Madison - St. Clair Record

Wednesday, December 11, 2019

St. Clair County structured settlement cases moved to federal court in Chicago

By The Madison County Record | Sep 1, 2015


Two class actions that David Cates of Swansea filed for a Chicago man in St. Clair County have wound up in federal court at Chicago, and a third awaits a decision on jurisdiction.

U.S. District Judge Staci Yandle transferred one to Chicago on Aug. 18, following the example of District Judge David Herndon in a similar suit last year.

Yandle wrote that “this case appears to have no connection to the Southern District of Illinois.”

A motion to transfer the third action remains pending before Chief District Judge Michael Reagan.

Cates, son of appellate judge Judy Cates, alleges that buyers of structured settlements cheated client Kenneth Jennings.

The suit claims the buyers improperly obtained orders from Sangamon County circuit judges, permitting Jennings to assign future settlement proceeds in exchange for cash.

It further claims the buyers falsely represented to the judges that the assignments did not contravene any statute or court order.

Cates aims to void the orders and recover damages for Jennings and all others in his situation.

Sangamon County records show judges signed 182 assignment orders from 2009 to 2013.

Jennings broke his neck in a high school football game in 1988.

He settled negligence claims for $2,250,000 in cash and a structured settlement that would produce more than $12 million in the course of time.

Eventually he would trade portions of the structure for cash.

Last year, he sued settlement buyer J.G. Wentworth in St. Clair County.

J.G. Wentworth removed the action to federal court.

Cates moved to remand it to St. Clair County, but he withdrew the motion.

J.G. Wentworth moved for transfer to Chicago, and Herndon granted it.

This year, Jennings sued Imperial Structured Settlements and Client First Settlement Funding in St. Clair County.

Imperial and Client First removed the actions to federal court, and Cates moved to remand them.

He argued that federal judges can’t review decisions of state courts.

Imperial and Client First opposed the motions and moved to dismiss or transfer the actions.

In the Client First case, Yandle ruled that a federal court can’t void a state court order but it can consider damages caused by alleged fraud.

She denied the motion to remand, and granted the motion to transfer.

“Plaintiff failed to respond to the motion,” she wrote, adding that she deemed his failure as an admission of the merits of the motion.

In the Imperial case, Reagan has suspended briefing on the motion to dismiss until he rules on the motion to remand.

The action against J.G. Wentworth has made little progress in Chicago.

District Judge Sara Ellis remanded it to St. Clair County in March, but Seventh Circuit appellate judges reversed her decision in April.

Ryan Mahoney, of Cates and Mahoney, also represents Jennings.

So do Eric Holland and Seth Crompton, both of St. Louis, and Brad Badgley of Belleville.

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Organizations in this Story

Illinois Fifth District Appellate CourtCates Mahoney, LLCThe Holland Law Firm - St Louis