AFFIRM; and Opinion Filed August 30, 2016.

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-15-00718-CV

RSL FUNDING, LLC AND RSL SPECIAL-IV, LIMITED PARTNERSHIP, Appellants V. RICKEY NEWSOME, Appellee

On Appeal from the 193rd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-14-14580-L

MEMORANDUM OPINION Before Justices Lang-Miers, Brown, and Schenck Opinion by Justice Brown In this interlocutory appeal, RSL Funding, LLC and RSL Special-IV, Limited Partnership

(collectively RSL) appeal the trial court’s orders denying their motions to compel arbitration and

granting a temporary restraining order (TRO). In two issues, RSL contends the trial court abused

its discretion by refusing to compel arbitration and by granting the TRO. We affirm the trial

court’s orders.

LEGAL AND FACTUAL BACKGROUND

In 1985, appellee Rickey Newsome settled a personal injury claim. Pursuant to the terms

of a structured settlement agreement, Newsome was entitled to receive monthly payments from

Allstate Insurance Company beginning in September 1986 for the duration of his life. Allstate

purchased an annuity from Allstate Life Insurance Company to fund the payments. In September 2013, RSL and Newsome entered into a Transfer Agreement under which Newsome

agreed to transfer and assign portions of his future periodic payments to RSL in exchange for a

lump-sum payment of $53,000. The Transfer Agreement contained an arbitration clause

providing that “[d]isputes under this Agreement of any nature whatsoever . . . shall be resolved

through demand by any interested party to arbitrate the dispute.” The agreement further stated,

“[T]he question of whether a dispute itself is subject to arbitration shall be decided solely by the

arbitrator and not, for example by any court.” A promissory note signed by Newsome also

contained an arbitration clause.

In the trial court, RSL filed an application for approval of the transfer, as required by the

Texas Structured Settlement Protection Act (SSPA). See TEX. CIV. PRAC. & REM. CODE ANN.

§ 141.006 (West 2011). The purpose of the SSPA is to protect recipients of structured settlement

payments who are in need of cash from exploitation by “factoring companies,” companies that

purchase structured settlements from personal injury victims by paying immediate cash for the

right to future payments. Johnson v. Structured Asset Servs., LLC,

(Tex.

App.—Dallas 2004, no pet.). The SSPA requires disclosures and court approval before any

transfer of structured settlement payment rights. Id.; Transamerica Occidental Life Ins. Co. v.

Rapid Settlements, Ltd.,

(Tex. App.—Houston [1st Dist.] 2008, no pet.);

see TEX. CIV. PRAC. & REM. CODE ANN. § 141.003. No transfer of structured settlement payment

rights shall be effective and no structured settlement obligor or annuity issuer shall be required to

make any payment directly or indirectly to any transferee unless the transfer has been approved

in advance in a final court order based on express findings that (1) the transfer is in the best

interest of the payee; (2) the payee has been advised in writing to seek independent professional

advice regarding the transfer and has either received the advice or knowingly waived it in

writing; and (3) the transfer does not contravene any applicable statute or an order of any court

–2– or governmental authority. TEX. CIV. PRAC. & REM. CODE ANN. § 141.004; see Washington

Square Fin., LLC v. RSL Funding, LLC,

, 769–70 (Tex. App.—Houston [14th

Dist.] 2013, pet. denied).

On October 23, 2013, the trial court signed an order approving the transfer. Among other

things, the order recited that the transfer was in Newsome’s best interest, RSL had provided

Newsome with a disclosure statement required by the SSPA, and Newsome had been advised in

writing to seek independent professional advice regarding the proposed transfer and had either

received the advice or knowingly waived it. The order included the following handwritten note:

“Transferee to pay Mr. Newsome the sum of $53,000 in 10 days from this order being signed or

transferee will be required to pay Mr. Newsome $106,000.” Neither party made any complaint

at that time to the trial court that the handwritten terms improperly modified their agreement.

In May 2014, the trial court received a pro se letter from Newsome indicating RSL had

failed to pay him for the transfer. The court ordered RSL to appear to determine whether a

subsequent contempt hearing should occur. At a June 2014 hearing, counsel for RSL represented

Newsome had made prior transfers of portions of his annuity to other parties and that Allstate

could not be required to split payments. Counsel represented that RSL had not paid Newsome

because it had been working with Allstate and the other parties to ensure that RSL would get the

money it bought. The trial court ordered the parties to mediation.

In August 2014, RSL filed an agreed motion for entry of a corrected order nunc pro tunc.

RSL asserted that the handwritten language in the court’s October 2013 order approving the

transfer modified the parties’ Transfer Agreement without their consent. The motion further

asserted that the parties sought entry of a corrected order to remove the handwritten language,

which had required RSL to pay Newsome $106,000 instead of $53,000 if it did not pay him in

ten days. Newsome himself signed the agreed motion. On September 15, 2014, the trial court

–3– signed a corrected order approving the transfer nunc pro tunc that omitted the handwritten

language found in its earlier order.

In December 2014, Newsome filed a petition for bill of review and application for

injunctive relief in the trial court. By way of bill of review, Newsome sought to set aside the

court’s nunc pro tunc order. He asserted that the nunc pro tunc order was void because the court

improperly corrected a judicial error, as opposed to a clerical error, after its plenary power had

expired. He asked the trial court to vacate the nunc pro tunc order and confirm that the original

order approving the transfer is the final judgment. As an alternative, Newsome asked the trial

court to set aside both the original order approving the transfer and the nunc pro tunc order and

confirm that none of Newsome’s annuity payments were transferred to RSL. Newsome further

alleged that RSL was liable for his attorney’s fees incurred as a result of the bill of review.

Newsome’s petition for bill of review also contained allegations that RSL had still not

paid him despite the fact that RSL was being paid the portion of his monthly annuity he had

transferred to it. He asserted RSL had filed a suit against him in Harris County seeking

declaratory relief and attached a copy of RSL’s Harris County petition. In it, RSL alleged that a

dispute had arisen regarding the amount to be paid to RSL under the parties’ contract for the

transfer of settlement payments. RSL asserted it had filed a demand for arbitration in Houston

and sought a declaration that the parties had a valid arbitration agreement and that the pending

dispute was subject to the arbitration agreement. In his petition, Newsome sought a temporary

injunction prohibiting RSL from taking any action in the Harris County lawsuit, which the trial

court granted.

Newsome amended his petition for bill of review in March 2015. The amended petition

sought the same relief as the original petition, but no longer contained the request for injunctive

relief. After Newsome amended his petition, RSL filed a motion to compel arbitration under the

–4– Federal Arbitration Act and to abate the proceedings pending arbitration. RSL asserted that a

dispute had arisen under the parties’ written agreement that contained an arbitration clause. RSL

alleged Newsome refused to execute a necessary stipulation and refused to accept the amounts

set out in the Transfer Agreement. RSL also noted that Newsome claimed he signed the agreed

motion for entry of the corrected order nunc pro tunc under duress and detrimentally relied on

RSL’s promises to pay him. RSL disputed Newsome’s claims of duress and detrimental reliance

and thus asserted that these issues should be submitted to arbitration. In its motion, RSL also

asserted that an arbitrator should determine whether Newsome had met the three prerequisites for

a bill of review.

RSL later filed a supplement to its motion to compel arbitration in which it asked the

court, in the event it denied the motion to compel, to stay the proceedings pending an appeal to

this Court. After a hearing, on May 28, 2015, the trial court denied RSL’s motion to compel

arbitration and also denied RSL’s request to stay the proceedings.

That same day, the trial court granted in part and denied in part a motion for summary

judgment filed by Newsome. The court ruled that summary judgment was proper on Newsome’s

claim that the corrected order approving the transfer nunc pro tunc should be vacated. The court

denied summary judgment on Newsome’s alternative request to vacate the original transfer order

and his claim for attorney’s fees. The court vacated its nunc pro tunc order and ruled that it was

void when entered.

A few days later, RSL filed a corrected motion to compel arbitration. In its brief, RSL

states it filed the corrected motion to attach the most recent version of the Transfer Agreement.

In an order signed June 2, 2015, the trial court denied RSL’s original motion to compel

arbitration, its supplemental motion, and its corrected motion. The court again denied RSL’s

request to stay the proceeding pending appeal.

–5– Also on June 2, 2015, Newsome filed an application for injunctive relief. He asked the

court to enter a TRO and temporary injunction ordering RSL to remit the monthly assigned

payments to him until resolution of the litigation and sought $8,000 for the monthly payments

RSL had already received. That same day, the trial court granted a TRO and ordered RSL to pay

Newsome the amount of all the assigned payments it had received from February 2014 to the

present as well as any future payments. The court set a temporary injunction hearing for June

11, 2015. Before the hearing date, on June 8, 2015, RSL filed its notice of interlocutory appeal

from the court’s May 28 and June 2, 2015 orders denying RSL’s motions to compel arbitration

and the June 2, 2015 TRO. This Court stayed the trial court proceedings pending further order

from this Court.

MOTION TO COMPEL ARBITRATION

In its first issue, RSL contends the trial court abused its discretion in denying RSL’s

motions to compel arbitration. RSL maintains it met its threshold burden to prove a valid

arbitration agreement existed in the Transfer Agreement. It asserts the parties agreed to arbitrate

arbitrability and only the arbitrator could decide if RSL presented a valid claim for arbitration.

We review an order denying a motion to compel arbitration under an abuse of discretion

standard. Bonded Builders Home Warranty Ass’n of Tex., Inc. v. Smith,

(Tex. App.—Dallas 2016, no pet.). We defer to the trial court’s factual determinations if they

are supported by the evidence, but we review the trial court’s legal determinations de novo.

Generally, a party seeking to compel arbitration under the Federal Arbitration Act must

establish (1) the existence of a valid, enforceable arbitration agreement and (2) that the claims at

issue fall within that agreement’s scope.

A court has no discretion and must compel

arbitration if these two requirements are met.

–6– In its motions to compel, RSL contended that various disputes existed under the Transfer

Agreement which were subject to arbitration. Its real complaint seems to be that the trial court

did not have the authority to modify the parties’ Transfer Agreement. RSL refers to several

disputes, including whether it owes Newsome $53,000 or $106,000 and when it must pay him,

whether Newsome breached the parties’ contract, and whether he was under duress when he

signed the agreed motion to correct the nunc pro tunc and detrimentally relied on RSL’s

promises. In his petition for bill of review, Newsome primarily sought relief on grounds that the

trial court’s nunc pro tunc order was void because it was signed after the court’s plenary power

had expired. None of the alleged disputes RSL contends require arbitration is relevant to the

issue of whether the court corrected a clerical error or a judicial error when it signed its nunc pro

tunc order. See Tex. Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC,

(Tex.

2013) (judgment nunc pro tunc can correct clerical error in original judgment, but not judicial

error).

RSL also contends the elements of a bill of review — a meritorious defense or ground for

appeal, which Newsome was unable to present due to RSL’s fraud, accident, or wrongful act,

unmixed with any fault or negligence on Newsome’s part — are fact issues that should be

decided by an arbitrator. But Newsome was using the bill of review to attack an allegedly void

judgment, not to establish that he had a meritorious defense he was unable to present. A claim

that a judgment is void because the trial court lacked jurisdictional power to render it constitutes

a collateral attack on the underlying judgment. Walker v. Walker, No. 05-13-00481-CV,

, at *2 (Tex. App.—Dallas Aug. 21, 2014, no pet.) (mem. op.). When a petitioner

uses a bill of review to collaterally attack a judgment on grounds it is void because the court

lacked jurisdiction, it is not required to prove the three elements of a bill of review. Id.; see

–7– Middleton v. Murff,

(Tex. 1985). Thus, these issues were also not relevant

to the relief Newsome sought.

As alternative relief, Newsome asked the trial court to vacate both the nunc pro tunc

order and the original order approving the transfer and confirm that none of the annuity

payments were ever properly transferred to RSL. The legal basis on which Newsome contends

in the alternative that the original transfer order should be vacated is unclear. If there is a legal

basis for vacating the court’s transfer orders, these issues are purely for the trial court to decide.

Under the SSPA, a court had to be involved in the process of approving the parties’ Transfer

Agreement. The agreement was not effective without the trial court’s approval. See TEX. CIV.

PRAC. & REM. CODE ANN. § 141.004. An arbitrator has no role in determining whether to, or the

terms on which to, approve a transfer agreement. See id. § 141.002(2) (defining “court” as used

in SSPA).

We recognize that the arbitration provision in the Transfer Agreement is broad in scope.

We further recognize that once a valid arbitration agreement is established, there is a strong

presumption favoring arbitration and we resolve doubts as to the agreement’s scope in favor of

arbitration. See Rachal v. Reitz,

(Tex. 2013). Under the unique facts of

this case, however, we conclude there was nothing for an arbitrator to determine. The disputes

asserted by RSL in its motions to compel had no bearing on Newsome’s claim that the nunc pro

tunc order was void. Further, the alternative relief Newsome sought from the trial court was in

the province of the trial court under the SSPA, not an arbitrator. Approving transfers of

structured settlement payment rights is a purely judicial function. We conclude the trial court did

not abuse its discretion in denying RSL’s motions to compel arbitration. We overrule RSL’s first

issue.

–8– TEMPORARY RESTRAINING ORDER

In its second issue, RSL contends the trial court abused its discretion in granting the

TRO. A trial court’s ruling on a TRO is generally not appealable. In re Tex. Nat. Res.

Conservation Comm’n,

(Tex. 2002). RSL maintains the TRO was

essentially a temporary injunction because it altered, rather than preserved, the status quo. See

TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4) (West Supp. 2015) (person may appeal

interlocutory order that grants temporary injunction). But at oral argument, Newsome

represented, without contradiction, that no payments were made pursuant to the TRO. The TRO

was signed on June 2, 2015, and expired fourteen days from that date. See TEX. R. CIV. P. 680.

Accordingly, this issue is moot. We overrule RSL’s second issue.

We affirm the trial court’s orders.

/Ada Brown/ ADA BROWN JUSTICE

Schenck, J., dissenting

150718F.P05

–9– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT

RSL FUNDING, LLC AND RSL SPECIAL- On Appeal from the 193rd Judicial District IV, LIMITED PARTNERSHIP, Appellants Court, Dallas County, Texas Trial Court Cause No. DC-14-14580-L. No. 05-15-00718-CV V. Opinion delivered by Justice Brown, Justices Lang-Miers and Schenck participating. RICKEY NEWSOME, Appellee

In accordance with this Court’s opinion of this date, the orders of the trial court are AFFIRMED.

It is ORDERED that appellee Rickey Newsome recover his costs of this appeal from appellants RSL Funding, LLC and RSL Special-IV, Limited Partnership.

Judgment entered this 30th day of August, 2016.

–10–