Lexfund Inc. sought summary judgment against multiple defendants, including former clients and the estate of their lawyer, Lucio Anthony Ferro, for repayment of litigation loans.
The loans, designed to finance personal injury actions, were structured with high compound interest and a condition of no repayment if the civil action was unsuccessful.
The defendants argued Lexfund failed to comply with the Consumer Protection Act's disclosure requirements, specifically regarding timely and adequate information provided directly to borrowers.
The court found Lexfund in flagrant breach of the Act, noting that loan documents were signed in blank, completed documents were not sent to borrowers, and loan statements were misleading by showing periodic advances instead of a single lump sum.
Consequently, the court dismissed Lexfund's claim for compound interest, finding actual prejudice to the borrowers.
However, recognizing the borrowers benefited from the loans, the court ordered them to repay the principal with simple interest at 5% per annum.
Judgment was also granted against the Ferro defendants for the cumulative amount owing.