At a June 7, 2007 hearing of the New York Supreme Court (County of Onondaga), Judge Deborah Karalunas held Rapid Settlements LTD (Rapid) in civil contempt for violating an earlier oral decision and written order of that court in a case titled CNA Structured Settlements and Continental Assurance Company (CNA) v. Rapid Settlement LTD and Willie T. Lawrence. The New York court ordered Rapid to pay a penalty of $10,000 to CNA "which represents compensation for their costs and attorney fees in prosecuting the contempt motion as well as an amount to coerce Rapid's compliance with this Court's order of March 15, 2007."
According to the case transcript, the New York Supreme Court earlier issued an oral decision and ruling on February 28, 2007 that granted plaintiffs (CNA) a declaratory judgment finding Rapid had no rights to receive the structured settlement payments at issue. The New York court permanently enjoined Rapid from further prosecuting an action in Harris County, Texas against Willie Lawrence, a structured settlement recipient. The court memorialized its decision in a written order March 15, 2007.
On March 14, 2007, however, Rapid convinced a judge in Harris County to sign a "Final Judgment" in the same proceeding that was the subject of the New York court's permanent injunction - apparently without mentioning the prior New York court injunction. In its "Final Judgment", the Texas court affirmed an arbitration award in favor of Rapid concerning the structured settlement payments the New York court had earlier ruled did not belong to Rapid. On April 30, 2007, relying on the March 14 Texas ruling, Rapid demanded in writing that CNA pay Rapid the structured settlement payments.
At the June 7, 2007 hearing before the New York court, Rapid unsuccessfully argued:
- The Feb 28 legal decision was without legal effect until it was reduced to a written order on March 15;
- The March 15 order was not valid until it was served on Rapid;
- It was inappropriate for the New York court to enjoin the Texas court.
The New York Supreme Court disagreed with Rapid.
Representing CNA, attorney Stephen R. Harris of Drinker Biddle cited cases holding that a directive from the bench is valid whether or not it is reduced to writing. "The only issue", according to Harris, "is whether it's clear to all concerned what the order was." Harris pointed to a transcript of the court order of February 28, 2007 which stated: "Rapid is permanently enjoined from further prosecuting the Texas action to enjoin its improper arbitration award." According to Harris, "...what Rapid is doing is a national campaign and essentially it's in defiance of courts all over the country." Harris concluded: "...every court that has looked at Rapid's conduct in terms of trying to enforce these arbitration awards in violation of the transfer act has found against Rapid..."
For related S2KM reporting, see:
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