Maslowski v. Prospect Funding Partners LLC

944 N.W.2d 235 (2020)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P is a litigation financing company. D was injured in a car accident. D retained Schwebel, Goetz & Sieben, P.A. to represent against the driver and owner of the other car involved in the accident. D contacted P regarding the company's litigation financing services because she needed money to pay her living expenses. P and D executed a 'Sale and Repurchase Agreement.' D was the 'seller' and P was the 'purchaser.' D sold the right to receive a portion of the proceeds of any settlement that she received from her personal injury suit. D received $6,000 from P which was essentially a cash advance on her prospective settlement. Under the contract's fee schedule, the amount D owed to P increased by 30 percent every 6 months, starting from a baseline of $6,000 plus fees, with a cap of $25,245.00. If D did not receive a settlement, she owed P nothing. The contract also provided that D's obligation would not exceed the amount of her settlement. D's attorney in the personal injury suit discussed the contract with her and signed the last page of the agreement certifying that he had reviewed the terms with D and acknowledged the payment directions in the event of a settlement. On June 22, 2015, P contacted D to inform her that she would owe $14,108.00 if her personal injury claim was settled and she made payment to P before September 22, 2015. D's attorney then informed P that he believed that the litigation financing agreement was unenforceable. D settled her personal injury suit in July 2015. D did not pay P. P filed suit in New York against D, her attorney, and her attorney's law firm for breach of contract and other related claims. The litigation as to the validity of the agreement itself proceeded in Minnesota, with both the district court and the court of appeals holding that P could not enforce the agreement because it violated Minnesota's common-law prohibition against champerty. P appealed.