdiction over the case.

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III.

Conclusion
RSL’s Rule 60(b) motion to vacate the June 6, 2013 order is granted. The suit is dismissed,

without prejudice.
SIGNED on February 3, 2014, at Houston, Texas.

______________________________________
Lee H. Rosenthal
United States District Judge

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