On November 17, 2015 (DCX 50 at 294), LFC sued Respondent in the Superior Court of the District of Columbia.

On May 11, 2016, Respondent filed a motion (DCX 52) pursuant to D.C. Super. Ct. Civ. R. 12(b)(6) to dismiss LFC’s suit for failing to state a claim on which relief could be granted, on the ground that the Loan Agreements allegedly violated Rule 5.4(a) of the District of Columbia’s Rules of Professional Conduct and were therefore unenforceable. DCX 52 at 302. Respondent’s motion argued that ̶ although neither the District of Columbia Court of Appeals nor the Utah Supreme Court had squarely addressed the issue (DCX 52 at 306) ̶ because of the Utah choice of law clause in the Loan Agreements (FF ¶ 50) and the existence of a 1997 Utah legal ethics opinion (DCX 52 at 311-12) deeming a non-recourse loan to an attorney made on the security of the attorney’s fee interest in a contingent fee case to be a violation of Rule 5.4(a) of the Utah Rules of Professional Conduct, the Loan Agreements were void as against the public policy of the District of Columbia (DCX 52 at 303-07).

On July 25, 2016, Judge Di Toro of the Superior Court of the District of Columbia denied Respondent’s motion to dismiss. DCX 53. Inter alia, Judge Di Toro’s decision stated the gross amount of the recovery in the Hedgepeth case,26 and that “[LFC] agreed to finance [Respondent’s] litigation of several personal injury lawsuits” (DCX 53 at 313). Judge Di Toro ruled:

(a) Under Utah’s substantive law, a contract can be voided on grounds of public policy only when “an established public policy ‘has been expressed in either constitutional or statutory provisions or the common law'” (DCX 53 at 318 (quoting Penunuri v. Sundance Partners, Ltd., 301 P.3d 984, 991 (Utah 2013)), and “courts have a ‘duty to employ any reasonable construction to declare contracts lawful and not in contravention of public welfare'” (id. (quoting Ockey v. Lehmer, 189 P.3d 51, 57 (Utah 2008)).

(b) “[A]llowing an attorney to use his own breach of ethical rules as a procedural weapon to void his contract obligations would appear to violate public interest.” DCX 53 at 319.