225 Cal. App. 4th 1087
Cal. Ct. App.2014Background
- Bisno and Coxeter were defendants in a prior Roberts fraud action with judgments imposing 10% postjudgment interest.
- Judgments were followed by forbearance agreements in Aug–Sept 2008, whereby Bisno paid $525,000 total for 30-day delays; fees were separate from the judgments and not credited toward principal or interest.
- Coxeter did not participate in the forbearance agreements; Bisno paid the fees and later moved toward satisfaction of the Roberts judgments.
- Coxeter and Bisno sued, asserting usury liability for the forbearance fees; the trial court granted summary judgment for the plaintiffs and Kahn, denying usury liability; this court consolidated the appeals.
- The court held that California’s usury law does not prohibit forbearance fees in exchange for delaying enforcement of a judgment, because the usury law lacks explicit reference to judgments and forbearance fees are governed by a separate contract, not the Enforcement of Judgments Law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether usury law prohibits judgment-forbearance fees | Bisno: forbearance fees are usurious | Preference plaintiffs/Kahn: forbearance fees are not usury | No usury liability for forbearance fees |
| Whether forbearance fees become part of the judgment or are enforceable under the Enforcement of Judgments Law | Bisno/ Coxeter argue fees must be credited to judgment | Fees are separate contract terms | Forbearance fees are not part of the judgment and not enforceable via the Enforcement of Judgments Law |
| Whether Kahn (as attorney for plaintiffs) can be liable for usury | Kahn as agent may be liable | Kahn acted as plaintiffs’ attorney, not liable personally | Kahn not personally liable for usury as agent; liability limited by statutory framework |
| Remedies and due process around treble damages for usury | Treble damages may be imposed for usury | Treble damages require clear statutory language; potential due process concerns | Usury remedies not clearly extendable to judgment-forbearance fees; treble damages not implied without unambiguous language |
Key Cases Cited
- Ghirardo v. Antonioli, 8 Cal.4th 791 (1994) (usury applies only to loans/forbearances; not to judgments unless statute says so)
- OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp., 168 Cal.App.4th 185 (2008) (constitutional usury provisions and rate-setting distinctions; judgments treated separately)
- Penziner v. West American Finance Co., 10 Cal.2d 160 (1937) (statutory nature of usury liability; rate framework established)
- Haskins v. Jordan, 123 Cal. 157 (1898) (judgment as thing in action; limits on applying common-law theories to usury)
- Westbrook v. Fairchild, 7 Cal.App.4th 889 (1992) (discussion of compound interest and omission in usury initiative provisions)