Dakota County District Court. File No. C7-02-8307.
Considered and decided by Klaphake, Presiding Judge; Stoneburner, Judge; and Forsberg, Judge.
1. An agreement is champertous when a person without interest in another's lawsuit undertakes to carry it on at his or her own expense, in whole or in part, in consideration of receiving, in the event of success, a part of the proceeds of the litigation.
2. A loan agreement wherein a third party financially assists a litigant throughout the litigation process is valid if the third party has an expectation of reimbursement for the expenses paid regardless of the outcome of the litigation.
3. Jurisdiction by Minnesota courts is proper where there is nothing to suggest that exercise of such jurisdiction would interfere with or infringe on a Native American tribe's self-government, government functions, laws, or customs.
The opinion of the court was delivered by: Forsberg, Judge
Affirmed in part and reversed in part
Appellant assigned to respondent some proceeds from litigation against her former employer in exchange for respondent's payment of litigation costs, and assigned a percentage of her daughter's benefits from tribal enrollment in exchange for payment of costs associated with enrollment. Appellant also signed a note for some of the funds advanced by respondent. In this action, respondent sued appellant for recovery of funds pursuant to the assignment, and the district court granted summary judgment in his favor. Appellant contends that (1) the agreements constitute maintenance and champerty and violate Minnesota law; (2) the agreement relating to the minor child's potential tribal benefits is an invalid assignment of a minor's rights by a parent and is null and void; (3) the district court lacks jurisdiction over monies disbursed by a federally recognized tribe to its member; and (4) because respondent failed to list agreements or notes with appellant as an asset in his personal bankruptcy filing, he is estopped from pursuing those claims under judicial estoppel and lacks standing to do so. Because the note is a valid agreement between the parties, we affirm the district court's finding that respondent is entitled to full payment on the note. But because we conclude that the assignment agreements are champertous, we reverse the district court's ruling that the agreements are enforceable.
In 1994, appellant Jill Wright sues Little Six, Inc., d/b/a Mystic Lake Casino; Leonard Prescott; Arlene Rose; and William Johnson. At about the same time, appellant sought to enroll her daughter, M.W., into the Shakopee Mdewakanton Sioux Tribe (the tribe) as a member.*fn2 Because appellant could not afford her attorney's retainer fee, respondent Brent Johnson, through his business, Money Changer LLC (MCM), agreed to financially assist appellant with her litigation expenses.
Throughout the litigation, respondent and/or his company financially assisted appellant with her litigation, enrollment, and personal expenses. In consideration of the funds loaned to appellant, the parties executed an assignment agreement wherein appellant assigned to respondent "a total of 27.67% of her right, claim and interest in and to any and all recovery by her, through suit, arbitration, settlement or otherwise, from all of her causes of action arising on or before September 14, 1994 against Little Six, Inc. d/b/a Mystic Lake Casino[.]" Respondent's loan was also secured by a promissory note (the Note) executed in November 1999 and payable to MCM in the amount of $140,000, plus annual interest at the rate of four percent. As the sole owner of MCM, respondent assigned the Note to himself.
Appellant settled her lawsuit in the fall of 2000. The district court ordered the settlement confidential and sealed the records. It is undisputed that appellant received a substantial monetary recovery. Also in the fall of 2000, M.W. was enrolled in the tribe as a member, which provided her with the right to receive per capita and other distribution payments.
In November 2000, appellant directed her attorney to disburse to respondent $38,976.22 from her litigation settlement proceeds that were held in the firm's trust account. But because the district court ordered that the settlement be confidential, respondent has no evidence of appellant's total settlement recovery to determine if the $38,976.22 represents the agreed upon 27.67% of the recovery. In addition, respondent claims that as additional consideration for financing appellant's legal actions, appellant assigned to him seven percent of all proceeds received by either appellant, her daughter, or a third party for the benefit of her daughter, from Little Six, Inc., and/or the tribe as a result of M.W.'s tribal membership enrollment, including M.W.'s per capita and other distributions resulting from enrollment.
Respondent commenced this action against appellant to enforce the Note and the two assignment agreements and moved for summary judgment. The district court granted summary judgment in favor of respondent on the Note in the amount of $140,000, plus interest. The district court also ordered appellant to provide respondent with a copy of the settlement agreements and an accounting of any and all monies received by appellant. Finally, the district court ordered appellant to pay respondent the amount claimed under the two ...