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Victoria Fausone v. U.S. Claims9/14/2005
Victoria Fausone appeals a final order granting U.S. Claims' motion to confirm an arbitration award. The arbitration occurred in Philadelphia but involved "litigation loans" extended to Ms. Fausone in Florida in exchange for an interest in her personal injury lawsuits pending in Florida. We affirm the order confirming this arbitration because Ms. Fausone presented no argument to the trial court that would permit us to deny confirmation. We explain the facts of this case in some detail because this method of litigation funding may warrant regulation in Florida. Ms. Fausone received $30,000 from U.S. Claims through a series of agreements in the fall of 2001 and now apparently owes U.S. Claims more than $102,007, plus the attorneys' fees associated with this lawsuit.
I. THE PERSONAL INJURY CLAIMS AND RESULTING LITIGATION LOANS
In May 2000, Ms. Fausone was struck by a dump truck while riding her bicycle. She retained the law firm of Florin, Roebig & Walker, P.A., to represent her in this claim and in a second unrelated products liability claim.
Beginning in October 2000, Ms. Fausone began selling interests in her lawsuits to organizations that buy such interests. These transactions are often referred to as "litigation loans," but the law does not regard them as loans because the corporation that gives money to the plaintiff has no right to recover from the plaintiff in the event that the lawsuit is unsuccessful. These transactions, however, are quite similar to any other non-recourse loan secured by an interest in any form of transferable property.
Ms. Fausone first sold an interest in her lawsuit to Advance Legal Funding, L.L.C., of Biloxi, Mississippi. She received $3000 in October 2000 and agreed to pay Advance Legal Funding, L.L.C., $6000 if she received a settlement of her claim before May 1, 2001, or $9000 plus 18% interest if a settlement occurred thereafter. Thus, the interest rate on this transaction depended on the date of repayment, but was never less than 200%.
Ms. Fausone sold a similar interest to Advance Settlement Funding, Inc., of Silver Springs, Florida. She received $2000 in exchange for a repayment schedule that increased by $150 per month with a total not to exceed $4250. The annual rate of interest on this transaction for the first year was approximately 90%.
Ms. Fausone apparently sold two more interests to Advance Settlement Funding because her obligation to them was $8075 in August 2001, and it was increasing at the rate of $375 per month.
In the summer of 2001, Ms. Fausone contacted U.S. Claims seeking additional money. In fairness to U.S. Claims, it should be emphasized that there is no evidence that it solicited Ms. Fausone. How or why she contacted them is not contained in the record. U.S. Claims provided more favorable terms for its litigation loans, and it helped Ms. Fausone consolidate her earlier loans. It helped her resolve the earlier loans at a significant discount.
U.S. Claims initially gave Ms. Fausone $18,000 in mid-August 2001, some of which was used to pay off the earlier loans. The purchase agreement was allegedly reviewed by Ms. Fausone's attorneys and transmitted to U.S. Claims by those lawyers. Her attorneys also provided U.S. Claims with information about her claim to assist U.S. Claims in deciding whether to advance her funds. Thereafter, Ms. Fausone returned to U.S. Claims on numerous other occasions between August 2001 and November 2002 to obtain advances in the total amount of approximately $30,000, secured by her personal injury claims.
II. THE AGREEMENT
The initial advance, as well as two of the subsequent advances, are in this
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