Pamela Maslowski, Respondent,

STATE OF MINNESOTA
IN COURT OF APPEALS
A21-1338

Pamela Maslowski,
Respondent,

vs.

Prospect Funding Partners LLC, et al.,
Appellants,

vs.

James Schwebel, Esq., et al.,
Respondents.

Filed June 27, 2022
Affirmed
Connolly , 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 Maslowski)

Daniel A. Beckman, Erickson, Bell, Beckman & Quinn, P.A., Roseville, Minnesota (for
appellants)

Kay Nord Hunt, Michelle K. Kuhl, Barry A. O’Neil, Lommen Abdo, P.A., Minneapolis,
Minnesota (for respondents Schwebel, et al.)

Considered and decided by Connolly, Presiding Ju dge; Larkin, Judge; and Smith,
Tracy M., Judge.
SYLLABUS
1. A litigation financier has unconscionably interfered in the underlying legal claim
that is t he subject of the financier’s litigation-financing agreement with the contracting
2
litigant if that agreement contains obligations that seek to control the litigant’s ability to
select counsel or to settle the underlying legal claim.
2. A litigation-financing agreement is a transaction subject to the usury statute.

OPINION
CONNOLLY, Judge
Appellants Prospect Fundings Partners LLC, Prospect Funding Holdings LLC, and
Prospect Funding Holdings (NY) LLC (collectively, Prospect) appeal the district court’s
grant of summary judgment declaring its litigation-financing contract with respondent
Pamela Maslowski to be enforceable in part and unconscionable in part and dismissing
Prospect’s claims against respondents James Schwebel, Esq. and Schwebel, Goetz &
Sieben P.A. (collectively, Schwebel). Prospect also appeals from the district court’s denial
of its motion for attorney fees and costs under the contract. Because the district court did
not err in (1) determining that the penalty clauses and the interest rate in the contract were
unconscionable, (2) determining that neither party prevailed in the litigation, or (3)
concluding that no contract existed between Prospect and Schwebel, we affirm.
FACTS
The underlying dispute between the parties has been the subject of several previous
appeals. See generally Maslowski v. Prospect Funding Partners LLC , 944 N.W.2d 235
(Minn. 2020). We therefore restate only the facts most pertinent to the present appeal.
Maslowski was injured in an automobile accident in 2012 and retained Schwebel
shortly thereafter to pursue a lawsuit against the other driver (the Personal-Injury Lawsuit).
Two years later, Maslowski entered into a litigation-financing agreement with Prospect to
3
secure funds for her living expenses. Prospect is a litigation-financing company that
purchases “a financial stake in the outcome of” a legal proceeding “in exchange for money
paid to a party.” Maslowski, 944 N.W.2d at 236 n.1 (quotation omitted).
The litigation -financing agreement purported to purchase a maximum $25,245
interest in any proceeds recovered from the Personal-Injury Lawsuit in exchange for a net
purchase price of $6,000.1 Maslowski is characterized as the “Seller” and Prospect as the
“Purchaser.” The litigation-financing agreement also included a “Repurchase Rate” of
“30% every 6 months (60% annually)” that drove the “Repurchase Schedule” up to the
maximum $25,245 after 42 months. The agreement stated that if Maslowski “RECOVERS
NOTHING FROM THE LEGAL CLAIM, ” then Prospect “ SHALL RECEIVE
NOTHING.” But Maslowski was “NOT ENTITLED TO RECEIVE ANY PROCEEDS ”
from the Per sonal-Injury Lawsuit “UNTIL PURCHASER HAS RECEIVED ” payment.
Maslowski signed the agreement on May 20, 2014.
Schwebel signed the “CERTIFICATION OF SELLER’S ATTORNEY ” included
in the litigation-financing agreement on the same day. This “CERTIFICATION” indicated
Schwebel reviewed the terms of the agreement with Maslowski and that any proceeds of
the Personal-Injury Lawsuit would be distributed from “the attorney’s trust account” in
accordance with the agreement. The agreement was also acc ompanied by an
“IRREVOCABLE LETTER OF DIRECTION ” from Maslowski instructing Schwebel as

1 The gross purchase price was $7,425, but the net purchase price provided to Maslowski
subtracted $1,425 in “Fees.”
4
to the disbursement of funds. Schwebel executed the “ATTORNEY
ACKNOWLEDGEMENT” on this letter that same day.
Maslowski settled the Personal-Injury Lawsuit in July 201 5 for $70,000. Several
years of litigation ensued , in which Maslowski sought to void the litigation-financing
agreement and Prospect sought to enforce the repayment terms against both Maslowski
and Schwebel. This litigation led to our decision declaring the agreement to be void under
the common law prohibition against champerty.2 Maslowski v. Prospect Funding Partners
LLC, No. 18-1906, 2019 WL 3000747, at *5 (Minn. App. July 8, 2019) . The Minnesota
Supreme Court reversed our decision. See Maslowski, 944 N.W. 2d at 238.
Although the supreme court determined that “[t]he lower courts . . . did not err in
determining that, under our prior decisions, the contract was unenforceable,” it declined
“to hold that the contract between Maslowski and Prospect is void as against public policy
as we understand it today.” Maslowski, 944 N.W.2d at 238. The supreme court abolished
the common-law prohibition against champerty and remanded, noting t hat “district courts
may still scrutinize litigation-financing agreements to determine whether equity allows
their enforcement.” Id. at 241. The supreme court specifically instructed that “[c]ourts
and attorneys should . . . be careful to ensure that lit igation financiers do not attempt to
control the course of the underlying litigation.” Id.

2 “Champerty is an agreement to divide litigation proceeds between the owner of the
litigated claim and a party unrelated to the lawsuit who supports or helps enforce the
claim.” Maslowski, 944 N.W.2d at 237 (quotation omitted).

5
On remand, the parties each filed dispositive motions. Prospect filed a motion for
summary judgment against Maslowski and Schwebel. Schwebel moved for judgment o n
the pleadings on the basis that it was not a party to the litigation-financing agreement and
therefore not bound by its terms. Maslowski also moved for judgment on the pleadings,
contending that the agreement’s penalty clauses3 are unenforceable and that its interest rate
and interference with the attorney -client relationship 4 render it unconscionable. The
district court issued a combined order on these and other motions in April 2021. It granted
in part and denied in part both Maslowski’s and Prospect’s motions, finding the agreement
is “enforceable in part, but not in whole,” and ordered Maslowski to pay Prospect $6,000,
plus fees in the amount of $1,425, and interest at 8% accrued from June 3, 2020. The
district court also granted Schwebel’s motion in its entirety and dismissed Schwebel from
the lawsuit.

3 The “penalty clauses” are those terms of the agreement that compel Maslowski to
“IMMEDIATELY PAY TO [PROSPECT] LIQUIDATED DAMAGE S IN THE
AMOUNT TWICE THE PURCHASE AMOUNT REGARDLESS OF THE OUTCOME
OF THE LEGAL CLAIM OR THE AMOUNT OF THE PROCEEDS ” if Maslowski
“MAKES ANY FALSE STATEMENTS IN THIS . . . AGREEMENT, . . . REPLACES
[HER] ATTORNEY WITHOUT OBTAINING A NEW ACKNOWLEDGEMENT
FROM THE REPLACEMENT ATTORNEY ,” enters into similar agreements in addition
to the agreement with Prospect, “ DOES NOT COMPLY WITH ” the agreement “ OR
AVOIDS OR ATTEMPTS TO AVOID PAYMENT TO” Prospect.

4 The litigation-financing agreement states that Maslowski may only “hire new or
additional attorneys” if, “prior to such hiring, [Maslowski] shall (a) provide [Prospect] with
written notice of such determination and (b) deliver a copy of the [letter of direction] to
such new or additional attorney, [and] (c) require such new or additional attorney to execute
and deliver to [Prospect] an Attorney Acknowledgement of the [letter of direction].”

6
Prospect filed a motion seeking over $290,000 in attorney fees and costs in May
2021, claiming authority under the agreement to collect such costs as the prevailing party.5
The district court denied this motion in August, because, when “[t]aking into consideration
the entirety of this litigation, . . . neither Maslowski nor [Prospect] fully prevailed.” The
district court also rejected Prospect’s argument that it is entitled to recover the claimed fees
as the costs of collection6 pursuant to the agreement.
Prospect appeals the district court’s determination that some provisions of the
agreement are un enforceable, its decision to award interest only from June 3, 2020, its
dismissal of Schwebel from the lawsuit, and its determination that Prospect was not the
prevailing party and therefore not entitled to attorney fees.
ISSUES
I. Did the district court err by determining that certain provisions of the litigation-
financing agreement were unenforceable?

II. Did the district court err by awarding interest only from June 3, 2020?

III. Did the district court err by determining that Schwebel was not a party to a contract
with Prospect and dismissing Schwebel from the lawsuit?

IV. Did the district court abuse its discretion by declining to award attorney fees and
costs to Prospect?

5 The agreement states that “THE PREVAILING PARTY IN ANY DISPUTE SHALL BE
ENTITLED TO ALL REASONABLE ATTORNEYS’ FEES AND COSTS, EXPENSES
AND DISBURSEMENTS WITH RESPECT TO SUCH DISPUTE.”

6 The agreement contains a clause stating that “all costs and expenses incurred by
[Prospect] in collecting the [amount due under the contract] shall be and become an
additional amount owed to [Prospect] pursuant to [the agreement] including legal fees and
expenses.”
7
ANALYSIS
I. The district court did not err when it determined that certain provisions of the
agreement were unenforceable.

In a detailed and well-reasoned opinion, the district court determined that two main
provisions of the litigation-financing agreement were unenforceable. First, it determined
that the purported liquidated -damages provisions were unenforceable penalties and an
unconscionable intrusion into the attorney -client relationship. Second, the district court
determined that the “repurchase rate” was both subject to and unconscionable under the
usury statute. We apply de novo review to both determinations. See SCI Minn. Funeral
Servs., Inc. v. Washburn -McReavy Funeral Corp. , 795 N.W.2d 855, 861 (Minn. 2011)
(stating that legal decisions on cross-motions for summary judgment based on undisputed
facts are reviewed de novo even if the matters decided “are for equitable rel ief”); St. Jude
Med., Inc. v. Medtronic, Inc. , 536 N.W.2d 24, 27 (Minn. App. 1995) (“Construing and
giving effect to the plain meaning of contract language is a question of law” reviewed de
novo), rev. denied (Minn. Oct. 27, 1995); Glarner v. Time Ins. Co., 465 N.W.2d 591, 595
(Minn. App. 1991) (“Unconscionability is a question of law.”), rev. denied (Minn. Apr. 18,
1991).
A. The liquidated-damages provisions are unenforceable penalties.
Liquidated damages are “fixed sums payable to a party when actual damages are
difficult to ascertain or prove.” In re Qwest’s Wholesale Serv. Quality Standards, 702
N.W.2d 246, 262 (Minn. 2005). But liquidated damages cannot be mere penalties. Id.
8
Courts therefore “scrutinize a particular provision to ascertain if it is one for a penalty or
one for damages.” Gorco Constr. Co. v. Stein, 99 N.W.2d 69, 74 (Minn. 1959).
A penalty is designed “to secure performance” and is unenforceable, while
liquidated damages are designed “to fix the amount to be paid in lieu of performance.”
Frank v. Jansen , 226 N.W.2d 739, 743 (Minn. 1975); see also Gorco , 99 N. W.2d at 74
(“Punishment of a promisor for breach, without regard to the extent of the harm that he has
caused, is an unjust and unnecessary remedy.”). The “controlling factor” in ascertaining
whether a clause is enforceable “is whether the amount agreed u pon is reasonable or
unreasonable in the light of the contract as a whole, the nature of the damages
contemplated, and the surrounding circumstances.” Gorco, 99 N.W.2d at 74.
The relevant clause of the litigation-financing agreement states that Maslowski
“SHALL IMMEDIATELY PAY TO [PROSPECT] LIQUIDATED DAMAGES IN THE
AMOUNT OF TWICE THE PURCHASE AMOUNT REGARDLESS OF THE
OUTCOME OF THE LEGAL CLAIM OR THE AMOUNT OF THE PROCEEDS ” if
Maslowski “ DOES NOT COMPLY WITH [THE AGREEMENT] OR AVOIDS OR
ATTEMPTS TO AVOID PAYMENT TO” Prospect in any manner. The “purchase price”
of the litigation-financing agreement is $7,425. This clause thus compels Maslowski to
“IMMEDIATELY PAY” $14,850 if she commits any breach of the agreement, an amount
that the agreement states be ars no relationship to the outcome of the legal claim or the
proceeds received.
Requiring Maslowski to pay $14,850 in the event of any breach is unreasonable in
light of the agreement as a whole. Prospect argues it assumed the risk that the Personal-
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Injury Lawsuit would not result in any recovery to Maslowski, in which case it “ SHALL
RECEIVE NOTHING.” But the liquidated -damages clause overrides this risk, imposing
upon Maslowski the obligation to pay $14,850 regardless of the outcome of the Personal-
Injury Lawsuit. The threat of an absolute obligation to repay 200% of the entire purchase
amount immediately upon any breach of the agreement is thus designed “to secure
performance” rather than to compensate Prospect in the event of Maslowski’s failure to
perform. Frank, 226 N.W.2d at 743.
Moreover, the prospective damages Prospect may incur under the agreement are
reasonably susceptible to accurate calculation, and the purported liquidated damages are
disproportionate. Liquidated damages are generally appropriate “where the actual damages
resulting from a breach of the contract cannot be ascertained or measured.” Gorco, 99
N.W.2d at 75. For this reason, liquidated damages are generally appropriate where there
is a risk of speculative damages such as lost profits or harm to corporate goodw ill. See
Meuwissen v. H.E. Westerman Lumber Co. , 16 N.W.2d 546, 550 (Minn. 1944) (holding
that liquidated damages are appropriate where damage to “[t]he value of goodwill” and the
cause of “[l]oss of profits” were at issue). But “when the measure of dama ges resulting
from a breach of contract is susceptible of definite measurement,” an amount “greatly
disproportionate” is unenforceable because it constitutes an impermissible penalty. Gorco,
99 N.W.2d at 75.
The damages Prospect may incur if Maslowsk i breaches the agreement are
susceptible to definite measurement. Prospect advanced a net total of $6,000 to Maslowski.
If Maslowski neglected her obligations under the litigation-financing agreement, Prospect
10
would be damaged in the amount it advanced —$6,000. Because $14,850 is “greatly
disproportionate” to the risk of loss that Prospect incurred under the agreement, the clauses
are unenforceable as a penalty. Id. The district court therefore did not err by determining
the liquidated-damages provisions were unenforceable penalties.
B. These penalty clauses are unconscionable.
The district court also concluded that the liquidated-damages provisions are thus
unconscionable because they interfere with Maslowski’s conduct of the Personal-Injury
Lawsuit and “freez e Maslowski into an unbreakable relationship” with Schwebel. “A
contract is unconscionable if it is such as no man in his senses and not under delusion
would make on the one hand, and as no honest and fair man would accept on the other.”
In re Estate of Hoffbeck, 415 N.W.2d 447, 449 (Minn. App. 1987) (quotation omitted), rev.
denied (Minn. Jan. 28, 1988). The supreme court has cautioned that courts should both (1)
pay careful attention to “uncounseled agreements, particularly between parties of unequal
bargaining power or agreements involving an unsophisticated p arty” and (2) “ensure that
litigation financiers do not attempt to control the course of the underlying litigation, similar
to the ‘intermeddling’ that we described in our early champerty precedent.” Maslowski,
944 N.W.2d at 241 (citing Huber v. Johnson, 70 N.W. 806, 808 (Minn. 1897)). Given the
supreme court’s evident concern about the possibility of litigation-financing agreements
interfering with litigants ’ power to prosecute the underlying legal claim to their own
satisfaction, the district court did not err by concluding that this agreement unconscionably
interfered with Maslowski’s decisions as to her legal claim, including the decision to select
her own counsel.
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The supreme court cited Huber for the proposition that “it is difficult to conceive of
any stipulation more against public policy than one which prohibits a party from settling
his own dispute” without the permission of a financier. Huber, 70 N.W. at 808. The Huber
court considered a contract that bound a party “not to settle the claim wit hout the written
consent” of the financier, and declared that , if the party did so settle the claim without
consent, “he shall pay . . . a fixed and arbitrary sum, without any regard to the amount or
value of the services which the [financier] may have per formed.” Id. The Huber court
found the pre-settlement consent provision to be against public policy and also determined
the provisions preventing settlement “except by his subjecting himself to the payment of
an arbitrary penalty for doing so” were “void as against public policy.” Id.
The penalty clauses in the agreement here operate in a manner similar to that of the
clauses declared void in Huber. The y impose an immediate penalty of $14,850 if
Maslowski breaches any term of the agreement. Several of the agreement’s terms relate to
the pursuit of the underlying legal claim. Most notably, the agreement requires prior
written notice of Maslo wski’s intent to hire a new attorney and that Maslowski “ require
such new or additional attorney to execute and deliver” to Prospect the acknowledgments
to the agreement and the letter of direction. In essence, the agreement imposes a $14,850
penalty upon Maslowski for not providing prior written notice of her intent to change
attorneys or for hir ing an attorney who will not sign the acknowledgements Prospect
requires.
“The lawyer-client relationship is jealously guarded and restricted to only those two
parties because it is a fiduciary relationship of the highest character.” CPJ Enters., Inc. v.
12
Gernander, 521 N.W.2d 622, 624 (Minn. App. 1994). The penalties imposed by the
agreement upon a party’s choices as to counsel are Prospect’s intrusion on this relationship.
The penalties may induce a party to either remain with counsel with whom the party is no
longer satisfied or to retain counsel with wh om Prospect is satisfied, i.e., counsel willing
to acquiesce to Prospect’s requirements. Because these penalties restrict “the freedom of
clients to select counsel of their choice,” they are unconscionable. Barna, Guzy & Steffen,
Ltd. v. Beens , 541 N.W.2d 354, 357 (Minn. App. 1995) (quotation omitted), rev. denied
(Minn. Feb. 27, 1996).
Moreover, the penalty clauses limit Maslowski’s control over her underlying
lawsuit. The agreement requires her to make “reasonable efforts not to enter into any
settlement agreement or covenant” that would restrict Prospect’s contractual rights to
“information relating to the [p]roceeds or any settlement in connection therewith” and to
use her “best efforts to prosecute” th e lawsuit and bring it “to a good faith settlement or
final judgment.” Restricting Maslowski’s freedom to enter into settlements and imposing
a fixed penalty on her if she fails to “use reasonable efforts” to protect Prospect’s interests
offends the same principle as that at issue in Huber—namely, an outside party may not
influence a litigant’s efforts to settle a legal claim through the imposition of fixed penalties.
Huber, 70 N.W. at 808. Further, “[i]t is well settled that a client may without the consent
of his attorney settle and compromise with his adversary all matters in litigation, in such
manner and upon such terms as he may deem necessary for the protection of his interests.”
Southworth v. Rosendahl, 158 N.W. 717, 718 (Minn. 1916). Prospect’s attempt to restrict
13
Maslowski’s rights with respect to her lawsuit and her attorney by imposing fixed penalties
is unconscionable.
C. The interest rate is unconscionable.
The district court determined the 60% annual repurchase rate to be unconscionable
as a violation of the usury statute, which states that “[n]o person shall directly or indirectly
take or receive . . . any greater sum, or any greater value, for the loan or forbearance of
money, goods, or things in action, than $8 on $100 for one year.” Minn. Stat. § 334.01,
subd. 1 (2020). The district court did not err in its conclusion that the usury statute applies
to the litigation-financing agreement, and the 60% int erest rate is unconscionable as a
result.
Generally, four elements that “must be proven to establish a violation of the usury
law:”
(1) a loan of money or forbearance of debt,
(2) an agreement between the parties that the principal shall be
repayable absolutely,
(3) the exaction of a greater amount of interest or profit than is
allowed by law, and
(4) the presence of an intention to evade the law at the inception
of the transaction.

Miller v. Colortyme, Inc. , 518 N.W.2d 544, 549 (Minn. 1994). Prospect argues that the
litigation-financing agreement is not usurious because the first two elements are not me t:
the agreement specifically states it is “not a loan secured by a collateral assignment” and
is to be treated “as a sale transaction and not as a loan for all purposes.” And the agreement
also states that “ IF [MASLOWSKI] COMPLIES WITH [THE AGREEMENT] AND
RECOVERS NOTHING FROM THE LEGAL CLAIM CITED BELOW, THEN
14
[PROSPECT] SHALL RECEIVE NOTHING ,” demonstratin g there is no absolute
repayment of the principal. But Prospect’s argument fails to account for the requirement
that courts, in determining whether a transaction is usurious, “must look through the form
to the substance of a transaction.” Negaard v. Miller Constr. Co., 396 N.W.2d 833, 836
(Minn. App. 1986), rev. denied (Minn. Jan. 21, 1987).
Courts determine “the nature of a particular transaction” by “considering all of the
evidence to ascertain if the true character of the transaction is in substance a contract to
receive a usurious rate of interest for a loan or forbearance of money.” Rathbun v. W.T.
Grant Co., 219 N.W.2d 641, 647 (Minn. 1974). Accordingly, a statement in an agreement
that a transaction is to be treated as a sale and not as a loan is not dispositive. An otherwise
valid contract may be usurious if it results in the “actual taking or receiving of excessive
interest” or if it contains “a contractual obligation to pay excessive interest.” Citizen’s
Nat’l Bank v. Taylor, 368 N.W.2d 913, 919 (Minn. 1985) (quoting Linne v. Ronkainen, 37
N.W.2d 237, 239-40 (Minn. 1949)).
The litigation-financing agreement here is designed to result in the actual receiving
of excessive interest as a mere device to evade the usury law. Maslowski is subject to an
annual interest rate of 60%—far in excess of the 8% annual rate permitted under the usury
statute. Minn. Stat. § 334.01, subd. 1. She incurs an absolute obligation to pay this interest
rate plus the principal if she recovers in the underlying lega l claim; the agreement states
she “is not entitled to receive any proceeds until [Prospect] has received” payment
according to the “Repurchase Schedule.” The obligation to repay is t herefore absolute
unless Maslowski chooses to forego pursuing a recovery in the underlying legal claim. But
15
the agreement also requires her to use her “best efforts to prosecute the Legal Claim and to
bring the Legal Claim to a good faith settlement or final judgment.” Breaching this
provision carries a penalty of $14,850. Accordingly, the litigation-financing agreement is
designed to compel Maslowski to bring her underlying legal claim to a final resolution,
which results in Prospect receiving excessive interest.
This conclusion is bolstered by the supreme court’s observations in its decision
abolishing the champerty prohibition. The supreme court recognized it is “unlikely that
companies like Prospect will fund frivolous claims because they only profit . . . if a plaintiff
receives a settlement that exceeds the amount of the advance —an unlikely result in a
meritless suit,” and that “[l]itigation financing companies have claim valuation procedures
to avoid this very problem.” Maslowski, 944 N.W.2d at 240. Accordi ngly, by entering
into the transaction, Prospect sought to purchase a stake in the outcome of a non-frivolous
lawsuit that Maslowski had a contractual obligation to bring to a resolution. The agreement
is thus designed to render the obligation to repay Prospect the advanced purchase price plus
60% interest to be absolute, and the agreement’s form as a “ SALE AND REPURCHASE
AGREEMENT” instead of a loan is a mere device to evade the usury law. The district
court did not err by reaching this conclusion and im posing the 8% interest rate permitted
under the usury statute.7

7 Prospect also argues that the district court erred in revising the terms of the contract to be
enforceable instead of removing these terms and enforcing the remainder as written.
Prospect cites to the severability clause of the agreement, which states that, if any clause is
deemed “invalid or unenforceable,” the remaining unaffected clauses “shall be enforced to
the fullest extent permitted by law.” But this same clause also grants a court ruling on a
dispute between the parties “the power to modify the scope of such term or provision, to
16
II. The district court did not err by determining that interest began to accrue on
June 3, 2020.

The district court concluded that the litigation-financing agreement was not
enforceable until the supreme court abolished the common-law prohibition on champerty,
and that Prospect was not entitled to interest on its judgment until the day the supreme
court’s decision was issued —June 3, 2020. Prospect contends the Maslowski decision
should apply retroactively as if it were the law “even at the date of the erroneous decision”
in the previous rulings. Hoven v. McCarthy Bros. Co. , 204 N.W. 29, 30 (Minn. 1925).
“Whether a judicial decision will apply retroactively is a question of law” reviewed d e
novo. Khawaja v. State Farm Ins. Co. , 631 N.W.2d 106, 111 (Minn. App. 2001), rev.
denied (Minn. Sept. 25, 2001).
The law upon which Prospect relies is not directly on point. Prospect quotes Hoven,
204 N.W. at 30, for the proposition that “[i]t is the law that a decision of a court of supreme
jurisdiction overruling a former decision is retrospective in its operation —the overruled
decision is regarded in law as never having been the law .” While this may be true for the
black-letter law, it is not necessarily true for the enforcement of contract provisions made
under then -existing precedent . Significantly, Prospect omits the remainder of the

delete specific words or phrases, and to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable.” Moreover, the district
court is empowered, upon a finding of unconscionability, to “refuse to enforce the contract,
enforce it without the offending language, or limit application of the unconscionable clause
to ‘avoid any unconscionable result.’” Kauffman Stewart, Inc. v. Weinbrenner Shoe Co. ,
589 N.W.2d 4 99, 502 (Minn. App. 1999) (quoting Restatement (Second) of Contracts
§ 208 (1981)). The district court did not err by modifying the unenforceable terms of the
agreement pursuant to its power under caselaw and as explicitly agreed to by Prospect in
the severability clause.
17
discussion from Hoven, which concerns the rights of parties to contracts affected by
overruled precedent:
[but], where a Constitution or statute has received a given
construction by the court of last resort, and contracts have been
made and rights acquired in accordance therewith, such
contracts may not be invalidated nor vested rights acquired
under them impaired b y a change of construction made by a
subsequent decision.

Id. This language suggests that parties who have entered into agreements are entitled to
their rights under those agreements even if the law under which they were made is later
changed. In this instance, the litigation-financing agreement was unenforceable as contrary
to public policy at the time it was made in 2014. Hoven suggests that a change in that
public policy does not necessarily change the status of the agreemen t at the time it was
made under the previous policy prohibiting champerty.
We also find it significant that Hoven relies on the existence of an “erroneous
decision” in its proposition that changes in precedent apply retroactively. Id. The supreme
court here expressly stated that the district court’s previous decision declaring the
litigation-financing agreement void for being champertous, and our decision affirming that
conclusion, were not erroneous: “The lower courts therefore did not err in determining that,
under our prior decisions, the contract was unenforceable.” Maslowski, 944 N.W.2d at
238. There is thus no “erroneous decision” that is being retroactively overruled here.
Instead, the supreme court indicated that the litigation-financing agreement was not
enforceable under Minnesota law prior to June 3, 2020. Therefore, the district court did
18
not err when it awarded interest only from the date of the supreme court’s Maslowski
decision.
III. The district court did not err by dismissing Schwebel from the lawsuit because
there was no contract between Schwebel and Prospect.

The district court determined that , according to the unambiguous terms of the
agreement and the letter of direction, neither document created a contract or obligation
between Schwebel and Prospect, and Schwebel must therefore be dismissed from the
lawsuit. The interpretation of a contract is a question of law reviewed de novo. Storms,
Inc. v. Mathy Constr. Co., 883 N.W.2d 772, 776 (Minn. 2016).
Prospect argues that the terms of Schwebel’s Certification of Seller’s Attorney and
Maslowski’s letter of direction demonstrate an enforceable contractual promise by
Schwebel to Prospect to follow the terms of the agreement. But the terms of the agreement
do not reflect an intent to create a contract between Prospect and Schwebel. Courts are to
“look to the language of the contract to determine the parties’ intent.” Id. When such
language “is clear and unambiguous,” courts “ enforce the agreement of the parties as
expressed in the language of the contract” and do not “rewrite, modify, or limit” a provision
“by a strained construction.” Id. (quotations omitted).
The agreement clearly identifies the relevant parties. Prospect is identified as the
“Purchaser.” Maslowski is identified as the “Seller.” Schwebel is separately identified as
“Seller’s Attorney,” a term that includes “any substitute, new or additional attorney
representing Seller” in the Personal-Injury Lawsuit. The agreement also contains a
mechanism by which Maslowski may “hire new or additional attorneys” to represent her,
19
which states that , if she does so , “[a]ny such new or additional attorney(s) shall be
considered part of ‘Seller’s Attorney in the Legal Claim’ upon such hiring for all purposes
of this [a]greement.” The agreement therefore provides for the complete replacement of
Schwebel as “Seller’s Attorney” without modifying any other term or obligation relating
to Maslowski. The plain terms of the agreement thus treat Schwebel as separate from
Maslowski—and therefore separate from Maslowski’s obligations under the agreement.
To construe the agreement here as imposing contractual obligations upon a party clearly
identified as separate from and ancillary to the “Seller” would be impermissible. See id.
Moreover, even if the agreement and the letter of direction did identify Schwebel as
a party to the contract between Maslowski and Prospect, the essential elements for contract
formation between Schwebel and Prospect are absent. “The formation of a contract
requires communication of a specific and definite offer, acceptance, and consideration.”
Com. Assocs., Inc. v. Work Connection, Inc. , 712 N.W.2d 772, 782 (Minn. App. 2006).
“Consideration may consist of either a benefit accruing to a party or a detriment suffered
by another party.” Kielley v. Kielley, 674 N.W.2d 770, 777 (Minn. App. 2004) (quotation
omitted). Courts do not “examine the adequacy of consideration as long as something of
value has passed between the parties.” Id. at 778. Even if Schwebel conferred a benefit
upon Prospect by signing the certification, as Prospect contends, Prospect passed nothing
of value to Schwebel. Under the agreement, Prospect paid the purchase price to
Maslowski. That payment is the only benefit Prospect conferred under the agreement, and
that benefit was conferred only on Maslowski, not on Schwebel. Thus, no contract was
formed between Schwebel and Prospect.
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Finally, Prospect argues that Schwebel may be liable to Prospect under the
agreement because Maslowski delegated her contractual duties of pa yment to Schwebel.
But a party may delegate its “duty to perform under a contract” if there is not “an express
agreement to the contrary.” Epland v. Meade Ins. Agency Assocs., Inc. , 564 N.W.2d 203,
207 (Minn. 1997). The agreement here contains such an e xpress agreement: “Seller’s
rights and obligations under this Sale and Repurchase Agreement may not be assigned or
transferred without the written consent of Purchaser” except for a transfer upon death.
There is no evidence in the record that Prospect gav e written consent for Maslowski to
delegate or assign her payment obligations to Schwebel. And there is no indication that
Maslowski intended to relieve herself of the obligation to pay under the agreement simply
by issuing to Schwebel instructions on how that payment should be effectuated. 8
Accordingly, there is no contractual obligation between Schwebel and Prospect that would
support Prospect’s claims for relief against Schwebel, and the district court did not err by
dismissing Schwebel from the lawsuit.
IV. The district court did not abuse its discretion by determining Prospect was not
the prevailing party and declining to award attorney fees and costs.

The district court denied Prospect’s motion for attorney fees and costs, reasoning
that Prospect was not entitled to fees and costs under the agreement. We “will not reverse

8 Prospect also argues for the first time on appeal that Prospect is an intended third -party
beneficiary to the letter of direction. Prospect did not raise this issue before the district
court. Because the issue of whether Prospect is a third-party beneficiary was not presented
to the district court, it is forfeited on appeal. See Thiele v. Stich , 425 N.W.2d 580, 582
(Minn. 1988) (“A reviewing court must generally consider only those issues that the record
shows were presented and consi dered by the [district] court in deciding the matter before
it.” (quotation omitted)).
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the district court’s decision on attorney fees absent an abuse of discretion.” Carlson v.
SALA Architects, Inc., 732 N.W.2d 324, 331 (Minn. App. 2007), rev. denied (Minn. Aug.
21, 2007). The district court here did not abuse its discretion by denying Prospect’s motion
for attorney fees.
“[A]ttorney fees are allowed only when permitted by a specific contract or when
authorized by statute.” Roach v. County of Becker, 962 N.W.2d 313, 322-23 (Minn. 2021).
The agreement authorizes the recovery of attorney fees: “the prevailing party in any dispute
shall be entitled to all reasonable attorneys’ fees and costs, expenses and disbursements
with respect to such dispute.” Whether Prospect should be entitled to recover attorney fees
depends on whether it is the “prevailing party.”
The district court is afforded discretion to determine “who the prevailing party is
for purposes” of an award of attorney fees. Posey v. Fossen, 707 N.W.2d 712, 714 (Minn.
App. 2006). The district court abuses this discretion only if its decision “is against logic
and facts on the record.” Id. And the party challenging a district court’s exercise of its
discretion bears the burden to demonstrate “that no reasonable person would agree with the
trial court’s assessment.” Id. (quotation omitted).
The determination of which party —if any—is the prevailing party depends on the
“careful weighing of the relative success of the parties to a lawsuit, a process that invests a
certain amount of discretion in the district court.” Id. at 715. The district court conducted
a review of the totality of the litigation and concluded that Maslowski prevailed “with
respect to the choice of forum and choice of law,” on t he initial determinations that the
agreement was unenforceable because it was champertous, and on her “contention that the
22
[a]greement was unconscionable.” With respect to Prospect, the district court determined
it “prevailed in its ultimate goal of changing the common law of champerty in Minnesota,”
but did not achieve “a complete victory with respect to” Maslowski because it was awarded
a “modest judgment” and “lost on significant issues” as to the enforceability of the contract.
Because both Maslowski and Prospect “won on some significant issues” and “lost on
others,” the district court concluded that neither of them truly prevailed and denied
Prospect’s request for relief. The district court’s review of the case constitutes the “careful
weighing of the relative success of the parties” that is required and is not an abuse of the
district court’s discretion. Id.
DECISION
Because the litigation-financing agreement contains unenforceable penalty clauses
that unconscionably interfere with Maslowski’s relationship with her counsel, and because
the interest rate is unconscionable under the usury statute, the district court did not err in
its decision to revise the agreement to be enforceable. In so deciding, it did not err by
determining interest is to be applied from June 3, 2020, the date of the Maslowski decision.
The district court also did not err by dismissing Schwebel from the lawsuit because no
contractual obligations existed between Schwebel and Prospect. We therefore affirm the
district court’s April 2021 decision in its entirety. And we discern no abuse of discretion
in the district court’s later determination that there was no prevailing party and its denial
of Prospect’s request for attorney fees and costs.
Affirmed.