STATE OF MINNESOTA

IN COURT OF APPEALS

A16-0770

Pamela Maslowski,

Respondent,

vs.

Prospect Funding Partners LLC,

Defendant,

Prospect Funding Holdings LLC,

Appellant.

Filed February 13, 2017

Affirmed

Larkin, Judge

Hennepin County District Court

File No. 27-CV-15-15143

James R. Schwebel, James S. Ballentine, Matthew J. Barber, Schwebel, Goetz & Sieben, 

P.A., Minneapolis, Minnesota (for respondent)

Daniel A. Beckman, Abigail A. Pettit, Gislason & Hunter LLP, Minneapolis, Minnesota 

(for appellant)

Considered and decided by Hooten, Presiding Judge; Peterson, Judge; and Larkin, 

Judge. 

S Y L L A B U S

A district court does not abuse its discretion by refusing to enforce a forum-selection 

clause that is inconsistent with Minnesota’s local interest against champerty. 
2

O P I N I O N

LARKIN, Judge

This appeal stems from an agreement in which appellant purchased an interest in 

respondent’s Minnesota personal-injury lawsuit. Appellant sued respondent in New York, 

seeking to enforce the agreement. Respondent sued appellant in Minnesota, seeking a 

declaration that the agreement violates Minnesota’s policy against champerty and is 

unenforceable. Appellant challenges the district court’s refusal to enforce a forumselection clause in the agreement, which requires the parties to bring any action relating to

the agreement in New York. Appellant also challenges the district court’s issuance of an 

anti-suit injunction enjoining appellant from prosecuting its New York action. Because the 

district court did not abuse its discretion by refusing to enforce the forum-selection clause 

or by issuing the anti-suit injunction, we affirm. 

FACTS

In March 2012, respondent Pamela Maslowski, a Minnesota resident, was injured 

in a motor-vehicle accident. Maslowski sued to recover damages for the personal injuries 

she sustained in the accident. While Maslowski’s personal-injury suit was pending, she 

needed money for living expenses. In May 2014, Maslowski entered into an agreement 

with appellant Prospect Funding Holdings LLC (Prospect), through its manager at its office 

in Minnetonka,1 under which Prospect would provide Maslowski with $6,000 in exchange 

 

1 Maslowski’s complaint alleges that Prospect is a Florida limited liability company with 

its principal place of business in Florida. In its answer, Prospect claimed that it is a New 

York limited liability company with its principal place of business in Minnesota. In later 

filings, Prospect claimed that it is a New York entity with a New York office. 
3

for an interest in her personal-injury action. The agreement provides that if Maslowski 

recovers in the personal-injury action, Prospect is entitled to recover $6,000, a $1,425 

processing fee, and 60% annual interest. The agreement further provides that if Maslowski 

does not recover in the personal-injury suit, Prospect will recover nothing. 

Under the agreement, the transaction is to be treated as a sale of Maslowski’s interest 

in the personal-injury suit and not as a loan, Maslowski is prohibited from assigning any 

other interest in the personal-injury action or the proceeds thereof without Prospect’s prior 

written consent, and Maslowski is not permitted to hire a new attorney unless she first 

notifies Prospect in writing and requires the new attorney to execute an “Attorney 

Acknowledgement of the Irrevocable Letter of Direction.” The agreement defines breach 

to include Maslowski’s termination of her attorney’s representation without notice to 

Prospect, termination followed by a replacement attorney’s failure to execute an “Attorney 

Acknowledgement of the Irrevocable Letter of Direction,” or Maslowski’s receipt of 

additional advances without Prospect’s consent. In the event of a breach, Maslowski must 

pay Prospect twice the purchase amount. All notices required under the agreement are to 

be sent to Prospect’s Minnesota address.

The agreement includes a choice-of-law clause designating New York law as the 

applicable law. The agreement also includes the following forum-selection clause:

THE PARTIES IRREVOCABLY AGREE THAT ALL 

ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER 

OR RESPECT, ARISING OUT OF OR RELATED TO THIS 

AGREEMENT SHALL BE LITIGATED ONLY IN COURTS 

HAVING SITUS IN NEW YORK COUNTY, NEW YORK. 

EACH PARTY CONSENTS AND SUBMITS TO 

PERSONAL JURISDICTION IN THE STATE OF NEW 
4

YORK AND WAIVES ANY RIGHT SUCH PARTY MAY 

HAVE TO TRANSFER THE VENUE OF ANY SUCH 

ACTION OR PROCEEDING.

Maslowski’s complaint in the underlying action seeks a declaration that 

Maslowski’s agreement with Prospect is void because it is champertous,

2

“against 

Minnesota policy,” “intended to evade Minnesota law,” and unconscionable. The 

complaint lists Prospect and Prospect Funding Partners LLC, an entity which “originates, 

services, administers and monitors claims” on behalf of Prospect, as defendants.3 On July 

7, 2015, Maslowski unsuccessfully attempted to serve the complaint on Prospect at its 

Minnesota office. 

On July 10, Prospect filed a complaint in New York against Maslowski, 

Maslowski’s Minnesota counsel, and counsel’s law firm, claiming breach of contract, 

unjust enrichment, promissory estoppel, breach of the duty of good faith and fair dealing, 

negligent misrepresentation, money had and received, and anticipatory breach. Prospect’s 

complaint included the following allegations: (1) Maslowski’s personal-injury case was 

going to settle; (2) Prospect notified Maslowski that $14,108 was due to Prospect if the 

case settled and payment was made on or before September 22, 2015; (3) Maslowski’s 

attorney informed Prospect that the funding agreement is unenforceable; (4) Maslowski 

failed to remit any payment in accordance with the agreement; and (5) Maslowski and her 

attorney indicated they would not comply with the terms of the agreement. 

 

2

“Champerty” is defined on page nine of this opinion.

3 Prospect Funding Partners LLC is not a party to this appeal. 
5

On August 6, Maslowski served her complaint in the Minnesota action against

Prospect on Prospect through the Minnesota Secretary of State. On August 26, Prospect 

moved the Minnesota district court to dismiss Maslowski’s action, asserting that she

brought her action “in an improper jurisdiction in violation of a mandatory forum[-]

selection clause in the agreement,” that “a case based on the same dispute was already 

pending in New York when the complaint in the present case was served,” and that under 

“the principles of comity, in particular the ‘first to file’ rule, New York is the proper forum 

to adjudicate this dispute.” 

In September, Maslowski, her Minnesota counsel, and counsel’s law firm moved to 

dismiss Prospect’s New York action on forum non conveniens grounds and because the 

New York court lacked personal jurisdiction over Maslowski’s lawyer and his law firm. 

The New York Supreme Court, New York County, granted the motion to dismiss as to 

Maslowski’s lawyer and his law firm, but the court denied the motion to dismiss as to 

Maslowski, reasoning that Maslowski is contractually bound to have her dispute with 

Prospect decided in a New York forum. On November 19, Maslowski moved the 

Minnesota district court to enjoin Prospect from prosecuting its New York action until final 

judgment is entered in the Minnesota action. 

On December 21, the Minnesota district court denied Prospect’s motion to dismiss 

the Minnesota action. The district court reasoned that “Minnesota courts have stated and 

reaffirmed that they will not enforce champertous agreements” and that another district 

court recently held a “contract that is substantially identical to the Agreement in this case, 

having been drafted by [Prospect], to be unenforceable.” The district court noted, “When 
6

Maslowski entered into the agreement that underlies this lawsuit with [Prospect] . . . 

[Prospect] had changed the forum-selection and choice-of-law clauses in their form 

agreement from Minnesota to New York.” The district court reasoned that Prospect “chose 

a sort of ‘end-around’ play, by using the same contract form as before, but stating that it 

would be governed by New York law, and subject to suit only in the New York court 

system.” 

The district court explained:

If this court were to enforce the forum selection clause 

as [Prospect] request[s], and if thereafter a New York court, 

applying New York law, were to decide that champertous 

contracts are permissible and enforceable in Minnesota, that 

would effectively reverse a line of precedent that has been 

established in Minnesota ever since 1897, and reaffirmed by 

Minnesota’s appellate court as recently as 2003, without any 

Minnesota court having any say in the matter. If the Minnesota 

Supreme Court’s ruling that champertous contracts are 

unenforceable in this state is to be reversed, it should be by an 

affirmative decision of the Minnesota Supreme Court, and not 

by a corporate decision to select a different state’s law to 

govern such contracts in this state.

The district court concluded that “the outcome of the dispute between the parties in 

this case will be felt within this State, and not anywhere in New York” and that enforcing 

the forum-selection clause “would result in the contravention of a strong Minnesota public 

policy that its courts should decide whether champertous agreements may be enforced 

within this state.” Prospect requested reconsideration. 

On January 14, 2016, Maslowski moved for judgment on the pleadings in her

Minnesota action. On the same day, Prospect moved the New York Supreme Court to 

enjoin Maslowski from prosecuting her Minnesota action. On January 27, the New York 
7

Supreme Court granted Prospect’s motion to enjoin Maslowski, based on its earlier ruling 

that Maslowski is bound by the forum-selection clause, but the New York Supreme Court

did not order Maslowski to withdraw motions pending before the Minnesota district court.

On March 4, the Minnesota district court denied Prospect’s request for 

reconsideration, denied Maslowski’s motion for judgment on the pleadings, and granted 

Maslowski’s motion to enjoin Prospect from prosecuting its New York action. As to the 

injunction, the district court found that the Minnesota and New York actions involve 

similar parties and similar issues, that resolution of the Minnesota action would dispose of 

the New York action, and that “principles of comity and equity favor [the Minnesota] 

forum, and not New York.” Prospect appeals.4

ISSUES

I. Did the district court abuse its discretion by refusing to enforce the forumselection clause in the parties’ agreement?

II. Did the district court abuse its discretion by issuing an anti-suit injunction?

 

4 Following oral argument in this case, the New York Supreme Court, Appellate Division,

reversed the New York Supreme Court’s denial of Maslowski’s motion to dismiss the New 

York action and its order enjoining Maslowski from prosecuting the Minnesota action. 

Prospect Funding Holdings LLC v. Maslowski, No. 2747-2748-2748A-2748B, 2017 WL 

113078 (N.Y. App. Div. Jan. 12, 2017). The New York Supreme Court, Appellate 

Division, found that “Maslowski demonstrated that the choice of forum provision in the 

parties’ agreement is unreasonable and should not be enforced,” noting that “[e]very aspect 

of the transaction at issue occurred in Minnesota, the parties, documents, and witnesses are 

located in Minnesota, and defending this action in New York would be a substantial 

hardship to Ms. Maslowski.” Id. Prospect moved for an order granting reargument of that 

appeal or leave to appeal to the New York Court of Appeals. Prospect’s motion for 

reargument or appeal to the New York Court of Appeals is currently pending.
8

ANALYSIS

I.

Prospect contends that the district court erred by failing to enforce the forumselection clause in the parties’ agreement. Whether to enforce a forum-selection clause is 

within the discretion of the district court, and this court will affirm the district court’s ruling 

unless it clearly abused its discretion. Personalized Mktg. Serv., Inc. v. Stotler & Co., 447 

N.W.2d 447, 450 (Minn. App. 1989), review denied (Minn. Jan. 12, 1990). A district court 

abuses its discretion when it misapplies the law. Minneapolis Grand, LLC v. Galt Funding 

LLC, 791 N.W.2d 549, 556 (Minn. App. 2010).

In Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., the Minnesota Supreme 

Court followed the United States Supreme Court’s approach and adopted the rule that 

forum-selection clauses are “not per se invalid, but enforceable in the discretion of the court 

if not unreasonable.” 320 N.W.2d 886, 888-90 (Minn. 1982). The supreme court held that 

“when the parties to a contract agree that actions arising from that contract will be brought 

in a particular forum, that agreement should be given effect unless it is shown by the party 

seeking to avoid the agreement that to do so would be unfair or unreasonable.” Id. at 890. 

The relevant issue is “whether a court should refrain from exercising the jurisdiction that 

it admittedly possesses to give effect to the parties’ intentions as expressed in a forum 

selection clause.” Id. at 889. 

The supreme court explained that this approach “accords with ancient concepts of 

freedom of contract and reflects an appreciation of the expanding horizons of American 

business”; it also provides “a degree of certainty to business contracts by obviating 
9

jurisdictional struggles and by allowing parties to tailor the dispute resolution mechanism 

to their particular situation.” Id. (quotation omitted). 

A forum-selection clause is unreasonable, and therefore unenforceable, if “(1) the 

chosen forum is a seriously inconvenient place for trial; (2) the choice of forum agreement 

is one of adhesion; and (3) the agreement is otherwise unreasonable.” Id. at 890. A forumselection clause is otherwise unreasonable if “enforcement of the forum selection clause 

‘would contravene a strong public policy of the forum in which suit is brought, whether 

declared by statute or by judicial decision.’” Id. at 891 (quoting M/S Bremen v. Zapata 

Off-Shore Co., 407 U.S. 1, 15, 92 S. Ct. 1907, 1916 (1972)). 

The district court determined that New York is not a seriously inconvenient place 

for trial and that fact issues preclude a determination regarding whether the parties’ forumselection agreement is one of adhesion. But the district court refused to enforce the forumselection clause based on Minnesota’s strong public policy against champerty. 

Minnesota follows the common-law rule prohibiting contracts for champerty. 

Huber v. Johnson, 68 Minn. 74, 77-78, 70 N.W. 806, 807 (1897). This court has defined 

champerty as “‘[a]n agreement between a stranger to a lawsuit and a litigant by which the 

stranger pursues the litigant[’s] claims as consideration for receiving part of any judgment 

proceeds.’” Johnson v. Wright, 682 N.W.2d 671, 675 (Minn. App. 2004) (first alteration 

in original) (quoting Black’s Law Dictionary 224 (7th ed. 1999)), review granted (Minn. 

Oct. 19, 2004) and appeal dismissed (Minn. Jan. 10, 2005). This court has defined 

maintenance, a similar concept, as “‘[a]ssistance in prosecuting or defending a lawsuit 

given to a litigant by someone who has no bona fide interest in the case; meddling in 
10

someone else’s litigation.’” Id. (alteration in original) (quoting Black’s Law Dictionary

965 (7th ed. 1999)). 

“The general purpose of the law against champerty and maintenance” is to “prevent 

officious intermeddlers from stirring up strife and contention by vexatious or speculative 

litigation which would disturb the peace of society, lead to corrupt practices, and pervert 

the remedial process of the law.” Huber, 68 Minn. at 78, 70 N.W. at 807. In other words, 

the prohibition on champerty and maintenance is aimed at discouraging “intrusion for the 

purpose of mere speculation in the troubles of others.” Hackett v. Hammel, 185 Minn. 387, 

388, 241 N.W. 68, 69 (1932). In Johnson, this court was asked to re-evaluate Minnesota’s 

position against champerty and maintenance. 682 N.W.2d at 679. We recognized that a 

few states have abandoned or modified the champerty doctrine, but we refused to do so, 

noting “the potential ill effects that a champertous agreement can have on the legal system.” 

Id. at 679-80.

The district court reasoned that the agreement in this case could implicate the 

concerns underlying Minnesota’s prohibition on champerty as follows: “a litigant with no 

obligation to pay advances back has no incentive to settle, unless the amount recovered 

would exceed her attorney’s fees plus the amount she would owe to the litigation funding 

company” and the “rapid escalation of amounts owed to the litigation funding company 

would lead to an equally rapid decline in the litigant’s willingness to consider settling for 

anything less than a maximum recovery.” The district court further reasoned that “[t]he 

outcome of the dispute between the parties in this case will be felt within this State, and 

not anywhere in New York.” The district court concluded that upholding the forum-
11

selection clause “would result in the contravention of a strong Minnesota public policy that 

its courts should decide whether champertous agreements may be enforced within this 

state.” 

Prospect argues that the district court abused its discretion primarily because 

“[t]here is no case law outlining such a public policy in Minnesota, nor did the district court 

rely on any in making this pronouncement.” Prospect further argues that “the types of 

public policy in which courts have found forum[-]selection clauses to be unreasonable have 

been limited to claims of” judicial economy and the prevention of multiple actions on 

similar issues. See Interfund Corp. v. O’Byrne, 462 N.W.2d 86, 89 (Minn. App. 1990) 

(“Judicial economy and the prevention of multiple actions on similar issues are policies 

which can render a forum[-]selection clause patently unreasonable.”). 

Whether the district court’s reasoning is a valid basis to refuse to enforce the parties’ 

forum-selection clause is an issue of first impression. Minnesota caselaw does not 

expressly endorse the reasoning. However, in adopting the current rule on forum-selection 

clauses in Hauenstein, the Minnesota Supreme Court did not suggest that the “otherwise 

unreasonable” category of forum-selection clauses is as narrow as Prospect contends. In 

setting forth three ways that forum-selection clauses may be unreasonable, the Minnesota 

Supreme Court said, “[o]ther indications of unreasonableness in forum selection 

agreements are sure to arise where for reasons other than those enumerated above, to 

enforce the agreement would be unfair or unreasonable.” Hauenstein, 320 N.W.2d at 891. 

The supreme court provided the following example from M/S Bremen v. Zapata Off-Shore 

Co: where enforcement “‘would contravene a strong public policy of the forum in which 
12

suit is brought, whether declared by statute or by judicial decision.’” Id. (quoting Bremen, 

407 U.S. at 15, 92 S. Ct. at 1916). 

Bremen involved a forum-selection clause that designated the London Court of 

Justice as the forum for any disputes arising under an international-towage contract. 407

U.S. at 2, 92 S. Ct. at 1909. The Supreme Court considered whether enforcement of the 

forum-selection clause would contravene the public policy established in Bisso v. Inland 

Waterways Corp., 349 U.S. 85, 75 S. Ct. 629 (1955). Id. at 15, 92 S. Ct. at 1916. Bisso

established a “judicial rule, based on public policy, invalidating contracts releasing towers 

from all liability for their negligence.” 349 U.S. at 90, 75 S. Ct. at 632. 

Bremen rejected the Bisso public-policy argument against enforcement of the 

forum-selection clause. 407 U.S. at 15-16, 92 S. Ct. at 1916. However, it did so solely 

because the Bisso policy was inapplicable to the facts in Bremen. The Supreme Court 

explained that, “whatever the proper scope of the policy expressed in Bisso, it does not 

reach this case. Bisso rested on considerations with respect to the towage business strictly 

in American waters, and those considerations are not controlling in an international 

commercial agreement.” Id. (footnote omitted). Moreover, the Supreme Court went on to 

explain:

[The] selection of a remote forum to apply differing foreign 

law to an essentially American controversy might contravene 

an important public policy of the forum. For example, so long 

as Bisso governs American courts with respect to the towage 

business in American waters, it would quite arguably be 

improper to permit an American tower to avoid that policy by 

providing a foreign forum for resolution of his disputes with an 

American towee.
13

Id. at 17, 92 S. Ct. at 1917.

The preceding example suggests that use of a forum-selection clause to avoid a 

forum’s established substantive policy may render the clause unreasonable. Such is likely 

the case here. It appears that the forum-selection clause in this case, in conjunction with 

the choice-of-law provision, is an attempt to avoid Minnesota’s long-established policy

that agreements for champerty are unenforceable. The district court recognized that reality 

in declining to enforce the forum-selection clause. The district court’s reasoning finds 

support in Bremen and Hauenstein. 

We now turn to a case that is factually similar to the case before us: Fountain v. 

Oasis Legal Fin., LLC, 86 F. Supp. 3d 1037 (D. Minn. 2015).

5

 In Fountain, consumers 

brought a putative class action in Minnesota state court against Oasis, alleging that Oasis 

was an Illinois company that purchased legal-funding interests through purchase 

agreements with Minnesota consumers who had personal-injury lawsuits pending in state 

or federal court. 86 F. Supp. 3d at 1040-41. The consumers further alleged that the 

purchase agreements constituted champerty and sought a declaration that the agreements 

violated Minnesota public policy and were void and unenforceable. Id. at 1041. Oasis 

removed the case to federal court and moved to dismiss based on a forum-selection clause 

in the purchase agreements requiring any lawsuit stemming from the agreements to be 

 

5 Although the case is not precedential, it is persuasive. See Sonenstahl v. L.E.L.S., Inc., 

372 N.W.2d 1, 4 (Minn. App. 1985) (noting that federal decisions may be persuasive where 

Minnesota courts have not addressed a subject).
14

brought in state court in Cook County, Illinois. Id. at 1040-41. The agreements also 

contained a choice-of-law provision selecting Minnesota law. Id. at 1040. 

In determining whether to enforce the forum-selection clause, the Fountain court 

noted that the Supreme Court had recently addressed the proper procedure for enforcing a 

forum-selection clause in Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 

134 S. Ct. 568 (2013). Id. at 1043. The Fountain court noted that in Atl. Marine, the 

Supreme Court affirmatively endorsed the forum non conveniens doctrine as a vehicle to 

enforce a forum-selection clause that chooses a nonfederal forum and therefore applied that 

doctrine. Id. at 1044.6 

The Fountain court first considered whether the forum-selection clause was 

enforceable and concluded that it was. Id. at 1044-45. The federal court rejected the 

consumers’ argument that enforcing the forum-selection clause would contravene 

Minnesota’s public policy against champerty. Id. at 1044. The federal court reasoned that 

“what matters is not whether the contract as a whole violates public policy, but whether the 

forum-selection clause itself violates public policy. Courts in this District have repeatedly 

held that enforcement of a forum-selection clause does not violate Minnesota public 

policy.” Id.

7

 Given the Minnesota Supreme Court’s recognition that “[o]ther indications 

 

6 Because the issue is not briefed in this appeal, we do not consider whether Minnesota 

should follow the federal approach in Atl. Marine. 

7 The Supreme Court of Alabama recently cited this text from Fountain and concluded that 

in Bremen, “the [Supreme] Court was saying that enforcement of the forum-selection 

clause must contravene a state’s public policy, not that the clause should be held 

unenforceable if enforcement of the contract that contains the clause would contravene a 

state’s public policy.” Ex parte PT Sols. Holdings, LLC, No. 1150687, 2016 WL 6900685, 

at *5 (Ala. Nov. 23, 2016).
15

of unreasonableness in forum[-]selection agreements are sure to arise,” Hauenstein, 320 

N.W.2d at 891, and the United States Supreme Court’s recognition that “it would quite 

arguably be improper” to permit a party to use a forum-selection clause to avoid a forum’s 

judicial policy, Bremen, 407 U.S. at 17, 92 S. Ct. at 1917, we disagree with the federal 

court’s conclusion that the only relevant public policy is the forum’s policy regarding 

forum-selection clauses.

After concluding that the forum-selection clause was enforceable, the Fountain

court next considered whether it should be enforced, using a modified forum non 

conveniens analysis set forth in Atl. Marine. Id. at 1046. In conducting that analysis, “the 

plaintiff’s choice of forum merits no weight” and the court “should not consider arguments 

about the parties’ private interests.” Atl. Marine, 134 S. Ct. at 581-82. The court may 

consider only public-interest factors, which “may include ‘the administrative difficulties 

flowing from court congestion; the local interest in having localized controversies decided 

at home; [and] the interest in having the trial of a diversity case in a forum that is at home 

with the law.’” Id. at 581 & n.6 (alteration in original) (quoting Piper Aircraft Co. v. Reyno, 

454 U.S. 235, 241 n.6, 102 S. Ct. 252, 258 n.6 (1981)). 

The parties in Fountain framed the relevant public-interest factor as follows: 

“whether a Court in Minnesota has a localized interest in applying Minnesota’s prohibition 

against champerty to the purchase agreements at issue here.” 86 F. Supp. 3d at 1046. The 

consumers “contend[ed] that approximately 2,000 consumers in the putative class are 

located in Minnesota and deserve[d] a chance to vindicate their rights in Minnesota based 

on Minnesota law.” Id. Oasis countered that “the purchase agreements contain[ed] a 
16

choice-of-law provision that require[ed] the application of Minnesota law and its strong 

interest in prohibiting champerty, regardless of which court decide[d] the case.” Id. 

The Fountain court concluded that the local public-interest factor did not weigh 

against enforcing the forum-selection clause, given the parties’ choice of Minnesota law. 

Id. The federal court reasoned that “[i]n the end, it [was] likely that an Illinois court 

applying Illinois choice-of-law principles would enforce the choice-of-law provision and 

analyze [the] claims under Minnesota law” and that “[e]nforcement of the forum-selection 

clause would therefore not thwart Minnesota public policy against champerty, diminishing 

any benefit to the public in keeping this case in this District.” Id. 

The parties’ framing of the public-interest factor in Fountain is similar to the district 

court’s reasoning here: Minnesota has a local interest in deciding whether the parties’ 

agreement is void under Minnesota’s policy against champerty. But unlike the 

circumstances in Fountain, the choice-of-law provision in this case does not select 

Minnesota law; it requires application of New York law. Although a New York statute 

prohibits champerty, its prohibition is narrower than Minnesota’s common-law approach. 

See N.Y. Jud. Law § 489 (McKinney 2016) (providing that no corporation or association 

“shall solicit, buy or take an assignment of, or be in any manner interested in buying or 

taking an assignment of a bond, promissory note, bill of exchange, book debt, or other thing 

in action, or any claim or demand, with the intent and for the purpose of bringing an action 

or proceeding thereon”); Maya Steinitz, Whose Claim is this Anyway? Third-Party 

Litigation Funding, 95 Minn. L. Rev. 1268, 1289-90 (2011) (noting that Minnesota 

represents those states that continue to “rigorously apply” champerty restrictions, whereas 
17

New York represents those states that, while not abandoning the champerty doctrine, “have 

taken a cautious approach to its application”).

Prospect notes that “both lower courts have declined to determine choice of law at 

this time” and that Maslowski has the right to “argue for the application of Minnesota law 

in [the New York] forum.” Prospect argues that the “record does not contain any evidence 

that the New York court will improperly interpret Minnesota law should it determine that 

Minnesota law applies, nor is it appropriate for the Minnesota court to make any such 

assumption.” However, Prospect also argues, “When read together, the choice of law 

clause and the choice of forum clause make clear that respondent agreed to submit to the 

New York courts and New York Law.” Given the choice-of-law provision in this case—

and Prospect’s intent to enforce it—enforcement of the forum-selection clause could be the 

first step in thwarting Minnesota’s policy against champerty. Unlike the circumstances in 

Fountain, there is, therefore, a benefit to the public in keeping this case in Minnesota. 

We recognize that the current rule favors enforcement of forum-selection clauses 

and that there are important reasons to honor such agreements. See Hauenstein, 320 

N.W.2d at 889. But in this particular case, the decision whether the parties’ agreement 

violates Minnesota’s policy against champerty has the potential to expose personal-injury 

actions in Minnesota to the negative effects of champerty. Given that potential, Minnesota 

has a strong local interest in applying its prohibition against champerty in this case. 

In sum, the district court did not abuse its discretion by refusing to enforce the 

forum-selection clause in the parties’ agreement based on Minnesota’s local interest against 

champerty. The district court’s decision finds support in United States Supreme Court and 
18

Minnesota Supreme Court precedent. We therefore affirm the district court’s refusal to 

enforce the forum-selection clause. 

II.

Prospect contends that the district court abused its discretion by enjoining it from 

prosecuting its New York action. “It has long been the law in Minnesota that a court may 

enjoin a party over whom it has in personam jurisdiction from pursuing similar litigation 

in another court.” First State Ins. Co. v. Minn. Mining & Mfg. Co., 535 N.W.2d 684, 687 

(Minn. App. 1995), review denied (Minn. Oct. 13, 1995); see Hawkins v. Ireland, 64 Minn. 

339, 344, 67 N.W. 73, 75 (1896) (stating that Minnesota courts may restrain its citizens 

from pursuing actions in other state courts “whenever the facts of the case make such 

restraint necessary to enable the court to do justice, and prevent one citizen from obtaining 

an inequitable advantage over other citizens”); Freick v. Hinkly, 122 Minn. 24, 26, 141 

N.W. 1096, 1096 (1913). 

Historically, Minnesota courts considered principles of comity and equity when 

determining whether to issue an anti-suit injunction. See, e.g., Doerr v. Warner, 247 Minn. 

98, 109-10, 76 N.W.2d 505, 514 (1956) (upholding anti-suit injunction partly because 

trustee acted in “calculated and systematic” manner to deprive Minnesota court of 

jurisdiction and because Minnesota court was first to acquire jurisdiction). Currently, this 

court applies a three-part substantial-similarity test that assesses (1) the similarity of the 

parties; (2) the similarity of the issues; and (3) the capacity of one action to dispose of the 

action to be enjoined. First State, 535 N.W.2d at 687. The decision whether to grant such 
19

an injunction is left to the district court’s discretion and will be upheld absent a clear abuse 

of that discretion. Id. 

The district court concluded that the New York and Minnesota actions involve 

similar parties. Prospect concedes that this part of the test is satisfied. As to the similarity

of the issues, the district court acknowledged that Prospect made additional claims against 

Maslowski in the New York action that are not included in the Minnesota action. Despite 

these additional claims, the district court determined that because the “‘paramount and 

threshold’ issue in both actions is the enforceability of the subject agreement” and Prospect 

can raise all of its claims against Maslowski in Minnesota in subsequent pleadings, the 

issues in both cases are substantially similar. Based on the similar parties and the 

paramount and threshold enforceability issue, the district court concluded that resolution 

of this action would dispose of the New York action and that “an injunction is necessary 

to protect the jurisdiction of the Minnesota courts to decide whether agreements like the 

subject agreement are champertous and unenforceable in Minnesota.” 

Prospect argues that the district court erred by finding that the two actions involve 

similar issues because the “claims in the New York Action are distinct, and include not 

only additional contract claims, but quasi contract claims and tort claims.” This court has 

previously upheld a district court’s finding of an identity of issues where two actions shared 

a “‘paramount and threshold’ issue of insurance coverage” and additional tort claims 

“stem[med] from the central contract action and could still be raised in Minnesota in 

subsequent pleadings.” Id. at 687, 689. Because the paramount and threshold issue in both 
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actions here is the enforceability of the funding agreement, the district court did not err by 

determining that the two actions involve similar issues. 

Prospect further argues that because “there are many additional elements raised in 

the New York Action which have no bearing on the Minnesota Action,” resolution of the 

Minnesota action would not dispose of the New York action. But all of Prospect’s New 

York claims are directly related to enforceability of the funding agreement. And, as the 

district court noted, Prospect can raise claims related to that central issue in subsequent 

pleadings in the Minnesota action. The district court therefore did not err by concluding 

that the third part of the substantial-similarity test is satisfied.

In addition to arguing that the district court erred in its application of the substantialsimilarity test, Prospect argues that “[c]omity and equity support deference to the New 

York court, and the district court abused its discretion by refusing to defer to the first-filed 

action.” As to comity, Prospect relies on the “first-filed rule,” which provides: 

Where two actions between the same parties, on the 

same subject, and to test the same rights, are brought in 

different courts having concurrent jurisdiction, the court which 

first acquires jurisdiction, its power being adequate to the 

administration of complete justice, retains its jurisdiction and 

may dispose of the whole controversy, and no court of 

coordinate power is at liberty to interfere with its action. This 

rule rests upon comity and the necessity of avoiding conflict in 

the execution of judgments by independent courts . . . .

State ex rel. Minn. Nat’l Bank of Duluth v. Dist. Ct., 195 Minn. 169, 173, 262 N.W. 155, 

157 (1935) (quotation omitted). 

However, this general rule does not apply when the same cause of action is pending 

before courts which do not share concurrent jurisdiction, such as courts of different states. 
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St. Paul Surplus Lines Ins. Co. v. Mentor Corp., 503 N.W.2d 511, 515 (Minn. App. 1993). 

In such circumstances, the actions may proceed independently of each other and the rules 

of res judicata will generally be applied with regard to the first suit to be concluded. Id. 

Because the Minnesota and New York courts do not have concurrent jurisdiction, the 

district court did not abuse its discretion by refusing to defer to the New York action under 

the first-filed rule. 

As to comity and equity in general, the district court noted that it fundamentally 

disagrees with the New York Supreme Court regarding the enforceability of the forumselection clause.8

 The district court also noted that Maslowski is a Minnesota resident, the 

underlying personal-injury claim arose in Minnesota and is venued in a Minnesota court, 

the case “raises significant issues regarding whether Minnesota’s long-standing prohibition 

against champerty and maintenance is violated by the terms of the subject agreement,” and,

if the funding agreement is champertous and enforced by a New York court, the effects of 

its enforcement will be felt within Minnesota’s legal system. The district court explained:

Enforcement of this agreement by a non-Minnesota court 

would encourage [Prospect] and other companies that sell presettlement funding products to take pains to avoid any 

possibility of review by Minnesota courts, while continuing to 

sell such products in Minnesota, thus depriving the Minnesota 

courts of their authority to determine what constitutes 

champerty for purposes of such agreements as they affect 

Minnesota lawsuits. 

 

8 As we noted above, the New York Supreme Court, Appellate Division, reversed the New 

York Supreme Court’s ruling that the forum-selection clause is enforceable.
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When weighing the equities, the district court found that Prospect “acted ‘in a calculated 

and systematic manner’ to deprive the Minnesota courts of their jurisdiction to determine 

whether pre-settlement funding contracts affecting Minnesota lawsuits are champertous.” 

Prospect assigns error to the district court’s findings regarding its actions and 

motivation. However, Prospect cannot dispute—and indeed argues—that the purpose of 

its forum-selection clause and choice-of-law provision is to ensure application of New 

York law instead of Minnesota law. One of Minnesota’s earliest cases regarding anti-suit 

injunctions states:

[T]o justify enjoining the prosecution of a foreign suit begun 

before any proceedings were taken in the home courts, it must 

appear that the foreign suit will result in evading the effect of 

some local law, or in securing some other inequitable 

advantage, or in imposing some inequitable disadvantage.

Freick, 122 Minn. at 24, 141 N.W. at 1096 (emphasis added).

Because equity supports an anti-suit injunction when a party attempts to evade the 

effects of Minnesota law and Prospect admittedly attempts to avoid Minnesota’s law 

against champerty, we need not determine whether the district court erred in finding that 

Prospect otherwise acted in bad faith. The district court’s well-reasoned analysis assures 

us that the district court did not err in concluding that equitable principles favor maintaining 

the suit in Minnesota. 

D E C I S I O N

The district court did not abuse its discretion by refusing to enforce the forumselection clause in the parties’ agreement based on Minnesota’s local interest against 

champerty. In addition, the district court properly applied the substantial-similarity test, as 
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well as principles of comity and equity, and did not abuse its discretion by issuing an antisuit injunction enjoining Prospect from prosecuting its New York action against 

Maslowski.

Affirmed.