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Tag: champerty

Lawsuit Alleging Billion Dollar Bribery Scheme Should Be Dismissed Because Assignment By Venezuela Oil Company Violated Champerty Law, Says Judge

Lawsuit Alleging Billion Dollar Bribery Scheme Should Be Dismissed Because Assignment By Venezuela Oil Company Violated Champerty Law, Says Judge

A federal magistrate judge has recommended dismissing a lawsuit filed by a trust company created by Venezuela’s state-run oil company to sue other oil companies over an alleged multi-billion dollar bid-rigging and bribery scheme because, among other things, the assignment to the trust was champertous. U.S. Magistrate Judge Alicia M. Otazo-Reyes concluded that the trust “lacks standing to pursue this action as the purported assignee of claims belonging to PDVSA” – Venezuela’s state-run oil company – and she therefore recommends…

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In Seeking To Recover Money Paid To Claimant, Litigation Funding Company Prevails On Some Legal Grounds

In Seeking To Recover Money Paid To Claimant, Litigation Funding Company Prevails On Some Legal Grounds

It is a legal maxim that when a contract is illegal, courts will leave the parties where they find them.  The result is that, if a party to a contract tries to recover on the contract, it will not get any aid from the courts.  But what if the claim is not enforcement of the illegal contract, but a request for recovery of monies paid pursuant to the unenforceable contract – on an equitable theory of unjust enrichment?  There, the…

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Kansas Appeals Court Says Suspended Lawyer Did Not Demonstrate an Interest to Justify Intervention – But If He Had, It Would Have Been Barred By the Public Policy Against Champerty

Kansas Appeals Court Says Suspended Lawyer Did Not Demonstrate an Interest to Justify Intervention – But If He Had, It Would Have Been Barred By the Public Policy Against Champerty

A Kansas appellate court affirmed a lower court decision to reject the motion to intervene of a suspended lawyer to intervene in a personal injury case, saying that the same Kansas public policy against champerty would have barred his interest – if he had demonstrated a sufficient interest to justify intervention.  In Massali v. Farmers Ins. Co., No. 117464 (Kan. Ct. App. Apr. 18, 2018), the Kansas appellate court summed up the case as follows: Maria E. Massali was injured…

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Illinois Court: No Full Faith and Credit for Default Judgment, and Litigation Funding Agreement Was Unenforceable on Champerty Grounds

Illinois Court: No Full Faith and Credit for Default Judgment, and Litigation Funding Agreement Was Unenforceable on Champerty Grounds

An Illinois court need not give full faith and credit to a Minnesota default judgment, and need not give effect to parts of a litigation funding agreement that was unenforceable, on champerty grounds, based on controlling Minnesota law. That was the ruling of an Illinois appellate court, in Prospect Funding Holdings v. Saulter, No. 1-17-1277, 2018 Ill. App. LEXIS 126 (Ill. App. Ct. Mar. 13, 2018), which involved claims by a litigation funding company against an attorney for a wrongful…

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Finding Violation of New York’s Champerty Laws, Federal Court Dismisses Fair Debt Collection Practices Act Lawsuit

Finding Violation of New York’s Champerty Laws, Federal Court Dismisses Fair Debt Collection Practices Act Lawsuit

Agreements among a credit repair organization, a law firm, and a New York woman were unenforceable or otherwise ran afoul of the law, a federal court ruled this week.  The reasons?  The credit repair organizations agreement with the woman violated a federal statute, and an agreement with the law firm violated New York’s champerty laws and other rules, the court said. Judge Robert W. Sweet, of the U.S. District Court for the Southern District of New York, issued the July 17…

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A Primer on Champerty and Lawsuit Funding – and Impact on Insurers – Is Part of Report On U.S. Chamber’s Support for Federal Rule Change

A Primer on Champerty and Lawsuit Funding – and Impact on Insurers – Is Part of Report On U.S. Chamber’s Support for Federal Rule Change

What’s champerty?  How does it relate to litigation funding? And why should it matter to the insurance industry? These are a few questions addressed this month in a short but pithy piece in the National Law Review, “U.S. Chamber Seeks New Federal Rule Requiring Disclosure Of Third-Party Litigation Funding Arrangements” (available here). As for the answers: (1) champerty is “an agreement between an officious intermeddler in a lawsuit and a litigation by which the intermeddler helps pursue the litigant’s claim…

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Minnesota Court of Appeals Says State’s Strong Policy Against Champerty Means Litigation Funder Can’t Enforce Forum Selection Clause or Compel Parallel Lawsuit to Proceed in New York

Minnesota Court of Appeals Says State’s Strong Policy Against Champerty Means Litigation Funder Can’t Enforce Forum Selection Clause or Compel Parallel Lawsuit to Proceed in New York

The principles at stake in Maslowski v. Prospect Funding, 890 N.W.2d 756, 2017 Minn. App. LEXIS 26 (Minn. App. Ct. Feb. 13, 2017), can be summed up as follows: A trial court does not abuse its discretion to refuse to enforce a contractual forum-selection clause where the court’s refusal was based on protecting Minnesota’s local interest against champerty; and A trial court does not abuse its discretion by issuing an anti-suit injunction enjoining a litigation funding company from prosecuting a lawsuit…

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Champerty Still Valid Defense in Kentucky, So Litigation Funding Agreements Are Void, Says Court

Champerty Still Valid Defense in Kentucky, So Litigation Funding Agreements Are Void, Says Court

A series of litigation funding agreements were champertous and therefore void under Kentucky law, a federal court has ruled. In Boling v. Prospect Funding Holdings, Civil Action No. 1:14-CV-0008-1-00081-GNS-HBB, 2017 U.S. Dist. LEXIS 48098 (W.D. Ky. Mar. 30, 2017), the federal district court reviewed the claims of an individual who had entered into a series of litigation funding agreements and later challenged the agreements, arguing that they were unenforceable due to Kentucky’s public policy against champerty and prohibition against usury….

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Litigation Funding Arrangement Gave Company Too Much Control, Violated North Carolina’s Public Policy Against Champerty, Says Court

Litigation Funding Arrangement Gave Company Too Much Control, Violated North Carolina’s Public Policy Against Champerty, Says Court

A federal court judge last week refused to approve a litigation financing arrangement because it was champertous. The court in In Re DesignLine Corp., Case No. 13-31943/Case No. 13-91944, 2017 Bankr. LEXIS 182 (Bankr. W.D.N.C. Jan. 20, 2017), said that a bankruptcy trustee’s arrangement with a litigation funding company violated North Carolina’s public policy against champerty because of the control that the funding company had over the litigation. The case involved a litigation trust that sued former officers and directors…

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New York’s Highest Court: Champerty Bars Attempted Acquisition of Lawsuit

New York’s Highest Court: Champerty Bars Attempted Acquisition of Lawsuit

New York’s highest court declined to reinstate breach-of-contract and fraud claims against an asset manager accused of making bad mortgage-based investments, finding that the suit represented a violation of the state’s champerty doctrine. So reported the New York Law Journal, describing the ruling this week by the New York Court of Appeals in Justinian Capital SPC v. West LB AG, No. 155, 2016 N.Y. LEXIS 3419 (N.Y. Oct. 27, 2016).  As the Law Journal explained, “Champerty prohibits the buying of…

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