by Structured Settlement Watchdog
A Rising Capital affiliate, in existence for a total of 5 months, was at the center of the unimaginable victimization of a mentally disabled Texas structured settlement annuitant.
This is yet another chilling example of how taking advice from unlicensed and unqualified structured settlement factoring companies could be financially hazardous
Victim of Rising Capital Affiliate
“Cannot live independently
Requires assistance with most basic elements of daily life, such as bathing, changing his clothes and handling money”
2019 WL 7347444 (Tex.App.-Beaumont) (Appellate Brief)
Court of Appeals of Texas, Beaumont,
Ninth District.
FAIRLAWN ASSETS, LLC, John Ferrante and Jarrod Freeborn, Appellants,
v.
Barbara BOOKER, as Guardian of the Person and Estate of M.H., Appellee.
No. 09-19-00306-CV.
December 20, 2019.
On Appeal from the 60th Judicial District Court of Jefferson County, Texas Trial Court Cause No. B-022429
This is an interlocutory appeal filed by factoring company Fairlawn after lower court refused to grant its motions to dismiss complaint filed by Booker; guardian of disabled adult M.H. Booker had filed suit to nullify a 2016 factoring order pursuant to which Fairlawn purchased M.H.’s periodic payments; appeal was fully briefed as of Jan. 9).
What is an Interlocutory Appeal?
An interlocutory appeal in the law of civil procedure in the United States, occurs when a ruling by a trial court is appealed while other aspects of the case are still proceeding.
Appellee’s Brief
According to the Clerk’s Record (“CR), the settlement was structured so M.H. would be able to receive payments from the annuity for his lifetime, while remaining eligible to receive government benefits. Fairlawn, the Rising Capital affiliate. was not the first company to offer to purchase M.H.’s annuity. Another company tried previously, but abandoned its efforts when M.H.’s lack of mental capacity became clear.
How a structured settlement transfer for a person with these characteristics got approved by a Texas judge defies imagination
“Mental abilities, which are akin to those of a small child; extremely poor memory, cannot live independently…”
- M.H. is a forty-year-old man suffering from chronic schizophrenia and mental retardation. CR 948-49. These conditions are permanent, and M.H. has suffered from this condition his entire life. CR 948, 951
- As a result of his condition, M.H.’s cognitive abilities are extremely limited:- he cannot live independently, and requires assistance with the most basic elements of daily life, such as bathing, changing his clothes and handling money;
- – his inability to work and take care of himself is the product of M.H.’s mental abilities, which are akin to those of a small child;
- among other problems, M.H. has an extremely poor memory, he thinks and acts slowly and even when given the same information time and time again, he is unable to comprehend and remember it;
- – at most, M.H. can follow simple, one-step instructions, but shows little understanding of his surroundings or what he is doing;
- – he is unable to remember even simple tasks that had multiple steps, being fired from a job at a car wash just days after being hired because he could not remember that he was supposed to do;
- – M.H. has little ability to read, and no ability to retain or understand what he has read;
- – he cannot communicate clearly, answering with “yes” or “no” when he is able, but sometimes answering a question in a way that it is obvious to the person asking the question that M.H. did not understand it;
- – he demonstrates little ability to understand abstractions or to reason in the abstract, and so his responses to questions are often simplistic and “childlike”; and
- – M.H. lacks all judgment about his actions, and his insight into others is “almost nil.”
- In addition to his cognitive problems, M.H. has other problems, revealing a lack of understanding of the world. He lacks basic social skills: he smiles at inappropriate times for reasons he cannot explain, and fails to maintain eye contact with people when he does speak. CR 948-49.
- As one would expect, M.H. is also very inexperienced: he is “naive and possesses a very simplistic and unrealistic outlook,” and “extremely suggestible and easily lead.” CR 949.
Because of his problems, M.H. has always lived with either his mother or Booker, a life-long friend of M.H.’s family and now his guardian. CR 947, 951.
- He also receives ongoing treatment from mental health care providers. CR 948.
An ethical factoring company would have stopped pursuing the case, in my opinion.
Structured Settlement Factoring Company LLC only in business for 5 months!
Fairlawn was a company that, for the very brief period it existed, was in the “business” of buying structured settlements. CR 1045. Fairlawn was in fact one of the “fly-by-night outfits [that purchase structured settlements, which target those with disabilities.” CR 914. It was formed in January, 2016, purchased M.H.’s structured settlement in February and dissolved itself in June, 2016, after a mere five months in operation. CR 1056, 1092-99.2
Rising Capital and Fairlawn Assets, LLC
Ferrante was a member of Fairlawn during its brief existence. CR 1044, 1273 (8:19-211). Ferrante is also the owner or person who controlled numerous other entities that engaged in similar work, many of which overlap and are involved in the same transactions. CR 1171-76 (“Rising Capital Associates”); CR 1181-82 (“Sunshine Settlement Funding”), CR 1308 (6:2-18, 7:23-9:3) (Ferrante is the president and owner of Rising Capital, and oversees its day-to-day operations). There is a close operational relationship among the entities Ferrante owns or operates – for example, Fairlawn controlled payments made by Rising Capital, and had the power to ensure it made payments Fairlawn owed. CR 1285 (54:23-55:23); see also CR 1280 (36:21-37:101) (oral agreement between Fairlawn and Rising Capital for the acquisition of annuities, an agreement made, in part, by Ferrante).
Freeborn was described by Fairlawn as being an “independent sales contractor” responsible for arranging for the sale of M.H.’s annuity; it was Freeborn who communicated with M.H. on Fairlawn’s behalf. CR 1047. However, the question of who Freeborn worked for exactly is not entirely clear: according to Freeborn, it was not Fairlawn that provided him with the “leads” about people who might have an annuity to sell, but rather Rising Capital, another of Ferrante’s entities. CR 1262 (26:5-28:13. In fact, the comings and goings of the various companies Ferrante and other defendants formed, used, rearranged and then dissolved confused even Freeborn, who worked for them. Compare CR 1260 (19:14-21:5 (“Rising Capital as the company involved in the M.H. deal) with CR 1263 1(31:1-31 (Freeborn unfamiliar with the name of Fairlawn; he excused his unfamiliarity by saying “We used a lot of different entities”).
On May 7, 2020, the Appeals Court Affirmed. Read Memorandum Opinion here