Ohio Farm Bureau Federation, Inc. v. Amos

In Ohio Farm Bureau Federation, Inc. v. Amos, Ashland App. No. 04-COA-020, 2004 Ohio 4767, the Court addressed the issues of champerty and maintenance. In such case, appellee Ohio Farm Bureau loaned the appellants, who were farmers, money to support their peat mining operations while the farmers challenged environmental restrictions. The parties executed a loan agreement, mortgage note and mortgage. After the appellants failed to make any payments on the loan, appellee Ohio Farm Bureau filed a complaint for foreclosure, alleging that it had advanced over $ 500,000.00 to the appellants. After the trial court awarded summary judgment to appellee Ohio Farm Bureau, the appellants appealed, arguing, in part, that the entire transaction was illegal and unenforceable under the doctrines of champerty or maintenance. However, this Court held that the agreement was not a maintenance contract or a champerty contract. In so holding, this Court stated, in relevant part, as follows: "Appellants argue Farm Bureau selected the law firm, and maintained control over the legal action. Pursuant to the contract, Farm Bureau would not advance any additional retainer beyond the $ 25,000.00 without appellants' written approval, but the contract required the approval not be unreasonably withheld. In addition, appellants agreed they would not settle or dismiss their case without first consulting the Farm Bureau. "Appellants argue it was illegal for the Farm Bureau to advance funds to initiate a lawsuit and to keep appellants' business afloat. "Farm Bureau replies the agreement between the parties does not constitute Maintenance or Champerty because appellants were obligated to repay the loan regardless of the outcome of the case. Had the contract made repayment of the advanced funds contingent on the outcome of the case, or based upon a percentage of the proceeds, then the contract would be illegal. The contract provides the parties could 'review all options available' to reduce the negative impact on appellants if their lawsuit yields no monetary judgment or a judgment insufficient to repay the loan, but, it does not make repayment of the loan contingent upon the success of the lawsuit or the amount of the repayment contingent upon the size of the recovery. "We find the agreement between the parties is not a Maintenance contract or a Champerty contract, and is not void as a matter of law." Id. at paragraphs 31-34.