Court Opinion

ID: 2967657
Source: CourtListenerOpinion
Date Created: 2015-09-22 03:03:18.862351+00
Date Added: 2024-06-11T15:01:12.847466
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT

ACCRUED FINANCIAL SERVICES,              
INCORPORATED, for itself and as
assignee of claims,
                  Plaintiff-Appellant,
                  v.
PRIME RETAIL, INCORPORATED; PRIME
RETAIL, L.P.; PRIME RETAIL FINANCE,
INCORPORATED; PRIME RETAIL FINANCE
II, INCORPORATED; PRIME RETAIL
FINANCE V, INCORPORATED; ARIZONA
FACTORY SHOPS PARTNERSHIP; BEND
FACTORY OUTLETS LIMITED
PARTNERSHIP; BUCKEYE FACTORY
SHOPS LIMITED PARTNERSHIP;
CAROLINA FACTORY SHOPS LIMITED
PARTNERSHIP; CASTLE ROCK FACTORY            No. 00-1971
SHOPS PARTNERSHIP; CORAL ISLE
FACTORY STORES LIMITED
PARTNERSHIP; FLORIDA KEYS FACTORY
SHOPS LIMITED PARTNERSHIP;
GAINESVILLE FACTORY SHOPS LIMITED
PARTNERSHIP; GROVE CITY FACTORY
SHOPS PARTNERSHIP; GULF COAST
FACTORY SHOPS LIMITED PARTNERSHIP;
GULFPORT FACTORY SHOPS LIMITED
PARTNERSHIP; HAGERSTOWN FACTORY
SHOPS LIMITED PARTNERSHIP;
HUNTLEY FACTORY SHOPS LIMITED
PARTNERSHIP; INDIANAPOLIS FACTORY
SHOPS LIMITED PARTNERSHIP; KANSAS
CITY FACTORY OUTLETS LIMITED
                                         
2            ACCRUED FINANCIAL SERV. v. PRIME RETAIL

PARTNERSHIP; LATHAM FACTORY           
STORES LIMITED PARTNERSHIP; OUTLET
VILLAGE OF LEBANON LIMITED
PARTNERSHIP; LOVELAND FACTORY
SHOPS LIMITED PARTNERSHIP;
MAGNOLIA BLUFF FACTORY SHOPS
LIMITED PARTNERSHIP; MARKET
STREET LIMITED; NEBRASKA CROSSING
FACTORY SHOPS LIMITED PARTNERSHIP;
NIAGARA INTERNATIONAL FACTORY
OUTLETS LIMITED PARTNERSHIP; OAK
CREEK FACTORY OUTLETS LIMITED
PARTNERSHIP; OHIO FACTORY SHOPS
PARTNERSHIP; OUTLET VILLAGE OF
KITTERY LIMITED PARTNERSHIP;
OXNARD FACTORY OUTLET PARTNERS;
FACTORY OUTLETS AT POST FALLS
LIMITED PARTNERSHIP; SAN MARCOS       
FACTORY STORES LIMITED; SHASTA
OUTLET CENTER LIMITED
PARTNERSHIP; TRIANGLE FACTORY
STORES LIMITED PARTNERSHIP;
HORIZON GROUP, INCORPORATED, a/k/a
Prime Retail, Incorporated; HORIZON
GROUP PROPERTIES, INCORPORATED;
HORIZON GROUP PROPERTIES, L.P.;
FIRST HGI, INCORPORATED; SECOND
HGI, INCORPORATED; THIRD HGI,
L.L.C.; HGI PERRYVILLE,
INCORPORATED, a/k/a Prime Outlets
at Perryville Limited Partnership;
HORIZON/GLEN OUTLET CENTERS
LIMITED PARTNERSHIP, a/k/a Prime
Retail, L.P.; FIRST HORIZON GROUP
                                      
              ACCRUED FINANCIAL SERV. v. PRIME RETAIL        3

LIMITED PARTNERSHIP; SECOND              
HORIZON GROUP LIMITED
PARTNERSHIP; THIRD HORIZON GROUP
LIMITED PARTNERSHIP; H/G
PERRYVILLE LIMITED PARTNERSHIP,
a/k/a Prime Outlets at Perryville        
Limited Partnership; FINGER LAKES
OUTLET CENTER, L.L.C.;
HORIZON/GLEN GROUP, INCORPORATED,
a/k/a Prime Retail, Incorporated,
              Defendants-Appellees.
                                         
ACCRUED FINANCIAL SERVICES,              
INCORPORATED, for itself and as
assignee of claims,
                  Plaintiff-Appellant,
                  v.
PRIME RETAIL, INCORPORATED; PRIME
RETAIL, L.P.; PRIME RETAIL FINANCE,
INCORPORATED; PRIME RETAIL FINANCE
II, INCORPORATED; PRIME RETAIL
FINANCE V, INCORPORATED; ARIZONA
FACTORY SHOPS PARTNERSHIP; BEND               No. 01-1231
FACTORY OUTLETS LIMITED
PARTNERSHIP; BUCKEYE FACTORY
SHOPS LIMITED PARTNERSHIP;
CAROLINA FACTORY SHOPS LIMITED
PARTNERSHIP; CASTLE ROCK FACTORY
SHOPS PARTNERSHIP; CORAL ISLE
FACTORY STORES LIMITED
PARTNERSHIP; FLORIDA KEYS FACTORY
SHOPS LIMITED PARTNERSHIP;
GAINESVILLE FACTORY SHOPS LIMITED
                                         
4            ACCRUED FINANCIAL SERV. v. PRIME RETAIL

PARTNERSHIP; GROVE CITY FACTORY       
SHOPS PARTNERSHIP; GULF COAST
FACTORY SHOPS LIMITED PARTNERSHIP;
GULFPORT FACTORY SHOPS LIMITED
PARTNERSHIP; HAGERSTOWN FACTORY
SHOPS LIMITED PARTNERSHIP;
HUNTLEY FACTORY SHOPS LIMITED
PARTNERSHIP; INDIANAPOLIS FACTORY
SHOPS LIMITED PARTNERSHIP; KANSAS
CITY FACTORY OUTLETS LIMITED
PARTNERSHIP; LATHAM FACTORY
STORES LIMITED PARTNERSHIP; OUTLET
VILLAGE OF LEBANON LIMITED
PARTNERSHIP; LOVELAND FACTORY
SHOPS LIMITED PARTNERSHIP;
MAGNOLIA BLUFF FACTORY SHOPS
LIMITED PARTNERSHIP; MARKET
STREET LIMITED; NEBRASKA CROSSING     
FACTORY SHOPS LIMITED PARTNERSHIP;
NIAGARA INTERNATIONAL FACTORY
OUTLETS LIMITED PARTNERSHIP; OAK
CREEK FACTORY OUTLETS LIMITED
PARTNERSHIP; OHIO FACTORY SHOPS
PARTNERSHIP; OUTLET VILLAGE OF
KITTERY LIMITED PARTNERSHIP;
OXNARD FACTORY OUTLET PARTNERS;
FACTORY OUTLETS AT POST FALLS
LIMITED PARTNERSHIP; SAN MARCOS
FACTORY STORES LIMITED; SHASTA
OUTLET CENTER LIMITED
PARTNERSHIP; TRIANGLE FACTORY
STORES LIMITED PARTNERSHIP;
HORIZON GROUP, INCORPORATED, a/k/a
Prime Retail, Incorporated; HORIZON
GROUP PROPERTIES, INCORPORATED;
                                      
              ACCRUED FINANCIAL SERV. v. PRIME RETAIL            5

HORIZON GROUP PROPERTIES, L.P.;         
FIRST HGI, INCORPORATED; SECOND
HGI, INCORPORATED; THIRD HGI,
L.L.C.; HGI PERRYVILLE,
INCORPORATED, a/k/a Prime Outlets
at Perryville Limited Partnership;
HORIZON/GLEN OUTLET CENTERS
LIMITED PARTNERSHIP, a/k/a Prime
Retail, L.P.; FIRST HORIZON GROUP
LIMITED PARTNERSHIP; SECOND
HORIZON GROUP LIMITED                   
PARTNERSHIP; THIRD HORIZON GROUP
LIMITED PARTNERSHIP; H/G
PERRYVILLE LIMITED PARTNERSHIP,
a/k/a Prime Outlets at Perryville
Limited Partnership; FINGER LAKES
OUTLET CENTER, L.L.C.;
HORIZON/GLEN GROUP, INCORPORATED,
a/k/a Prime Retail, Incorporated,
                Defendants-Appellees.
                                        
           Appeals from the United States District Court
            for the District of Maryland, at Baltimore.
                 J. Frederick Motz, District Judge.
              (CA-99-2573-JFM, CA-00-2474-JFM)

                     Argued: October 30, 2001
                      Decided: July 29, 2002

Before NIEMEYER, WILLIAMS, and MICHAEL, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the majority
opinion, in which Judge Williams joined. Judge Michael wrote a dis-
senting opinion.
6              ACCRUED FINANCIAL SERV. v. PRIME RETAIL
                              COUNSEL

ARGUED: Rodney R. Patula, SQUIRE, SANDERS & DEMPSEY,
L.L.P., San Francisco, California, for Appellant. Charles Preston
Scheeler, PIPER, MARBURY, RUDNICK & WOLFE, L.L.P., Balti-
more, Maryland, for Appellees. ON BRIEF: Diane L. Gibson,
SQUIRE, SANDERS & DEMPSEY, L.L.P., San Francisco, Califor-
nia, for Appellant. Glen K. Allen, PIPER, MARBURY, RUDNICK
& WOLFE, L.L.P., Baltimore, Maryland, for Appellees.

                              OPINION

NIEMEYER, Circuit Judge:

   The district court declined to enforce, as void against public policy,
contracts and related assignments between Accrued Financial Ser-
vices, Inc. ("AFS") and its clients, who were tenants in outlet shop-
ping malls. The contracts provided that AFS would conduct audits of
the tenants’ leases with their landlords and retain 40-50% of any dis-
crepancy that AFS would discover and collect for the tenant. As part
of the arrangement, the tenant assigned to AFS exclusive control of
all potential legal claims that the tenant might have against the land-
lord. The district court concluded that the contractual arrangements
were "champertous" and that they violated Maryland’s public policy
against private parties’ "contingent fee witness agreements." For the
reasons that follow, we affirm.

                                    I

   Accrued Financial Services, Inc. is a California corporation
engaged in the business of conducting lease audits for tenants in com-
mercial buildings and factory outlet malls. It is paid by retaining a
percentage of the "discrepancies" that it discovers and collects as a
result of its audits. As part of its arrangement with client-tenants, AFS
requires that the tenant assign to AFS all legal claims that the tenant
has against the landlord and give AFS control over any litigation that
AFS might wish to initiate to enforce the claims.
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                 7
   The relationship is typically documented by a "Letter of Agreement
Regarding Leased Locations" and an "Assignment of Cause of
Action." In the Letter of Agreement, the tenant authorizes AFS "to
serve as sole and exclusive representative" of the tenant for the pur-
pose of reviewing the lease relationship and appoints AFS "to contact,
negotiate, and settle with Clients’ landlords" any overcharge discov-
ered by AFS. The tenant also gives AFS authority to pursue collection
of any overcharge, which the agreement refers to as a "Discrepancy,"
using "its normal collection practices," including authority "to file all
lawsuits under AFS’s name as plaintiff" and "full discretion [after
consultation with the tenant] to accept or reject any settlement or
other disposition." Finally, under the Letter of Agreement, the tenant
authorizes AFS to retain as its fee 40-50% of any "discrepancy" dis-
covered and collected. If the tenant chooses not to pursue the discrep-
ancy, the tenant must pay AFS 40% of the discrepancy "as a
Cancellation fee for providing Client [tenant] with valuable informa-
tion and services."

   The Assignment of Cause of Action, executed in connection with
the Letter of Agreement, provides that the tenant assigns to AFS "any
and all causes of action [tenant] may have" against its landlord "aris-
ing solely from periodic (including annual) charges of any type what-
soever made by or on behalf of the Landlord." The Assignment
provides that AFS "may adjust, compromise, or settle the assigned
cause of action at its reasonable discretion." AFS retains as a commis-
sion 40-50% of the net recovery, defined to be the total recovery less
attorneys fees and litigation costs. The Assignment provides that it is
"governed by and construed in accordance with the laws of Califor-
nia."

   Pursuant to a particular Letter of Agreement and Assignment, AFS
conducted audits at two large factory outlet malls, one in Michigan,
owned by Horizon Group, Inc., and the other in Baltimore, Maryland,
owned by Prime Retail, Inc.1 These audits purportedly led AFS to find
more than mere "discrepancies." AFS contends that it discovered that
Prime Retail had made "improper charges and reserve assessments
which could not be explained as mere errors or even aggressive bill-
  1
   Prime Retail has now acquired Horizon and therefore we refer to the
two collectively as "Prime Retail."
8             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
ing practices. The errors were systematic and pervasive." Rather than
simply "contact[ing], negotiat[ing], and settl[ing]" the discrepancies,
AFS persuaded 16 other tenants located in Prime Retail malls to enter
into similar contractual relationships with AFS2 and thereby launched
a larger attack against Prime Retail.

   In May 1998, on behalf of the 17 tenants, AFS sent Prime Retail
a demand letter in connection with a broad array of claims that AFS
asserted it had discovered and acquired through assignments. In
response, Prime Retail filed an action in the Circuit Court for Queen
Anne’s County, Maryland, seeking a declaratory judgment that AFS
was not the proper plaintiff on the claims and therefore lacked stand-
ing to assert them. Shortly thereafter, AFS commenced an action in
the Central District of California for the claims it discovered in Mich-
igan and Maryland, alleging RICO violations (i.e., violations of the
Racketeering Influenced and Corrupt Organizations Act), violations
of the California Business and Profession Code, fraud, breach of
express and implied lease covenants, and related claims involving
malls across the country. The district court in California transferred
the action to the District of Maryland, after which AFS voluntarily
dismissed the case without prejudice.

   AFS then commenced a second action in the Circuit Court for Bal-
timore City, Maryland, which Prime Retail removed to federal court.
In that action, AFS, suing in its own name on behalf of 17 tenants at
almost 50 locations, alleged nine different causes of action similar to
those alleged in the first action. It asserted two additional counts on
its own behalf, alleging tortious interference with AFS’s contractual
relations and prospective advantage. Prime Retail filed a motion to
dismiss under Federal Rules of Civil Procedure 12(b)(6) and 17, as
well as under 28 U.S.C. § 1367 (conferring supplemental jurisdic-
tion). Among other things, Prime Retail contended that AFS lacked
    2
   One of the tenants did not sign a Letter of Agreement and Assignment
but rather signed a similar document entitled "Consultant Agreement."
Under the Consultant Agreement, AFS was to retain a fee of 50% of all
"net recoveries," defined as the amount the tenant or AFS "actually
received" from the landlord. The Consultant Agreement gave the tenant
the right to disapprove any claims prepared by AFS and did not contain
an assignment clause.
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                  9
standing to bring the claims because the alleged assignments were
invalid as against public policy.3 With respect to the two claims
brought on AFS’s own behalf — both under state law — Prime Retail
urged the district court not to exercise supplemental jurisdiction.

   The district court granted Prime Retail’s motion to dismiss because
"the assignments made by the tenants to AFS [were] void as a matter
of public policy because they [were] champertous." The court also
concluded that the assignments were void because they violated the
public policy of both California and Maryland against "contingent fee
witness agreements." The court observed that "[f]inancial arrange-
ments that provide incentives for the falsification or exaggeration of
testimony threaten the very integrity of the judicial process which
depends upon the truthfulness of the witnesses." The court concluded
that, without the assignments, AFS had no interest in the claims, and
accordingly, it dismissed the first nine counts for AFS’ lack of stand-
ing. With respect to the two state-law counts asserted by AFS on its
own behalf, the district court declined to exercise supplemental juris-
diction under 28 U.S.C. § 1367(c). From the district court’s judgment
in this case, AFS filed one of the appeals before us.

   After the district court dismissed this second suit, AFS commenced
a third action in state court, identical to the second action, to protect
itself against the running of the statute of limitations on the two state-
law claims. This action was again removed to federal court, and the
district court again dismissed the first nine counts, now relying on the
doctrine of res judicata. With respect to the two state-law causes of
action, however, the court stayed disposition pending appeal. The
court then certified final judgment under Federal Rule of Civil Proce-
dure 54(b). AFS also filed an appeal from this judgment.

   The two appeals now before us are concurrent, raising the same
issue — whether the contractual arrangements between AFS and the
tenants are void as against the public policy of Maryland.
  3
   Prime Retail also asserted that AFS did not adequately allege causes
of action under RICO; that punitive damage claims could not be assigned
to AFS by the tenants; and that the facts alleged did not amount to a
claim under California’s unfair competition statute.
10             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
                                   II

   AFS’s standing to bring the claims at issue was created solely
through the tenants’ assignments to AFS of all legal claims that AFS
discovered through its audits. Without the assignments, AFS had no
interest in the tenants’ claims. Moreover, AFS’s interest in the claims
was not based on securing any underlying transaction or preexisting
commercial relationship between the tenants and AFS or satisfying
any preexisting obligation. In short, AFS’s interest in the litigation
was solely to collect fees that its audits and litigation would generate.

   AFS seeks to justify its contractual arrangements with the tenants
under standard principles of assignment law, which recognize the
legality of assigning both existing and potential choses in action, so
long as the causes of action survive the death of the assignor. As AFS
correctly asserts, those principles apply under both the law of Mary-
land and the law of California. Hernandez v. Suburban Hosp. Ass’n,
Inc., 572 A.2d 144, 148 (Md. 1990) ("‘[A] chose in action in tort is
generally assignable, in the absence of a statutory prohibition, if it is
a right which would survive the assignor and could be enforced by his
personal representative’" (quoting Summers v. Freishtat, 335 A.2d 89,
92 (Md. 1975))); Curtis v. Kellogg & Andelson, 86 Cal. Rptr. 2d 536,
545 (Cal. Ct. App. 1999) (stating California’s rule that choses in
action arising "out of an obligation, breach of contract, violation of
right of property, or damage to personal or real property" are assign-
able).

   Because all of the claims asserted in this case were commercial
claims that would survive the death of the assignor, there is no ques-
tion that the choses in action were generally assignable. But that gen-
eral principle, heavily relied upon by AFS, does not override the
principle that an assignment, like any other contract, is enforceable
only to the extent that it is consistent with public policy. See, e.g.,
Hernandez, 572 A.2d at 148 (considering whether there were any
public policy reasons to preclude a particular assignment); see also
McCabe v. Medex, 786 A.2d 57, 62 (Md. Ct. Spec. App. 2001) ("[A]
contract conflicting with public policy set forth in a statute is invalid
to the extent of the conflict between the contract and that policy.").

   While the assignments in this case contain a choice-of-law provi-
sion providing that California law governs, the parties’ choice of law
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                11
provision is enforceable only to the extent that the chosen law does
not violate a fundamental public policy of the forum state, Maryland.
Am. Motorists Ins. Co. v. ARTRA Group, Inc., 659 A.2d 1295, 1301
(Md. 1995) (stating that a choice-of-law clause will not be honored
if "the strong fundamental public policy of the forum state precludes
the application of the choice-of-law provision"); see also Restatement
(Second) of Conflict of Laws § 187(2)(b) (1971). We must therefore
determine whether the Assignments in this case violate Maryland’s
public policy.

   At the outset, we observe that the assignments of the choses in
action in this case were not made for the traditional purposes of secur-
ing an existing transaction, collecting on a pre-existing debt, giving
effect to a form of subrogation, or satisfying a preexisting obligation.
Rather, they were sought by AFS to further its business of uncovering
claims and earning fees from collecting on them.

   In entering into the arrangements at issue, AFS held itself out to the
tenants as an expert in conducting audits of commercial leases, and
it proposed to search the tenant’s files for claims of which the tenant
had no knowledge. There is no suggestion that the tenants knew or
suspected wrongdoing before AFS proposed to perform the audits. As
far as the tenants were concerned, there could have been major
claims, minor claims, or no claims at all. The Letter of Agreement
stated, quite simply, that AFS would seek to discover discrepancies.
But despite this initial focus on discrepancies, AFS relied on the
Assignment of choses in action to give effect to its contingent fee
business, which was implemented in a manner that served AFS’s
interest more than the legitimate interest of resolving discrepancies in
a manner suitable to the tenant.

   The Assignments encompassed "any and all causes of action,"
present and future, and the consideration for them was not fixed but
rather dependent on what AFS could discover. If discrepancies were
discovered, the corresponding claims would immediately become the
property of AFS under its sole control. And if, after discovery of the
claims, the tenant were to determine that it would not be in the ten-
ant’s best interest to pursue litigation, there was no effective way to
prevent AFS from prosecuting the claim in court. The cost to a tenant
for refusing to cooperate or provide the information necessary for the
12             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
litigation was the obligation to pay AFS the fee that it otherwise
would have earned had it successfully prosecuted the litigation. Thus,
the tenant was left with the Hobson’s Choice of allowing AFS to
design and pursue a lawsuit on the tenant’s behalf or of paying AFS
its contingency fee as if AFS had succeeded, regardless of the merits
of the proposed claim.4

   In short, the Assignments, which were purchased with contingent
consideration, gave AFS effective control over discovery and design
of lawsuits, of which the assignor had no knowledge, without requir-
ing, upon discovery, a renewed consent from the real party in interest
before proceeding with litigation.

   These relationships between AFS and the tenants were essentially
lawsuit-mining arrangements under which AFS "mined for" and pros-
ecuted lawsuits with no regard for the informed wishes of the real par-
ties in interest. AFS thus became a promoter of litigation principally
for the sake of the fees that it would earn for itself and not for the ben-
efit that it might produce for the tenant, the real party in interest.
Under these arrangements, even though the tenant might conclude,
after reviewing the facts uncovered, that a lawsuit would imprudently
damage the landlord-tenant relationship — or that pursuing aggres-
sive allegations would do more harm than good — the tenant lost the
right to control its destiny. Because we see these broad assignments
as nothing more than arrangements through which to intermeddle and
stir up litigation for the purpose of making a profit, we conclude that
they violate Maryland’s strong public policy against stirring up litiga-
tion and are therefore void and unenforceable in Maryland.

  The Court of Appeals of Maryland has recognized that the early
common law had, in varying degrees, prohibited barratry, mainte-
nance, and champerty, declaring contracts that provide for such con-
duct to be void.5 See Son v. Margolius, 709 A.2d 112, 119 20 (Md.
  4
    In contrast to this arrangement where AFS had total control over pros-
ecuting its discoveries, the Consultant Agreement, signed by one tenant,
gives the tenant the opportunity to review AFS’ discoveries and to disap-
prove claims proposed by AFS.
  5
    Blackstone defined "common barratry" as the offense of "frequently
exciting and stirring up suits and quarrels"; "maintenance" as "an offi-
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                13
1998); accord 7 Williston on Contracts §§ 15.1, 15.4 (Richard A.
Lord ed., 4th ed. 1997). But over time, the early definitions proved
too broad and interfered with emerging commercial conditions, the
recognition of assignments in general, and the rise of attorney repre-
sentation under contingent-fee contracts. See Son, 709 A.2d at 119-
21; see generally Max Radin, Maintenance by Champerty, 24 Cal. L.
Rev. 48 (1935-36). Accordingly, the defining nature of barratry,
maintenance and champerty changed over the years.

   But despite the law’s metamorphosis, Maryland continues to
reserve a policy against some of the originally prohibited conduct. For
example, the Maryland Court of Appeals explained, in Son, that con-
duct once characterized as maintenance is now prohibited in Mary-
land under the label of barratry. Son, 709 A.2d at 120-21. The
Maryland court observed that the broad definition of maintenance
given in Blackstone’s Commentaries did not survive in Maryland, id.
at 120, but that a more narrow form was retained under barratry,
which remains against Maryland public policy. Thus, the common
law has simply been redefined under a modern form of barratry to
reflect the current public policy against "improperly, and for the pur-
pose of stirring up litigation and strife, encourag[ing] others either to
bring actions, or to make defenses which they have no right to make."
Id. (internal quotation marks and citation omitted); Schaferman v.
O’Brien, 28 Md. 565, 574 (1868) (citation omitted); see also Wheeler
v. Harrison, 50 A. 523, 526 (Md. 1901) (noting that the public policy
is violated where "one officiously and without just cause intermeddles
in and promotes the prosecution or defense of a suit in which he has
no interest by assisting either party with money or otherwise"). In
other words, the concepts of "officious meddling" and "personal gain"
reflect the modern policy, described by Williston, against enforcing
"schemes to promote litigation for the benefit of the promoter rather
than for the benefit of the litigant or the public." 7 Williston on Con-
tracts § 15:4.

cious intermeddling in a suit that no way belongs to one, by maintaining
or assisting either party with money or otherwise to prosecute or defend
it"; and "champerty" as a "bargain with a plaintiff or defendant . . . to
divide the land or other matter sued for between them . . . whereupon the
champertor is to carry on the party’s suit at his own expense." 4 William
Blackstone, Commentaries *134-36.
14             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
  Indeed, an aspect of the public policy developed under Maryland’s
common law was codified as a Maryland criminal statute, outlawing
"barratry," as follows:

     Without an existing relationship or interest in an issue[,] a
     person may not, for personal gain, solicit another person to
     sue or to retain a lawyer to represent the other person in a
     lawsuit.

Md. Code Ann., Bus. Occ. & Prof. Art., § 10-605(a)(1). The Court of
Appeals has characterized this statutory offense as the "stirring up,
meddling in, or maintaining litigation in which the person has no
interest, for personal gain." Son, 709 A.2d at 121. And the key ele-
ments to the statutory offense are "officious meddling" and "personal
gain." Id.

   Thus, through surviving common law principles and statutory pro-
hibition, the current fundamental public policy of Maryland prohibits
schemes to stir up and promote litigation for the benefit of the pro-
moter rather than for the benefit of the real party in interest. Any con-
tract violating this policy is void in Maryland and will not be enforced
by its courts.

   Considering the contractual arrangements before us, it is apparent
that they violate Maryland’s strong public policy. These Assignments
are not typical assignments of choses in action, which further existing
or underlying commercial transactions. They are, rather, "schemes to
promote litigation for the benefit of [AFS] rather than for the benefit
of the litigant or the public." As we explained above, the tenants, who
were the real parties in interest, assigned rights in litigation of which
they had no knowledge. Moreover, these rights were assigned, not in
exchange for an existing value, but for future fees to be determined
by decisions and value judgments controlled by AFS, who had no
interest in the underlying claims. Because the rights were assigned
before their nature, costs and benefits could be assessed, the real par-
ties in interest — the tenants — had no opportunity to evaluate
whether their prosecution was in the tenants’ interest. As such, AFS
was given the power to mine lawsuits, promote them, and profit off
of them without regard to the interests and desires of the injured
party.
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                  15
   The essence of the contractual relationship between AFS and the
tenants leaves AFS as a solicitor, for personal gain, of unknown liti-
gation, in the business of stirring up litigation for the sake of its fees.
If its real purpose was to provide consulting services within its exper-
tise, as it insists, it can continue that business without the assign-
ments. By concluding that the assignments in this case are against
fundamental public policy, we in no way undermine or devalue any
claims that AFS has discovered and that the tenants may have. If
those claims are viable, the tenants retain the right to prosecute them
with the assistance of AFS. Our holding focuses only on the promo-
tional efforts of AFS in stirring up litigation primarily at its own ini-
tiative and for its own benefit.

   We thus agree with the district court that, whether under the label
of maintenance, champerty or barratry, the Assignments in this case
violate Maryland’s strong public policy against the stirring up litiga-
tion or promoting litigation for the benefit of the promoter rather than
for the benefit of the litigant or the public.

                                    III

   In addition to our conclusion that the Assignments violate Mary-
land’s public policy against barratry, we also conclude that the
arrangements are against public policy insofar as they provide for
supplying expert testimony for a contingent fee. To the extent that
AFS employees, as experts on the relationship between landlords and
tenants in a commercial context, planned to testify regarding the alle-
gations in this litigation, AFS was offering expert testimony for a con-
tingent fee. Such an arrangement would also violate public policy, as
articulated more fully by the district court.

  Because of our rulings, we need not reach the other issues raised
by AFS on appeal. The judgment of the district court is

                                                             AFFIRMED.

MICHAEL, Circuit Judge, dissenting:

   A number of tenants at factory outlet malls engage Accrued Finan-
cial Services, Inc. (AFS) to audit common area maintenance charges
16              ACCRUED FINANCIAL SERV. v. PRIME RETAIL
that landlords add to the tenants’ rent bills. AFS takes an assignment
of any claims discovered in the audits and retains a percentage of any
overcharges collected as a fee for its services. This sounds like a sen-
sible arrangement, and it is one that is legal under California law, the
law chosen by AFS and the tenants to govern their contracts. The
majority outlaws the assignments, however, saying that the assign-
ments stir up lawsuits and allow AFS to supply expert testimony for
a contingent fee, all in violation of the public policy of Maryland, the
forum state. I respectfully dissent for two reasons. First, the Restate-
ment (Second) of Conflict of Laws § 187, which Maryland has
adopted, requires that the contracting parties’ choice of California law
be honored in this case. Even if Maryland law did apply, it would not
prevent the tenants from protecting themselves through the arrange-
ment chosen for the discovery and collection of overcharges, an
arrangement that avoids litigation more than nine times out of ten.
Second, because AFS owns the claims that are the subject of this law-
suit, the company is not supplying expert testimony for a contingent
fee.

                                   I.

   AFS is a California-based company that provides lease audit ser-
vices for tenants operating stores in factory outlet malls throughout
the United States. Mall landlords, such as Prime Retail, Inc. (Prime),1
commonly require their tenants to sign leases that obligate the tenants
to pay assessed charges for common area maintenance expenses.
These charges cover certain mall operating expenses, ranging from
real estate taxes to marketing and promotional costs. In some cases,
the leases require the tenants to pay into a reserve fund that is set
aside to cover these expenses. Invoices to tenants for common area
maintenance charges are usually in summary form. The leases, how-
ever, permit the tenants to conduct audits of these charges. That is
where AFS comes in: it conducts the audits for tenants.

   According to AFS, an audit usually reveals some errors in charges
billed to the tenant, and occasionally an audit uncovers overly aggres-
sive or dishonest calculation of charges. In most cases, each tenant’s
claim for an audit period (usually one year) is relatively small in dol-
  1
     "Prime" includes Horizon Group, Inc., a company acquired by Prime.
              ACCRUED FINANCIAL SERV. v. PRIME RETAIL                17
lar amount. Thus, most tenants do not find it economically feasible to
conduct their own audits. But AFS, by securing audit engagements
from several tenants in the same mall and then conducting a single
audit for those tenants, makes the contractual right to conduct audits
meaningful for the individual tenant. AFS performs the audits in
return for a percentage of any overcharges it collects. The contingent
nature of AFS’s compensation also helps to make the audits afford-
able. Overcharges are collected without litigation more than ninety
percent of the time.

    AFS’s authority to conduct the lease audits and pursue collection
of overcharges is set forth in two agreements entered into between
AFS and the tenant, a "Letter of Agreement Regarding Leased Loca-
tion" and an "Assignment of Cause of Action." In the "Letter of
Agreement" the tenant designates AFS as its representative to conduct
a lease audit, and AFS agrees to "use reasonable efforts to ascertain
. . . whether [the tenant] has been overcharged for any Tenant Contri-
butions." The tenant assigns any overcharges to AFS. AFS is autho-
rized "to contact, negotiate, and settle" with the landlord and "to file
all lawsuits under AFS’s name as plaintiff." For its work, AFS retains
40 to 50 percent of any overcharges recovered, and the tenant gets the
balance. The "Assignment of Cause of Action" spells out the details
in routine fashion. The tenant assigns to AFS "any and all causes of
action it may have against" the landlord. "Full authority is conferred
on Assignee [AFS] to perform all lawful acts deemed necessary by
Assignee, or its agents, to pursue and collect on the assigned cause
of action. Assignee may adjust, compromise, or settle the assigned
cause of action at its reasonable discretion." AFS must "advance all
litigation costs incurred and be personally liable for those costs." In
addition, "[u]nder no circumstances shall Assignor [the tenant] be lia-
ble for any litigation costs in excess of any recovery on the claim."
Finally, the assignment provides that it will "be governed by and con-
strued in accordance with the laws of California."

   In 1997 AFS began audits at Prime, which owns and manages fac-
tory outlet malls where a number of AFS’s clients are tenants. The
audits were commenced in Michigan and Maryland. According to
AFS, the audits uncovered improper charges and reserve assessments
that cannot be explained as inadvertent errors or even as aggressive
billing practices. AFS claims that that the audits revealed a systematic
18            ACCRUED FINANCIAL SERV. v. PRIME RETAIL
effort by Prime to conceal from the tenants the improper nature of
many of the charges assessed. AFS further claims that it discovered
a pattern of fraud on the part of Prime that has likely resulted in mil-
lions of dollars in overcharges to tenants. Finally, AFS claims that
when it began to uncover the scheme in the audit it was conducting
in Maryland, Prime stopped the audit before it was finished. The
majority opinion describes several lawsuits (the first one was filed by
Prime) that ensued between Prime and AFS, after Prime refused to
negotiate. In this case, AFS, as assignee of seventeen tenants with
stores in dozens of malls, sues Prime for breach of express and
implied lease covenants, fraud, and violations of RICO and the Cali-
fornia unfair competition statute.

                                  II.

                                  A.

   The majority’s main holding is that the tenants’ assignments to
AFS are void because they violate a strong public policy in Maryland
against "stirring up litigation," whether it be called maintenance,
champerty, or barratry. Ante at 15. The majority thus rejects Califor-
nia law, the law chosen by AFS and the tenants to govern the applica-
tion and validity of the assignments. California does not recognize the
doctrines of maintenance and champerty, see Abbott Ford, Inc. v.
Superior Court, 741 P.2d 124, 141 n.26 (Cal. 1987), and no person
can be convicted of barratry unless he has corruptly or maliciously
"excited" at least three vexatious lawsuits, see Cal. Penal Code § 159
(2002). The assignments are therefore valid under California law. The
majority nonetheless contends that the choice of law provision is not
enforceable because the chosen (California) law violates a fundamen-
tal policy of the forum state, Maryland. The majority is wrong, I
respectfully suggest, because three conditions must be present before
Maryland will refuse to apply, for public policy reasons, the law
selected by the parties to a contract. None of these conditions are
present in this case.

   Maryland recognizes "that the parties to a contract may agree as to
the law which will govern their transaction, even as to issues going
to the validity of the contract." Kronovet v. Lipchin, 415 A.2d 1096,
1104 (Md. 1980). Maryland relies on section 187 of the Restatement
              ACCRUED FINANCIAL SERV. v. PRIME RETAIL                   19
(Second) of Conflict of Laws to determine the validity of a contrac-
tual choice of law provision. Nat’l Glass, Inc. v. J.C. Penney Props.,
Inc., 650 A.2d 246, 248 (Md. 1994); Ciena Corp. v. Jarrard, 203 F.3d
312, 323 (4th Cir. 2000). Section 187(2) of the Restatement provides
in pertinent part:

    The law of the state chosen by the parties to govern their
    contractual rights and duties will be applied, . . . unless . . .

         (b) application of the law of the chosen state
             would be contrary to a fundamental policy of
             a state which has a materially greater interest
             than the chosen state in the determination of
             the particular issue and which, under the rule
             of § 188, would be the state of the applicable
             law in the absence of an effective choice of
             law by the parties.

Restatement (Second) of Conflict of Laws § 187(2) (Supp. 1989).
Three conditions must therefore be met before Maryland would reject
California law on the ground that Maryland public policy is impli-
cated. First, Maryland law must apply in the absence of an effective
choice of law provision. Second, the California law must be contrary
to a fundamental (or strong) public policy of Maryland. Third, Mary-
land must have a materially greater interest than California in the out-
come of the particular issue, here, whether the assignments are legal.
The majority never addresses the first and third conditions even
though all three must be met under the Restatement rule adopted by
Maryland. See Nat’l Glass, 650 A.2d at 248-251.

   As to the first condition, the question is whether Maryland law
would apply if the parties had not made a choice in their contract.
Maryland relies on lex loci contractus if there is no choice of law pro-
vision. Am. Motorists Ins. Co. v. ARTRA Group, Inc., 659 A.2d 1295,
1301 (Md. 1995). "Under this principle, the law of the jurisdiction
where the contract was made controls its validity and construction."
Kramer v. Bally’s Park Place, Inc., 535 A.2d 466, 467 (Md. 1988).
This case was decided on Prime’s motion to dismiss, and there is no
suggestion in the pleadings or in the motion papers that the assign-
ment contracts between AFS and its clients (the outlet mall tenants)
20             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
were made in Maryland. Indeed, it appears highly unlikely that the
contracts would have been made in Maryland because AFS is located
in Long Beach, California, and none of the tenants are headquartered
in Maryland. In sum, at this stage the record does not allow a determi-
nation that Maryland law would apply to the assignments in the
absence of a choice of law provision. Thus, the first condition of
§ 187(2)(b) of the Restatement has not been met.

   For the second condition, the question is whether California law —
the law that would allow the assignments — violates a strong public
policy of Maryland. The existence of a routine difference between
California and Maryland law would not be sufficient to satisfy this
condition: "merely because Maryland law is dissimilar to the law of
another jurisdiction does not render the latter contrary to Maryland
public policy." Am. Motorists, 659 A.2d at 1301 n.3. Rather, for the
second condition to be met, there must be a strong public policy
against the enforcement of the foreign law in Maryland. Bethlehem
Steel Corp. v. G.C. Zarnas & Co., 498 A.2d 605, 608 (Md. 1985). So
far, the only time Maryland courts have found a contractually chosen
law to violate strong Maryland policy is when the foreign law con-
flicts with a Maryland statute that contains a clear statement of policy.
See Bethlehem Steel, 498 A.2d at 608 (law of chosen state permitted
a contract that a Maryland statute expressly described as one that "is
against public policy" and "is void and unenforceable."); Nat’l Glass,
336 Md. at 250 (chosen law clashed with Maryland statute stating that
"any provision . . . made in violation of this section is void as against
the public policy of this State."). The Maryland courts have not yet
said whether a chosen law is contrary to a public policy that can only
be inferred from Maryland’s common law. In any event, strong Mary-
land public policy cannot "be represented by a [common law] rule
[that is] tending to become obsolete." Restatement § 187(2) cmt. g
(Supp. 1989). Maryland’s common law on maintenance, champerty,
and barratry appears to be tending toward obsolescence because, as
far as I can tell, Maryland has not used these common law doctrines
to invalidate any contract in the last one hundred years.2 Indeed, as
  2
   The majority does not cite a single case in which a contract was found
to violate any Maryland common law against maintenance, champerty,
or barratry. The assignment contracts in both Schaferman v. O’Brien, 28
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                21
far back as 1868 the Court of Appeals of Maryland noted that "the
common law notion of maintenance, as applicable to the assignments
of rights of action, had become practically obsolete." Schaferman v.
O’Brien, 28 Md. 565 (1868) (quoting Story’s Equity Jur. § 1057).
Accordingly, no strong public policy against the California law allow-
ing the assignments in this case can be gleaned from whatever, if any-
thing, might remain of the common law doctrines of maintenance,
champerty, and barratry in Maryland.

   If there is any strong public policy to be found here, it must be
found in Maryland’s barratry statute. For that statute to evidence
strong Maryland policy, the policy must be "expressly stated" or "ex-
plicit[ly] determin[ed]" by the General Assembly. Nat’l Glass, 650
A.2d at 249-50 (internal quotations and citations omitted). Maryland’s
barratry statute, as applied to non-lawyers, provides: "Without an
existing relationship or interest in an issue . . . a person may not, for
personal gain, solicit another person to sue or to retain a lawyer to
represent the other person in a lawsuit." Md. Code Ann., Bus. Occ.
& Prof. § 10-604(a)(1) (2000). The General Assembly has not made
any express statement of strong public policy in this language. It is
simply a run-of-the-mill misdemeanor provision.

   There is, then, no indication that application of the law of the cho-
sen state, California, would be contrary to any strong public policy of
Maryland. But even if it could be shown that the assignments violated
strong Maryland policy, that would not end the matter because it still
"must [be] determine[d] whether Maryland has a materially greater
interest in the determination of the issue." General Ins. Co. of Am. v.
Interstate Serv., Inc., 701 A.2d 1213, 1218-19 (Md. Ct. Spec. App.
1997). In determining whether Maryland has a materially greater
interest in an issue, the courts of Maryland (1) evaluate the contacts
the parties and their contract have with Maryland and the chosen state
and (2) take into account strong Maryland public policy that bears on

Md. 565 (1868), and Wheeler v. Harrison, 50 A. 523 (Md. 1901), were
upheld. The majority’s only case from the last hundred years, Son v.
Margolius, Mallios, Davis, Rider & Tomar, 709 A.2d 112 (Md. 1998),
focused on Maryland’s barratry statute. In any case, the agreement in Son
was also upheld.
22             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
the issue. See Nat’l Glass, 650 A.2d at 250-51. The contacts listed in
Restatement § 188(2) are the ones evaluated in deciding which state
has a materially greater interest. See, e.g., Ticknor v. Choice Hotels
Int’l, Inc., 265 F.3d 931, 938 (9th Cir. 2001). These contacts include:

     (a) the place of contracting,

     (b) the place of negotiation of the contract,

     (c) the place of performance,

     (d) the location of the subject matter of the contract, and,

     (e) the domicil, residence, nationality, place of incorpora-
         tion and place of business of the parties.

Restatement (Second) of Conflict of Laws § 188(2) (1971).

   Factor (e), which focuses on the location of the contracting parties
and their places of incorporation, favors California. AFS is a Califor-
nia corporation, with its sole place of business in Long Beach, Cali-
fornia. Four of AFS’s clients are headquartered in California, and
none are headquartered in Maryland. Factors (a) and (b), which focus
on where the contract was negotiated and made, almost certainly
favor California: given the contracting parties’ physical locations,
there is no reason to believe that the contracts were negotiated or
entered into in Maryland. Factor (d), relating to the location of the
subject matter of the contracts (here, the outlet stores and leases), also
appears to favor California. At least a dozen of AFS’s seventeen cli-
ents have outlet stores in California, and only five have stores in
Maryland. Every client with stores in both states has more stores in
California than in Maryland. For example, client Claire’s Boutiques,
Inc. has four stores in California and two in Maryland. Information
relevant to factor (c), the place of performance of the contracts, is
somewhat sparse. We do know that AFS started audits in Michigan
and Maryland and that Prime forced AFS to stop the Maryland audit
before it was completed. The Maryland audit, which Prime itself
ended, is the only contact that could count in Maryland’s favor. In any
event, when the information about all of the factors is considered
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                23
together, California has significantly more contacts with the matter
than Maryland.

   As mentioned, in deciding which state has a materially greater
interest (the third condition of Restatement § 187(2)(b)), Maryland
also considers whether it has a strong public policy against the chosen
law. Nat’l Glass, 650 A.2d at 251. Here, of course, Maryland has no
strong public policy against champerty, maintenance, or barratry.
Because the contacts strongly favor California, and because Maryland
has no strong public policy against the assignments, it is evident that
California has a materially greater interest in the outcome of this case
than Maryland. In conclusion, because the contracting parties’ choice
of California law must be respected under the terms of Restatement
§ 187(2)(b), California law governs any issue concerning the validity
of the assignments. The majority, which fails to conduct a full analy-
sis, errs in holding that Maryland would not honor the choice-of-law
provision agreed to by AFS and its clients, the outlet mall tenants.

                                   B.

   There is another fundamental problem with dismissing AFS’s case.
The limited record, which was made in connection with Prime’s
motion to dismiss, does not establish that AFS’s conduct meets the
legal standards required for whatever is left of the doctrines of cham-
perty, maintenance, and barratry in Maryland. Again, Maryland does
have a barratry statute which provides: "Without an existing relation-
ship or interest in an issue . . . a person may not, for personal gain,
solicit another person to sue or to retain a lawyer to represent the
other person in a lawsuit." Md. Code Ann., Bus. Occ. & Prof., § 10-
604(a)(1) (2000). According to the Maryland Court of Special
Appeals, "[t]he essence of [the crime of] barratry is the solicitation of
another to make a litigious claim by one without an existing relation-
ship or interest for his own gain." Schackow v. Medical-Legal Con-
sulting Serv., Inc., 416 A.2d 1303, 1312 (Md. Ct. Spec. App. 1980).
AFS was not pushing or soliciting litigation here. AFS’s first, and
most important, task under the agreements and assignments was to
conduct audits, audits the tenants had the right to pursue under their
leases. If AFS found an overcharge, it had the authority to contact the
landlord and obtain a refund or negotiate a settlement. Litigation is
available as a last resort, and AFS has had to pursue litigation in rela-
24             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
tively few cases. AFS’s president, Mark S. Malan, confirms this in his
unrefuted affidavit:

     In my 15 years of performing reviews of commercial leases
     and 5 years experience in performing lease audits, it has
     only rarely been necessary to commence legal action against
     a landlord or management company to collect overcharges.
     In fact, I estimate that litigation has been required in less
     than 10% of the engagements for which we have been
     retained.

AFS thus did not solicit its clients to make litigious claims. In this
case, in particular, litigation became necessary only because Prime
shut down an audit and refused to negotiate. AFS has thus not com-
mitted barratry under the Maryland statute, and it has not been "stir-
ring up litigation" or "mining for lawsuits," as the majority charges.

   Even if the common law doctrines of champerty, maintenance, and
barratry are not obsolete in Maryland, what is left of them does not
apply to this case. In the first place, these doctrines do not outlaw
every effort by a person to encourage or assist another in pursuing liti-
gation. The Maryland Court of Appeals recognized this in Son when
it quoted Lord Abinger, Chief Baron of the Court of Exchequer, who
said: "if a man were to see a poor person in the street oppressed and
abused, and without the means of obtaining redress, and furnished
him with money and employed an attorney to obtain redress for his
wrongs, it would require a very strong argument to convince me that
that man could be said to be stirring up litigation and strife." Son, 709
A.2d at 120 n.5 (quoting Findon v. Parker, 11 M. & W. 679 (1843)).
Lord Abinger’s comment in 1843 is simply the starting point. Today,
we allow many practices that encourage litigation. For example, con-
tingent fees are legal, Maryland Rules of Professional Conduct 1.5(c);
lawyers are allowed to advertise, Bates v. State Bar of Arizona, 433
U.S. 350 (1977); choses-in-action may be assigned, Hernandez v.
Suburban Hosp. Assoc., Inc., 572 A.2d 144 (Md. 1990); and class
actions are permitted, Fed. R. Civ. P. 23.

   The common law, to the extent it is still viable, would thus not out-
law all efforts to facilitate litigation. Rather, it would be aimed at the
stirring up of a certain kind of litigation, specifically, litigation that
               ACCRUED FINANCIAL SERV. v. PRIME RETAIL                25
is groundless, vexatious, or multitudinous. See Osprey, Inc. v. Cabana
Ltd. P’ship, 532 S.E.2d 269, 273 (S.C. 2000) ("The laws against
champerty, maintenance and barratry are aimed at the prevention of
multitudinous and useless lawsuits."). When the allegations in the
complaint in this case are taken as true, as they must be on a motion
to dismiss, it cannot be said that AFS is pursuing, or encouraging the
pursuit of, groundless, vexatious, or multitudinous litigation. Rather,
AFS makes a serious claim, based on a partial audit, that Prime over-
charged its tenants, through aggressive billing or fraud, in amounts
that could total millions of dollars. Moreover, because AFS must bear
the expenses of any unsuccessful litigation, it is unlikely that it would
waste its resources on a pointless lawsuit. In any case, if AFS has
filed a frivolous or vexatious lawsuit — and there is no indication
thus far that it has — there is a way to deal with the problem without
outlawing the assignments. Rule 11, for example, allows stiff sanc-
tions to be imposed upon lawyers and parties who present pleadings
"for any improper purpose, such as to harass" or who present plead-
ings that lack "evidentiary support." Fed. R. Civ. P. 11(b), (c).

   The doctrines of champerty, maintenance, and barratry were also
meant to protect against "financial overreaching by a party of superior
bargaining position." Saladini v. Righellis, 687 N.E.2d 1224, 1226
(Mass. 1997). The majority implies that AFS engaged in overreaching
here, saying that the assignments leave the tenants with the Hobson’s
choice of either allowing AFS to pursue litigation or buying back
their claims for an amount equal to AFS’s fees. There is every reason
to believe that the tenants, who are large outlet store companies such
as Anne Klein Factory Stores, Inc., Corning Revere Factory Stores,
Publisher’s Warehouse, and Lechter’s, were able to bargain with AFS
on equal footing. Indeed, the tenants are substantial companies, and
AFS has less than a half dozen employees. It is reasonable to con-
clude that had the tenants not found the assignments to be advanta-
geous, they would not have executed them. Also, there is no evidence
that any tenant was reluctant to allow AFS to sue Prime because all
of the tenants ratified their assignments after the lawsuit began. Thus,
the majority’s argument that the assignments serve AFS’s interests
more than its clients’ (the tenants’) interests is without any founda-
tion. Although it is true the tenants could have retained their claims
and sued in their own names, history has proven that option to be une-
conomical in most instances. That is why the tenants assigned their
26             ACCRUED FINANCIAL SERV. v. PRIME RETAIL
claims to AFS in the first place. The majority’s decision thus hurts the
tenants, not just AFS. The decision benefits the mall owners and man-
agers, who could be getting away with overcharging and fraud.

                                    C.

   The majority wants to stamp out "lawsuit-mining arrangements"
and vexatious lawsuits. This is a worthy goal, but the majority takes
an unprecedented step to achieve it. The majority restricts the tenants’
right to contract, specifically, the right to enter into assignment con-
tracts that provide a cost-efficient means of protecting against sharp
billing practices and fraud by landlords at outlet malls. The State of
Maryland does not have any fundamental policy or law that dictates
this result. Cf. U.S. Const. art. I § 10 ("No State shall . . . pass any
. . . law impairing the Obligation of Contracts"). Today’s decision
also means that AFS is barred from suing on the assigned claims that
it legitimately owns. That is overkill.

                                   III.

   The majority also holds that the assignments are void and unen-
forceable as a matter of public policy because, the majority claims,
AFS is being paid a contingent fee for supplying expert testimony. I
respectfully disagree. I recognize, of course, that "[a]n agreement
with a witness to pay him a fee contingent on the success of the litiga-
tion is against public policy and void." Van Norden v. Metson, 171
P.2d 485, 488 (Cal. Dist. Ct. App. 1946). However, AFS was not
hired to provide expert testimony. Instead, AFS was hired as an audi-
tor, and any claims uncovered in the audit are assigned to AFS. The
assignments make AFS the real party in interest, and a corporation
that is a real party in interest may offer in its own case the testimony
of its principals and employees.

   Nor are AFS and the tenants attempting to mask a contingent fee
witness arrangement behind an assignment. The assignments are, in
most respects, routine. AFS has full authority to do what is necessary
"to pursue and collect on the assigned causes of action," including set-
tling in "its reasonable discretion." AFS must advance all litigation
costs and is responsible for those costs if the litigation is unsuccessful.
AFS does, of course, "receive as a commission for [its] services [forty
              ACCRUED FINANCIAL SERV. v. PRIME RETAIL                27
to fifty percent] of the Net Recovery." Nonetheless, because these
contracts transfer the claims to AFS and provide that AFS will sue in
its own name, control the litigation, and pay all litigation costs, they
are true assignments. AFS is therefore the real party in interest, and
it may offer the testimony of its own people without violating any
public policy against supplying expert testimony for a contingent fee.

  I respectfully dissent.