Article by Victoria Holstein-Childress
Modern public policy objectives of champerty law in both common and civil law jurisdictions include the prevention of predatory speculation in litigation and attendant abuses of judicial process that undermine judicial economy, fairness, and integrity. This Article offers a comprehensive analysis of the enforceability of the most controversial modern champertous contract, the Mary Carter settlement agreement, under the Louisiana Civil Code. Under a Mary Carter agreement, one defendant in a multidefendant tort suit guarantees the tort victim a minimum recovery up front and agrees to remain a party to the lawsuit in exchange for an offset to be satisfied by a percentage of any award recovered at trial from the nonsettling defendants.
This Article contends that such agreements constitute an absolute nullity under Louisiana law. Highlighting the flawed methodology employed by Louisiana intermediate appellate courts in upholding Mary Carter agreements, this Article calls for a return to the Louisiana Civil Code as a source of guiding principles. This Article demonstrates that such courts have disregarded fundamental public policy considerations embodied in the Louisiana Code that are the same as those that compelled the state supreme courts of Texas, Florida, and Nevada to declare such contracts void. This Article reveals that, by ensuring litigation in lieu of settlement, skewing trial proceedings, and undermining the deterrent effect of tort damages by interfering with their legislatively prescribed allocation, Mary Carter settlement agreements contravene Louisiana's public policy goals underlying its code articles governing the sale of litigious rights, transactions or compromises, and comparative fault.
About the Author
Victoria Holstein-Childress. Associate, The O'Neil Group, New Orleans, Louisiana; A.B. 1993, Brown University; J.D. 2002, Tulane Law School.
Citation
77 Tul. L. Rev. 885 (2003)