Pamela Maslowski v. Prospect Funding Partners LLC, Prospect Funding Holdings LLC
2017 Minn. App. LEXIS 26
| Minn. Ct. App. | 2017Background
- Maslowski (Minnesota resident) received $6,000 from Prospect in exchange for an interest in her pending Minnesota personal-injury suit; the contract promised payment to Prospect only if Maslowski recovered and included large fees/interest and restrictions on changing counsel.
- The agreement contained a New York choice-of-law clause and a forum-selection clause requiring all disputes to be litigated only in New York County, New York.
- Maslowski sued in Minnesota seeking a declaration that the agreement is champertous and unenforceable; Prospect sued Maslowski in New York asserting breach and related claims.
- The New York trial court held Maslowski bound by the forum clause and enjoined her Minnesota suit (later reversed on appeal after this opinion was filed).
- The Minnesota district court refused to enforce the forum-selection clause, found Minnesota has a strong local interest in applying its anti-champerty policy, and issued an anti-suit injunction enjoining Prospect from pursuing the New York action.
- Prospect appealed; the Minnesota Court of Appeals affirmed both the refusal to enforce the forum clause and the issuance of the anti-suit injunction.
Issues
| Issue | Plaintiff's Argument (Maslowski) | Defendant's Argument (Prospect) | Held |
|---|---|---|---|
| Enforceability of forum-selection clause | Clause should not be enforced because it would thwart Minnesota’s public policy against champerty and Minnesota has a strong local interest. | Forum-selection clauses are presumptively enforceable; New York forum is contractually chosen and reasonable. | Court affirmed refusal to enforce the clause because enforcing it (with the New York choice-of-law) would likely evade Minnesota’s anti-champerty policy and Minnesota has a strong local interest. |
| Anti-suit injunction (enjoining New York action) | Minnesota may enjoin foreign litigation when actions are substantially similar, the Minnesota action would dispose of the foreign action, and equity/comity favor Minnesota. | New York was the first-filed competent forum under the clause; comity and first-filed principles favor deferring to New York. | Court affirmed the anti-suit injunction: parties and threshold issues are substantially similar, resolution in Minnesota would dispose of the New York suit, and equitable/comity concerns support enjoining Prospect. |
Key Cases Cited
- Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886 (Minn. 1982) (forum-selection clauses are enforceable unless unreasonable; outlines categories of unreasonableness including contravention of forum public policy)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (forum-selection clauses may be unenforceable where enforcement would contravene forum public policy or be used to avoid local substantive protections)
- Fountain v. Oasis Legal Fin., LLC, 86 F. Supp. 3d 1037 (D. Minn. 2015) (federal district court analysis of forum clause & Minnesota champerty argument; persuasive on forum-clause enforcement issues)
- First State Ins. Co. v. Minn. Mining & Mfg. Co., 535 N.W.2d 684 (Minn. App. 1995) (Minnesota three-part substantial-similarity test for anti-suit injunctions)
- Johnson v. Wright, 682 N.W.2d 671 (Minn. App. 2004) (definition and discussion of champerty and maintenance under Minnesota law)