Woodbridge Structured Funding, LLC v. Arizona Lottery

When Wallace Thomas, Jr. (defendant) won $1 million in the Arizona Lottery, he chose to receive his winnings in 25 annual payments of $40,000. Two years later, Thomas negotiated a deal with Genex Capital Corporation (Genex) (plaintiff) under which he agreed to assign his right to the remaining 23 annuity payments to Genex in exchange for a lump-sum payment of $428,148. Thomas signed the agreement on June 8 but emailed Genex later the same day, before Genex made any payment, to say that he wanted to cancel the agreement. Thomas sent a follow-up fax the next day, June 9, stating that he was canceling the agreement. Also on June 9, Thomas executed an agreement with Woodbridge Structured Funding, LLC (Woodbridge) (defendant), assigning his interest in the remaining 23 annuity payments to Woodbridge in exchange for $430,000. On June 14, Genex left a voicemail for Thomas saying that it did not accept Thomas’s attempt to rescind their agreement. Then, on June 19, Genex purported to perfect a security interest in its right to the annuity payments by filing a Uniform Commercial Code financing statement with Arizona’s secretary of state. On July 19, Genex filed suit against Thomas and Woodbridge, asserting a breach-of contract claim against Thomas and a tortious-interference-with-contract claim against Woodbridge. Genex’s claims relied in part on the financing statement filed with the secretary of state, which Genex argued gave it a superior interest to Thomas and Woodbridge in the annuity payments. Thomas and Woodbridge argued that Genex never had an attached security interest in the annuity payments and the financing statement was therefore unfounded. The trial court granted summary judgment in favor of Thomas and Woodbridge, and Genex appealed.