Sanders v. JGWPT Holdings, LLC

VALERIO SANDERS, KENNETH JENNINGS,and KEVIN RINCK, Plaintiffs, v. JGWPT HOLDINGS, LLC; J.G. WENTWORTH, LLC;PEACHHI, LLC; PEACH HOLDINGS, INC.;PEACHTREE FINANCIAL SOLUTIONS, LLC;SETTLEMENT FUNDING, LLC, D/B/APEACHTREE SETTLEMENT FUNDING; BRIAN P. MACK;and THE MACK LAW GROUP, P.C., Defendants.

No. 14 C 9188

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

June 20, 2017

Judge Sara L. Ellis

OPINION AND ORDER

When Plaintiffs Valerio Sanders, Kenneth Jennings, and Kevin Rinck needed quick cash, they sold their rights to receive periodic payments from structured settlements to Defendant Settlement Funding, LLC d/b/a Peachtree Settlement Funding ("Settlement Funding LLC"). Plaintiffs allege that Settlement Funding LLC conspired to swindle Plaintiffs and similarly situated individuals into selling their rights to structured settlement payments for far less than what they were worth with Defendants Brian P. Mack and his law firm the Mack Law Group, P.C. (collectively, the "Mack Defendants") and Defendants JGWPT Holdings, LLC, J.G. Wentworth, LLC, PeachHI, LLC, Peach Holdings, Inc., Peachtree Financial Solutions, LLC (collectively, the "JGWPT Defendants"). The JGWPT Defendants and the Mack Defendants move to dismiss Plaintiffs' Third Amended Class Action Complaint ("3AC").¹ The Court grants in part Defendants' motions, dismissing with prejudice Plaintiffs' tortious interference withcontract claim and conversion claim against the JGWPT Defendants and dismissing with prejudice Plaintiffs' conversion claim against the Mack Defendants.

ANALYSIS

The JGWPT Defendants and the Mack Defendants moved to dismiss Plaintiffs' last complaint, the Second Amended Class Action Complaint ("SAC"). Granting and denying Defendants' motions to dismiss, the Court ordered Plaintiffs to file the 3AC in order to tailor Plaintiffs' allegations to prior rulings. In the 3AC, Janeka Hicks is no longer a Plaintiff; JGWPT Holdings, Inc. is no longer a Defendant; and Plaintiffs no longer allege that Defendants violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c)-(d). But beyond that, the 3AC varies little from the SAC. Because the underlying facts do not materially differ, the Court presumes familiarity with the facts as alleged by Plaintiffs and discussed in the Court's July 26, 2016 Opinion and Order, Doc. 167, and the Court does not fully repeat the facts herein.

I. JGWPT Defendants' Motion to Dismiss

The JGWPT Defendants move to dismiss Plaintiffs' claims because (1) Plaintiffs waived the anti-assignment provisions of the annuity contracts that Plaintiffs transferred to Settlement Funding LLC, (2) Plaintiffs fail to sufficiently plead their claims, and (3) statutes of limitations bar Sanders' tort claims.

A. Waiver of Anti-Assignment Provisions

The JGWPT Defendants first argue that Plaintiffs have no case because they waived the anti-assignment provisions that would have prevented the assignment of structured settlement payments from Plaintiffs to Settlement Funding LLC. The JGWPT Defendant argue that "[t]he gravamen of each Plaintiffs' claims is the allegation that Settlement Funding LLC and the MackDefendants did not inform Plaintiff that they could not transfer their [structured settlement] Periodic Payments unless all interested parties . . . waived the anti-assignment provision." Doc. 180 at 10. Of course, that is only part of Plaintiffs' case against Defendants: Plaintiffs have always alleged that they were (1) "duped about the effect of their anti-assignment clauses" and (2) "induced to sell their contracts for far too little." In re JGPWT Holdings, Inc., No. 15-8005, slip op. at 3 (7th Cir. Apr. 9, 2015). The anti-assignment clauses are important, but, even if Plaintiffs waived their anti-assignment claims, the Seventh Circuit and this Court have both recognized that Plaintiffs attack not just with the fact that they transferred their structured settlement payment rights—possibly when they could not—but also with how much they received as part of the transfer—and why they received so little. Therefore, the JGWPT Defendants incorrectly argue that the Court must dismiss Plaintiffs' claims if the Court now concludes that Plaintiffs waived their anti-assignment protections.

As to whether Plaintiffs can plausibly allege that they did not waive their anti-assignment protections, the Court already laid out the fundamentals of this position in its last Opinion and Order. Doc. 167 at 14-17. Illinois law allows structured settlement payment recipients like Plaintiffs to waive anti-assignment protections contained in the contracts that established Plaintiffs' structured settlement payments. In re Nitz, 739 N.E.2d 93, 103, 317 Ill. App. 3d 119, 250 Ill. Dec. 632 (2000). Plaintiffs allege that they did not waive those provisions, but the JGWPT Defendants argue that Plaintiffs and all the other parties involved in Plaintiffs' structured settlements did, actually, waive those provisions. The JGWPT Defendants point to "stipulations" signed by Plaintiffs, which the JGWPT Defendants argue contain Plaintiffs' waiver of any anti-assignment language protections. The Court can consider these stipulations because the 3AC references and incorporates the stipulations, which Plaintiffs allege were part ofthe paperwork that the parties submitted to state courts in order to receive "Qualified Orders" from the state courts that approved Plaintiffs' factoring transactions.

But the stipulations lack utility at the motion to dismiss stage. In Illinois, the law has always been "that a party who signs an instrument relying upon representations as to its contents when he has had an opportunity to ascertain the truth by reading the instrument and has not availed himself of the opportunity, cannot be heard to say that he was deceived by misrepresentations." Leon v. Max E. Miller & Son, Inc., 320 N.E.2d 256, 260, 23 Ill. App. 3d 694 (1974) (citing Nathan v. Leopold, 247 N.E.2d 4, 9-10, 108 Ill. App. 2d 160 (1969)). But that is not true when the person inducing the signature is the signer's attorney. See Nathan, 247 N.E.2d at 9-10 ("Kasakoff was not his attorney, thus dispelling any notion that he might have been justified in relying on Kasakoff's representations."); Wrobel v. Wojtasiek, 173 N.E. 348, 352, 341 Ill. 330 (Ill. 1930) (holding that agreements are not enforced in favor of parties who use a "secret agent" to induce the counter-party into signing the agreement). Plaintiffs allege that the Mack Defendants misrepresented their allegiances and convinced Plaintiffs that the Mack Defendants were Plaintiffs' attorneys in order to mislead Plaintiffs to waive their anti-assignment protections, which the Court takes as true at the pleading stage. The Mack Defendants' alleged tainted work extends to the stipulations. The JGWPT Defendants raise an issue that the Court cannot resolve until after the parties complete discovery, and the Court denies the JGWPT Defendants' motion to dismiss to the extent the JGWPT Defendants argue that Plaintiffs waived any anti-assignment provisions.

B. Pleading Deficiencies

The JGWPT Defendants also move to dismiss the 3AC by arguing that Plaintiffs do not sufficiently allege their tort claims and fail to abide by the pleading mandates of the Federal Rules of Civil Procedure.

1. Breach of Fiduciary Duty

The JGWPT Defendants argue that Plaintiffs do not state a breach of fiduciary claim because Plaintiffs do not allege a fiduciary relationship with the JGWPT Defendants or a breach of that relationship. To state a claim for breach of fiduciary duty under Illinois law, Plaintiffs must allege a fiduciary duty and a breach of that duty that caused damages. Hollerich v. Acri, No. 14 CV 10411, 2017 WL 1316259, at *6 (N.D. Ill. Apr. 10, 2017). To plead a fiduciary relationship, Plaintiffs must show "that one party placed trust and confidence in the other so that the latter gained influence and superiority over the former." Simon v. Wilson, 684 N.E.2d 791, 797, 291 Ill. App. 3d 495, 225 Ill. Dec. 800 (1997).

The JGWPT Defendants characterize their promises to Plaintiffs as promises to follow the requirements of the Illinois Structured Settlement Protection Act ("SSPA"), 215 Ill. Comp. Stat. 153/1 et seq., and the JGWPT Defendants argue that following the SSPA did not create a fiduciary relationship. A statute may create relationships that are "fiduciary." See In re McGee, 353 F.3d 537, 540-41 (7th Cir. 2003) (determining whether municipal code created fiduciary relationships). But the statute must impose a fiduciary relationship or the legislature must intend for the statute to create a right of action for breach of the imposed relationship. See Haney v. Ill. Dev. Fin. Auth., --- N.E.2d ----, 53 Ill. Ct. Cl. 171, 178 (Ill. Ct. Cl. 1998) (rejecting the plaintiff's assertion that the defendant owed a fiduciary duty under a statute because the statute did not identify such a fiduciary duty and neither the statute's language nor legislative intent suggested aright of action for violation of the statute). The JGWPT Defendants highlight Section 30 of the SSPA, which requires the transferee of settlement payment rights, rather than the third parties paying the structured settlement payments, to follow certain requirements of Sections 10 and 15 of the SSPA. See 215 Ill. Comp. Stat. 153/30(f) ("Compliance with the requirements set forth in Section 10 of this Act and fulfillment of the conditions set forth in Section 15 of this Act shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights[.]"). Plaintiffs do not allege that the JGWPT Defendants were transferees, however, so the SSPA did not require the JGWPT Defendants to follow Section 30(f) of the SSPA, and the Court need not consider whether Section 30(f) of the SSPA imposed a fiduciary relationship between the JGWPT Defendants and Plaintiffs.

Plaintiffs instead allege that the JGWPT Defendants s...