LitFunding Corp. v. Victor Bonner
Published: Feb. 18, 2004 | Result Date: Dec. 11, 2003 | Filing Date: Jan. 1, 1900 |Case number: BC284879 Bench Decision – $66,200
Judge
Court
L.A. Superior Central
Attorneys
Plaintiff
Robyn M.N. McKibbin
(Stone Dean LLP)
Defendant
Facts
The plaintiff provides funding to lawyers and law firms for the prosecution of third-party litigation. On four separate occasions, the defendant, an attorney, licensed to practice law in the State of Texas, requested and received non-recourse advances, totaling $48,000. Pursuant to the terms of the Contingent Advance Agreements, the defendants owed LitFunding either the full amount of each advance plus the applicable fees enumerated in the agreements, or, if the defendant's recovery in the underlying case was less than the full amount of the aggregate advances plus fees, then the defendant only owed LitFunding the full amount of the recovery. If the defendant failed to recover any proceeds from the underlying action, the defendant owed LitFunding nothing. The defendant settled the underlying litigation for approximately $97,000. At the time of the settlement, the defendant owed LitFunding $91,200. The defendant's partial payment of $25,000 left a balance of $66,200. Under the terms of the written agreements, LitFunding is entitled to attorneys fees and costs incurred in collecting payment. The defendant argued a verbal agreement modified the terms of the written agreements in which LitFunding agreed to accept a total sum of $25,000 to satisfy and release the defendant from his duties and obligations. The defendant also argued that the Contingent Advance Agreements violated California usury laws by exceeding the statutory limit for interest to be charged on a loan of money thus, are illegal.
Result
The court concluded that the evidence did not support the defendant's contention there was a verbal agreement to modify the terms and conditions of the written agreements, or that any settlement was made. Further, because LitFunding risked losing the principal amount advanced if the underlying litigation is unsuccessful, LitFunding's agreements are non-recourse advances, not loans of money. Thus, LitFunding's Contingent Advance Agreements do not fall within the scope of California's usury laws.
Other Information
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