TERRY JENNINGS, Justice.
Appellants, Anglo-Dutch Petroleum International, Inc. and Anglo-Dutch (Tenge) LLC (collectively, "Anglo-Dutch"), challenge the trial court's rendition of summary judgment
Factual and Procedural Background
In 2000, Anglo-Dutch filed suit against "Halliburton" and "Ramco" (the "Halliburton lawsuit") alleging that Halliburton and Ramco misappropriated Anglo-Dutch's trade secrets and breached their confidentiality agreements with Anglo-Dutch, which were executed by the parties during the course of developing an oil and gas field.
Due to the expense associated with prosecuting the Halliburton lawsuit, and in order "to operate its business, to retain its employees, and to avoid bankruptcy until it could recover a judgment from Halliburton and Ramco," Anglo-Dutch needed to raise money. Anglo-Dutch initially, but unsuccessfully, sought to borrow money from commercial banks, using the Halliburton lawsuit as collateral. As appellees allege in their petition, Anglo-Dutch then contacted
After the Halliburton lawsuit was tried to a jury, the trial court entered a judgment in the amount of approximately $81 million, including approximately $10 million in attorneys' fees, against Halliburton and Ramco. Anglo-Dutch and Halliburton subsequently entered into a settlement agreement, the terms of which are undisclosed.
Appellees refused Anglo-Dutch's offer of reduced payments and filed the instant suit against Anglo-Dutch, asserting claims for breach of contract, fraud, breach of fiduciary duty, conspiracy, and conversion.
Appellees also attached to their summary judgment motion copies of the Claims Investment Agreements and the Assignments of Cash Recovery executed by each appellee and by Anglo-Dutch. While the agreements differed in some respects, including the amount of the investment and the amount of any return, all of the agreements were similarly structured. The agreements generally referred to each appellee as an "Investor" and characterized each investor as being a first, second, third, or fourth tier investor, depending on certain variables, such as the date of investment. The appellees' "investor's rights" were determined by their assigned tier and a payment schedule included in the agreements.
The agreements uniformly provided that Anglo-Dutch was "selling interests in any Cash Recovery . . . that it may receive from the [Halliburton] lawsuit." The agreements also stated:
The agreements further provided that in the event of Anglo-Dutch's bankruptcy, the investor's interest in any cash recovery would not be described as a debt or obligation of Anglo-Dutch. An Assignment of Cash Recovery was attached to each agreement, providing each investor with a security interest in any cash recovery received by Anglo-Dutch. The assignments stated that "Anglo-Dutch hereby assigns, transfers, and sets over to Investor its proportionate share of Anglo-Dutch's right, title and interest in and to any Cash Recovery ... actually received by Anglo-Dutch from the [Halliburton] Lawsuit ... as continuing and collateral security for the payment of obligation due and owing by Anglo-Dutch to Investor."
Also attached to appellees' summary judgment motion were letters from Anglo-Dutch to appellees, which were sent after entry of the judgment against Halliburton and Ramco and after Anglo-Dutch concluded its settlement with Halliburton, requesting that appellees accept a lower payment than was provided for in the agreements. In these letters, Anglo-Dutch claimed that appellees' refusal to accept its proposed lower payment "put at risk Anglo-Dutch's ability to resolve the Lawsuit with Halliburton" and asserted that the agreements were contrary to Texas public policy and unenforceable. With these letters, Anglo-Dutch enclosed checks for the amount of the reduced payments and stated that, by depositing the checks, appellees would be releasing Anglo-Dutch from any future liability. The appellees refused to accept the reduced payments.
In its response to appellees' summary judgment motion, Anglo-Dutch contended that (1) the litigation funding agreements were usurious loans, (2) if the agreements were not loans, they were illegal, unregistered securities, and (3) the agreements violated Texas public policy. In support of its argument that appellees' investments were actually usurious loans, Anglo-Dutch asserted that appellees "understood that Anglo-Dutch was virtually certain to recover in the lawsuit at least an amount sufficient to repay the principal advanced by [appellees]," that appellees were "in the business of evaluating and financing lawsuits," and that, at a minimum, "there [was] a genuine issue of material fact regarding whether Anglo-Dutch's obligation to repay was absolute." Anglo-Dutch attached to its response the affidavit of Scott Van Dyke, president of Anglo-Dutch, who testified that, during the prosecution of the
Van Dyke also testified in support of Anglo-Dutch's specific contentions that, at the time the agreements were executed, "[appellees] expected their loans to be repaid," that the parties "considered Anglo-Dutch's recovery to be quite certain," and that the contingency of repayment expressed in the agreements was "in reality non-existent." Specifically, Van Dyke testified that "[d]uring discovery, counsel for Anglo-Dutch found numerous documents and obtained testimony which conclusively established that the confidentiality agreements had been breached" and that "damages were effectively established by Halliburton's and Ramco's own documents." Van Dyke also testified that, during his conversations with appellees, he described to appellees the details of the Halliburton lawsuit and showed them the relevant evidence. He explained to appellees "that there was no risk to their principal" because (1) the evidence "showed that Halliburton and Ramco had breached their confidentiality agreements," (2) Halliburton's own "economic model showed that the interest... lost as a result of the breach by Halliburton and Ramco was valued ... at hundreds of millions of dollars," and (3) Anglo-Dutch's lawyers "had an excellent track record of settling or winning cases." Van Dyke further testified that he assured appellees that "the facts relating to the Halliburton lawsuit were such that [he] and [his] able trial counsel were confident that recovery of an amount sufficient to repay them and others who had or would loan funds to Anglo-Dutch was not speculative" and that he "understood at the time and [he] expressed to each of the [appellees] that Anglo-Dutch had an absolute obligation to repay them." Finally, Van Dyke testified that Anglo-Dutch recorded these agreements as loans and as borrowed funds.
The trial court granted appellees' summary judgment motion and ordered that appellees recover from Anglo-Dutch $2,556,105.51 in actual damages plus $52,001.80 in attorneys' fees. The trial court then severed appellees' breach of
Standard of Review
The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to summary judgment as a matter of law. TEX.R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). A plaintiff moving for summary judgment on its claim must establish its right to summary judgment by conclusively proving all the elements of its cause of action as a matter of law. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999). If a defendant wishes to assert an affirmative defense to the summary judgment motion, it must urge the defense in its response and provide enough summary judgment evidence to create a fact issue on each element of the defense. Beathard Joint Venture v. W. Houston Airport Corp., 72 S.W.3d 426, 434 (Tex.App.-Texarkana 2002, no pet.); Jones v. Tex. Pac. Indem. Co., 853 S.W.2d 791, 795 (Tex.App.-Dallas 1993, no writ). A nonmovant asserting an affirmative defense is not required to prove the affirmative defense as a matter of law-raising a fact issue is enough. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984). In conducting our review, we assume that all evidence favorable to the nonmovant is true and indulge every reasonable inference and resolve all doubts in favor of the nonmovant. Nixon, 690 S.W.2d at 548-49.
In its first issue, Anglo-Dutch argues that the trial court erred in granting summary judgment in favor of appellees because the evidence raises a genuine issue of material fact as to whether appellees charged Anglo-Dutch a usurious rate of interest in the agreements. Anglo-Dutch urges this Court to "look beyond the language" of the agreements to determine the parties' intent. Anglo-Dutch asserts that the summary judgment evidence shows that "the alleged contingency was not a real contingency and, therefore, the parties intended their agreements to be loans, which Anglo-Dutch had an absolute obligation to repay." Anglo-Dutch further asserts that, in considering its usury allegations, parol evidence is admissible to establish that the parties intended their transactions to be loans and that such extrinsic evidence, contradicting the terms of an agreement, may be considered in determining if an agreement is usurious. Anglo-Dutch notes that, despite the terms of the agreements, Van Dyke testified that he and appellees understood the agreements to be loans, that Anglo-Dutch believed it had an absolute obligation to repay the principal on the loans, and that appellees understood that their agreements "were not speculative" and involved "no risk." Alternatively, Anglo-Dutch argues that even if there was a "real contingency" in the agreements, the agreements were still usurious because, once Anglo-Dutch settled with Halliburton, it had an absolute obligation to repay appellees.
Appellees contend that, based on the "specific and unambiguous terms" of the agreements, repayment of their investments was based on an absolute contingency, the transactions were not loans, and usury laws do not apply. Appellees note that the agreements do not describe the investments as loans, do not use the word interest, do not state an interest rate, and do not provide a specific repayment date for a sum certain. Appellees further note that the Halliburton lawsuit was a "highly complex, multi-party commercial lawsuit that took over three years of extensive discovery and contested motion practice before it even reached a nine week trial," that some appellees invested only four
The essential elements of a usurious transaction are "(1) a loan of money, (2) an absolute obligation to repay the principal, and (3) the exaction of a greater compensation than allowed by law for the use of the money by the borrower." First Bank v. Tony's Tortilla Factory, Inc., 877 S.W.2d 285, 287 (Tex.1994); Holley v. Watts, 629 S.W.2d 694, 696 (Tex.1982); Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 322-23 (Tex.App.-Houston [1st Dist.] 2004, pet. denied); see also Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994). "A factor that courts consider when determining usury is whether repayment was based on a contingency." Catalina, 881 S.W.2d at 297. This factor is important because it helps a court in determining whether a transaction was a loan or a business investment. Id.; see also Bray v. McNeely, 682 S.W.2d 615, 619 (Tex.App.-Houston [1st Dist.] 1984, no writ); Beavers v. Taylor, 434 S.W.2d 230, 231-32 (Tex.Civ.App.-Waco 1968, writ ref'd n.r.e.). If a transaction is missing any of the above identified three elements, it cannot be usurious. See Holley, 629 S.W.2d at 696-97. Thus, if the agreements did not constitute a loan, if the agreements did not create an absolute obligation to repay, or if the agreements did not charge "usurious interest," Anglo-Dutch's usury defense fails as a matter of law.
"`Loan' means an advance of money that is made to or on behalf of an obligor, the principal amount of which the obligor has an obligation to pay the creditor." TEX. FIN.CODE ANN. § 301.002(a)(10) (Vernon Supp.2005) (emphasis added). "`Interest' means compensation for the use, forbearance, or detention of money." Id. § 301.002(a)(4). "`Usurious interest' means interest that exceeds the applicable maximum amount allowed by law." Id. § 301.002(a)(17). If there is no "loan," then any disputed amount charged cannot be characterized as interest, and without interest, there cannot be usury. See First USA Mgmt., Inc. v. Esmond, 960 S.W.2d 625, 628 (Tex.1997). "Usury statutes are penal in nature and should be strictly construed." Tony's Tortilla Factory, Inc., 877 S.W.2d at 287; Oyster Creek Fin. Corp., 176 S.W.3d at 323. "When construing a contract under a usury claim, courts presume the parties intended a nonusurious contract." Fin. Sec. Servs., Inc. v. Phase I Elecs. of W. Tex., Inc., 998 S.W.2d 674, 677 (Tex.App.-Amarillo 1999, pet. denied).
Under the plain terms of the agreements, appellees' right to recover their principal and any return on their investment was contingent upon Anglo-Dutch's cash recovery, if any, in the Halliburton lawsuit. Per the unambiguous terms of the agreements, Anglo-Dutch did not have an absolute obligation to repay the principal amounts that appellees invested. In its arguments, Anglo-Dutch confuses the terms "contingency" and "risk." Appellees' belief that they were exposed to little or no risk does not negate the contingency in the agreements. Here, it is indisputable that, if Anglo-Dutch recovered nothing or an insufficient amount of damages, then according to the plain terms of the agreements, Anglo-Dutch had no obligation to reimburse appellees for the principal amounts invested, much less pay appellees
As Anglo-Dutch emphasizes, however, we must examine the form of the transaction and its substance in determining the existence or non-existence of usury. Gonzales County Sav. & Loan Ass'n v. Freeman, 534 S.W.2d 903, 906 (Tex. 1976). Thus, we recognize that whether an amount of money being charged constitutes interest depends not on what the parties call it, but on the substance of the transaction. First USA Mgmt., Inc., 960 S.W.2d at 627. For example, in Tony's Tortilla Factory, Inc., the supreme court stated that a court "may look past the label of the fee to determine if a fee is a service charge or interest" and that, if there is a question of fact when there is a dispute in the evidence concerning the purpose of the fee, a jury may determine if the fee is "merely a device to conceal usury." 877 S.W.2d at 287. Additionally, other courts of appeals have stated that while "the document containing the allegedly usurious demand is the primary source from which to divine the drafter's intent," a party may offer extrinsic evidence to prove that a contract is usurious. Strasburger Enters., Inc. v. TDGT Ltd. P'ship, 110 S.W.3d 566, 574 (Tex.App.-Austin 2003, no pet.); Hoxie Implement Co. v. Baker, 65 S.W.3d 140, 146 (Tex.App.-Amarillo 2001, pet. denied); see also Bray, 682 S.W.2d at 617 (stating that "to determine whether this transaction should be classified as a loan or a sale, we must look to the intention of the parties as revealed by the contract and the surrounding circumstances")
However, the "extrinsic evidence" offered by Anglo-Dutch is not sufficient to create a fact issue concerning Anglo-Dutch's absolute obligation to repay appellees. Anglo-Dutch's "extrinsic evidence" consists almost entirely of the affidavit of Van Dyke, in which he testifies that both he and Anglo-Dutch considered the agreements to be loans. But, even as Anglo-Dutch recognizes, any particular "label placed upon the transaction by the parties should not control the determination of whether that transaction is a loan." Najarro v. SASI Int'l Ltd., 904 F.2d 1002, 1007 (5th Cir.1990) (refusing to consider affidavit testimony that transaction was investment when terms of written contract between parties unambiguously constituted
Here, the agreements clearly set forth a contingency upon which appellees would be reimbursed, and Anglo-Dutch did not have an absolute obligation to repay appellees the monies they invested. Rather, Anglo-Dutch's obligation depended upon a contingency beyond appellees' control. The labels that Van Dyke attempted to assign to the terms of the agreements after the conclusion of the Halliburton lawsuit do not appear in the agreements themselves, but instead only appear in his affidavit testimony. We may not simply accept Van Dyke's labels concerning an absolute obligation to repay. Rather, we must instead focus on the substance of the transaction.
Van Dyke's testimony that he explained to appellees that there was "no risk" and that he was confident that Anglo-Dutch would "collect enough money" to repay appellees because Anglo-Dutch's interest in the oil and gas field lost as a result of Halliburton's and Ramco's actions was valued in the "hundreds of millions of dollars," is also insufficient to create a fact issue concerning Anglo-Dutch's usury defense. These statements merely constituted Van Dyke's personal expectations on the success of the Halliburton lawsuit, and the fact that he communicated his personal expectations to appellees is of no consequence; Van Dyke's "confidence in the outcome of the lawsuit" did not dissolve the very real contingency that existed in the agreements themselves. Similarly, Van Dyke's testimony that appellees communicated to him that they did not consider their investments to be speculative, that some appellees stated that they believed that success in the Halliburton lawsuit was certain, that one appellee told Van Dyke that he could not afford to lose his money, and that multiple appellees stated that there must be "no risk whatsoever" because of Anglo-Dutch's trial counsel also constitute nothing more than appellees' personal expectations on the success of the Halliburton lawsuit. As such, it does not erase the contingency in the agreements. Significantly, despite Van Dyke's testimony concerning his and appellees' confidence in the outcome of the lawsuit, the very real contingency contained in the agreements is illustrated by the fact that the amount of the judgment that Anglo-Dutch ultimately received in the Halliburton lawsuit was significantly lower than what it had anticipated and, importantly, what it had represented to appellees that it would receive at the end of the case.
Here, there is no competent evidence showing that, by the time appellees invested, Anglo-Dutch had obtained "incontrovertible evidence" of its claims against Halliburton and Ramco, and that the evidence established damages in an amount sufficient to ensure the repayment of appellees' investment and sufficient to render the contingency in the agreements illusory. Although we do not have the record of the Halliburton lawsuit before us, there is nothing in the record of the instant case
Moreover, we note that the testimony of Van Dyke upon which Anglo-Dutch relies to create a fact issue consists almost entirely of unsubstantiated legal and factual conclusions and is not competent summary judgment evidence. See Rizkallah v. Conner, 952 S.W.2d 580, 587 (Tex.App.-Houston [1st Dist.] 1997, no writ).
We must also reject Anglo-Dutch's argument that, even if there originally was a "real contingency" and a serious risk that Anglo-Dutch might lose the lawsuit, once it settled with Halliburton, it had an absolute obligation to repay appellees
Noting that no other Texas court has addressed usury allegations in the context of litigation funding agreements, the parties cite a number of cases from other jurisdictions that have addressed the enforceability of such agreements. Anglo-Dutch cites Echeverria v. Estate of Lindner, 7 Misc.3d 1019(A), 801 N.Y.S.2d 233 (N.Y.Sup.Ct.2005), Lawsuit Financial, L.L.C. v. Curry, 261 Mich.App. 579, 683 N.W.2d 233 (2004), and Rancman v. Interim Settlement Funding Corp., No. 20523, 2001 WL 1339487, at *3 (Ohio Ct.App. Oct. 31, 2001) (not designated for publication). Although we note that usury laws vary greatly from state to state, as do the policies on which usury laws are adopted, we consider these cases because this specific issue is one of first impression in Texas.
In Echeverria, the New York Superior Court held that a litigation funding agreement that provided for a lender's right of recovery only in the event the plaintiff received a judgment in his favor charged usurious interest. 801 N.Y.S.2d 233. However, the court noted that because the underlying case was a strict liability labor law case "there was a very low probability that judgment would not be in favor of the plaintiff" and, in fact, later characterized the probable success of the lawsuit a "sure thing." Id. Similarly, in Rancman, the Ohio Court of Appeals concluded that a litigation funding agreement charged a usurious amount of interest after finding that evidence presented at trial demonstrated that "no real probability existed that non-payment would occur."
The final case cited by Anglo-Dutch, from the Michigan Court of Appeals, is substantively distinguishable. In Curry, the parties entered into a litigation funding agreement after the jury rendered a verdict in the amount of $27 million. 683
The reasoning applied by the foreign courts in the cases cited by appellees is applicable here and is more persuasive. See Dopp v. Yari, 927 F.Supp. 814, 822-24 (D.N.J.1996); Kraft v. Mason, 668 So.2d 679, 684 (Fla.Dist.Ct.App.1996); Nyquist v. Nyquist, 255 Mont. 149, 841 P.2d 515, 518 (1992); and Aldrich v. Aldrich, 260 Ill.App. 333, 1931 WL 1668, at *12-13 (Ill. App.Ct.1931). For example, in Dopp, the District Court of New Jersey enforced a litigation funding agreement and rejected a claim that the agreement was usurious. 927 F.Supp. at 823. The court, noting that the agreement contemplated a degree of risk to the investor, held that the agreement was a "joint undertaking of the parties disclosing an intent to distribute proceeds of the case, if any." Id. Similarly, in Kraft, the Florida District Court of Appeal enforced an agreement loaning money to a plaintiff in exchange for a share of any judgment on the grounds that "when the loan was given, any talk of recovery was pure speculation." 668 So.2d at 684; see also Nyquist, 841 P.2d at 518 (holding agreement to advance litigation expenses did not constitute loan agreement subject to usury statute because agreement contained conditional obligation; further stating "no certainty ever existed that the plaintiffs in the litigation would prevail and receive a damage award"). Similarly, here, the agreements contained a conditional obligation and, despite Van Dyke's testimony concerning his subjective belief, there was no certainty that Anglo-Dutch would recover an amount sufficient to repay appellees their principal and returns.
We overrule Anglo-Dutch's first issue.
In its second issue, Anglo-Dutch contends that the trial court erred in granting summary judgment in favor of appellees because the evidence raises a genuine issue of material fact as to whether the agreements were illegal, unregistered securities and thus, void and unenforceable under both state and federal law. Specifically, Anglo-Dutch argues that the evidence raises fact issues as to whether "(1) the litigation funding agreements fall within article 33(K) [of the Texas Securities Act],
Appellees argue that, even assuming the agreements can be characterized as securities under the Securities Act of 1933
Article 581-33(K) of the Texas Securities Act states:
TEX.REV.CIV. STAT. ANN. art. 581-33(K) (Vernon Supp.2005).
Here, Anglo-Dutch has not presented any evidence raising a genuine issue of material fact that appellees acquired their rights under the agreements "with knowledge of the facts by reason of which its making or performance was in violation" of the Act. Furthermore, Anglo-Dutch has not cited any authority for the proposition that, as the seller of the "unregistered securities," it has the right to void the agreements. To the contrary, federal and state authority indicate that the agreements are not automatically void, but instead are voidable by the purchaser. In A.C. Frost & Co. v. Coeur D'Alene Mines Corp., 312 U.S. 38, 40-41, 61 S.Ct. 414, 415-16, 85 L.Ed. 500 (1941), the Supreme Court stated "[t]he essential purpose of the [Securities Act of 1933] is to protect investors by requiring publication of certain information concerning securities before offered for sale" and that "[n]o provision of the Act declares that in the absence of registration, contracts in contemplation of or having relation to a public offering shall be void."
Similarly, Anglo-Dutch has not presented any evidence raising a genuine issue of material fact concerning its in pari delicto defense. Pursuant to the doctrine of in pari delicto, "a buyer may not enforce a transaction if (1) the buyer bore at least substantially equal responsibility for the violations he sought to redress, (2) preclusion of recovery would not significantly interfere with enforcement of the securities laws and protection of investors, and (3) the role of the plaintiff in the transaction was more that of a promoter than investor." Pinter v. Dahl, 486 U.S. 622, 633-39, 108 S.Ct. 2063, 2071-74, 100 L.Ed.2d 658 (1988). Here, the evidence showed that Anglo-Dutch actively solicited appellees' investments. Van Dyke testified that he had conversations with each appellee regarding the proposed transactions, that he made a presentation to each of the appellees regarding the transactions, and that he presented appellees with the Claims Investment Agreements, which were executed by the parties and which governed the parties' investment relationships. Anglo-Dutch did not present any evidence that the role of appellees in the transaction was more that of a promoter than investor, and thus Anglo-Dutch's in pari delicto defense fails as a matter of law.
We overrule Anglo-Dutch's second issue.
In its third issue, Anglo-Dutch contends that the trial court erred in granting summary judgment in favor of appellees because the agreements violated Texas public policy. Anglo-Dutch asserts that the agreements are "champertous
In State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696, 707 (Tex.1996),
Assignments of causes of action that tend to increase and distort litigation may be found to violate public policy. Gandy, 925 S.W.2d at 707-11 (citing Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex. 1992) (holding Mary Carter agreements are void as against public policy); Int'l Proteins Corp. v. Ralston-Purina Co., 744 S.W.2d 932, 934 (Tex.1988) (holding tortfeasor cannot take assignment of plaintiff's claim as part of settlement agreement with plaintiff and prosecute that claim against joint tortfeasor); Trevino v. Turcotte, 564 S.W.2d 682, 690 (Tex.1978) (holding assignment of interests in estate invalid); Zuniga v. Groce, Locke & Hebdon, 878 S.W.2d 313, 316 (Tex.App.-San Antonio 1994, writ ref'd) (holding assignments of legal malpractice claims invalid)). With these concerns in mind, we address the specific complaints asserted by Anglo-Dutch.
First, we note that Anglo-Dutch has not cited us to any authority that agreements that are "champertous in nature" are automatically void or against public policy. See Gandy, 925 S.W.2d at 707. Second, Anglo-Dutch has not presented a compelling argument of how these agreements prey on financially desperate plaintiffs. Instead, at least in this case, it was Anglo-Dutch who solicited appellees' investments after being unable to obtain a conventional loan because it had inadequate collateral. Here, the amount of returns provided to each appellee and the formulas upon which the returns were based varied significantly from agreement to agreement, suggesting that the amount of the returns was bargained for by the parties. Moreover, if Anglo-Dutch was financially desperate, as it alleges, it would have been unable to prosecute the Halliburton lawsuit without the appellees' funding since, as Anglo-Dutch concedes, it could not obtain a conventional loan from a commercial bank. Even Van Dyke testified that the funds advanced by appellees were necessary, in part, so that Anglo-Dutch could continue to operate its business and avoid bankruptcy.
Third, there is no evidence that appellees maintained any control over the Halliburton lawsuit. The agreements do not contain provisions permitting appellees to select counsel, direct trial strategy, or participate in settlement discussions, nor do they permit appellees to look to Anglo-Dutch's trial counsel directly for payment. Thus, the cases cited and the public policy arguments made by Anglo-Dutch are not pertinent to the agreements at issue in this lawsuit.
Fourth, it is not readily apparent that these types of agreements necessarily increase or prolong litigation. It is doubtful that litigation funding agreements, like the ones presented here, in which the investor has no right to repayment unless the plaintiff receives a recovery, serve to increase litigation. Presumably, prior to making an investment pursuant to a similarly structured agreement, an investor would consider the merits of the suit and make a
We overrule Anglo-Dutch's third issue.
Having overruled Anglo-Dutch's first three issues, we necessarily overrule its fourth issue, in which it contends that the trial court erred in awarding appellees attorneys' fees because appellees were not entitled to summary judgment.
We affirm the judgment of the trial court.