Metro. Life Ins. Co. v. RSL Funding, LLC

METROPOLITAN LIFE INSURANCE COMPANYAND BRIGHTHOUSE LIFE INSURANCE COMPANY, Appellants v. RSL FUNDING, LLC, RSL SPECIAL-IV, LTD.,AND MARLA MATZ FELDMAN, Appellees

NO. 14-19-00155-CV

State of Texas in the Fourteenth Court of Appeals

February 2, 2021

On Appeal from the County Civil Court at Law No. 1 Harris County, Texas

Trial Court Cause No. 994875

MEMORANDUM OPINION

This case involves a dispute between the issuers of several annuities and assignees of those annuities following an arbitration between the annuitants and assignees about their competing claims to the proceeds of the annuities.

We hold that the arbitration award in favor of the assignees did not render moot the annuity issuers' claims for interpleader and a declaratory judgment. Thus, the trial court erred by granting the assignees' plea to the jurisdiction and dismissing the annuity issuers' claims as moot, and the court's resolution of the parties' requests for attorney's fees must be reconsidered. The trial court's judgment is reversed, and the case is remanded for further proceedings.

I. Background

The material facts in this case are undisputed, and they are discussed in greater detail in this court's and the supreme court's prior opinions. See RSL Funding, LLC v. Pippins, 424 S.W.3d 674 (Tex. App.—Houston [14th Dist.] 2014), aff'd, 499 S.W.3d 423 (Tex. 2016). In short, appellants (MetLife) issued annuities to several annuitants, who then assigned their annuities to appellees (RSL) in exchange for lump-sum payments.¹ Relying on purported anti-assignment language in each of the annuity contracts, MetLife refused to honor the assignments.

RSL sued MetLife for breach of contract and a declaratory judgment. When disputes arose between the annuitants and RSL because the annuitants wanted to terminate the assignment agreements with RSL, MetLife filed counterclaims and crossclaims for interpleader and a declaratory judgment and sought attorney's fees. MetLife's interpleader claim asked to deposit payments under the annuities into the registry of the court and to be discharged of liability regarding payments made into the registry. The trial court ordered MetLife to deposit annuity payments into the registry of the court. MetLife's declaratory judgment claim asked the court to determine, among other things, whether the terms of the annuities permit theannuities or payments thereunder to be assigned, sold, or otherwise transferred by the annuitants to RSL.

After the prior appeal in this case concerning arbitrability of the claims between RSL and the annuitants, RSL and the annuitants arbitrated their claims. MetLife was not a party to the arbitration.

The arbitrator found that the annuitants breached their contracts with RSL, and the arbitrator awarded RSL all of the income streams for the annuities and the funds in the court's registry, plus attorney's fees. The arbitrator awarded and transferred to RSL all rights that the annuitants possessed and could exercise against MetLife arising out of or relating to the annuities. The arbitrator declared that the award resolved all issues, disputes, claims, and defenses raised or that could have been raised by any party to the arbitration in relation to the annuity contracts and transfer agreements. The arbitration award was confirmed in state and federal courts.

Based on the arbitration and judgments confirming the award, RSL filed a "suggestion of mootness and plea to the jurisdiction" in this case and a motion to disburse the funds in the court's registry. RSL argued that the arbitration "resolves and moots the same issues framed by" MetLife's interpleader and declaratory judgment claims "as to ownership of the annuities and the funds." Regarding attorney's fees, RSL argued that the judgments confirming the arbitration award "renders moot the substantive declarations sought by the MetLife Parties, leaving only the issue of attorney's fees sought by RSL."

The trial court signed two orders (1) disbursing the funds in the court's registry to RSL and ordering MetLife to make future payments to RSL; and (2) dismissing "with prejudice as moot" MetLife's claims for interpleader anddeclaratory relief and dismissing with prejudice MetLife's requests for attorney's fees "as part of their claims for interpleader and declaratory relief."

The trial court held a jury trial on the amount of RSL's attorney's fees for defending against MetLife's declaratory judgment claim, and the jury awarded RSL $435,077.75 in attorney's fees plus conditional appellate attorney's fees.² The trial court signed a final judgment consistent with the jury's verdict. In the judgment, the court reiterated its prior ruling dismissing MetLife's interpleader and declaratory judgment claims "with prejudice as moot." The court reaffirmed (1) "its prior ruling that principles of equity preclude any award of attorney's fees to the MetLife Parties arising out of their claim for interpleader relief" and (2) its prior ruling that awarding the MetLife parties any attorney's fees pursuant Section 37.009 of the Texas Civil Practice and Remedies Code would produce an inequitable or unjust result."

MetLife appeals.

II. Issues

MetLife briefs three issues with several sub-issues. MetLife's first two issues are dispositive, in which MetLife contends that the trial court erred by (1) dismissing as moot their interpleader and declaratory judgment counterclaims with prejudice, including the related requests for attorney's fees, and (2) awarding attorney's fees to RSL for defending against the declaratory judgment claim. RSL contends that MetLife has waived several issues by inadequate briefing, failing to include a complete reporter's record, failing to attack all grounds for the trial court's ruling, and failing to request findings of fact.

III. Waiver Analysis

A. Briefing

MetLife has adequately briefed this court on its dispositive issues by making a clear and concise argument for the contentions made with appropriate citations to the record and authorities—including authorities that we rely upon when resolving the appeal in MetLife's favor. See Tex. R. App. P. 38.1. RSL's complaints about MetLife's briefing for issues that are not dispositive of the appeal are inapposite.

B. Record

A reporter's record of a pretrial hearing is required only if evidence is introduced in open court. See Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 782 (Tex. 2005). "If the proceeding's nature, the trial court's order, the party's briefs, or other indications show that an evidentiary hearing took place in open court, then a complaining party must present a record of that hearing to establish harmful error." Id. at 783. "But otherwise, appellate courts should presume that pretrial hearings are nonevidentiary, and that the trial court considered only the evidence filed with the clerk." Id. A bare assertion that the trial court "considered evidence at the hearing" is insufficient to show that a hearing was evidentiary because trial courts consider evidence when a hearing is conducted entirely on paper or based solely on affidavits and exhibits filed beforehand. Id. "Instead, there must be a specific indication that exhibits or testimony was presented in open court beyond that filed with the clerk." Id.

Regarding the hearing on RSL's plea to the jurisdiction and motion to disburse, RSL contends only that the trial court "considered evidence at that hearing." The order dismissing MetLife's claims as moot states that the trial court considered the plea "along with all evidence attached thereto." Thus, we presumethat this hearing was nonevidentiary, and MetLife was not required to file a transcript of the hearing to assert error based on the trial court's granting of RSL's plea to the jurisdiction. See id. RSL's complaints about MetLife's failure to file a transcript of another pretrial evidentiary hearing on MetLife's motion for sanctions, or to ensure that proceedings such as voir dire and the informal charge conference were included in the reporter's record, are inapposite because MetLife does not assert error related to those subjects. See Estate of Nunu, 542 S.W.3d 67, 74 (Tex. App.—Houston [14th Dist.] 2017, pet. denied) (no waiver of appeal concerning appellant's complaints about attorney's fees and distribution of estate's assets when the appellant failed to request a complete transcript of the trial and all pretrial hearings because the reporter's record was not necessary to the appeal).

C. Grounds

RSL contends that MetLife fails to challenge all grounds for dismissal presented in the plea to the jurisdiction and to challenge the recitals in the trial court's judgment reaffirming its prior rulings that equitable principles precluded an award of attorney's fees for the interpleader claim or that fees were not equitable and just for the declaratory judgment claim.

Applying familiar principles of appellate review, the First Court of Appeals has held that when a trial court sustains a plea to the jurisdiction based on multiple grounds but does not specify the ground or grounds relied upon, an appellant must challenge all of the grounds on appeal or else the appellate court will affirm. See Britton v. Tex. Dept. of Crim. Justice, 95 S.W.3d 676, 680-82 (Tex. App.—Houston [1st Dist.] 2002, no pet.). But when the trial court gives its reason for sustaining a plea to the jurisdiction, the appellant need only challenge the specified ground on appeal. See id. at 682 n.7; cf. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 381-82 (Tex. 1993) (regarding summary judgment, court of appealslimited to considering grounds specified by trial court); Miller v. Debo Homes, LLC, No. 14-15-00004-CV, 2016 WL 5399507, at *3 (Tex. App.—Houston [14th Dist.] Sept. 27, 2016, pet. denied) (mem. op.) (court of appeals must affirm when appellant challenges some but not all bases for judgment based on jury's verdict).

Here, the trial court's order and final judgment state that the claims were...