Usury Law Not Applicable to Judgment Creditor’s Forebearance Agreement

  In consolidated appeals, and in a lengthy opinion in Bisno v. Kahn, the First Appellate District concludes that California’s usury law does not apply to a judgment creditor’s agreement to forbear collecting on a judgment. Held: “Because the usury law does not expressly prohibit a party from entering into an agreement to forbear collecting on a judgment, usury liability does not extend to judgment creditors who receive remuneration beyond the statutory 10 percent interest rate in exchange for a delay in enforcing a judgment.”

  However, “any forbearance fee does not become part of the judgment and is not an amount that must be paid to satisfy the judgment under the Enforcement of Judgments Law [citation omitted]. Rather, a forbearance agreement is a contract between the judgment creditor and the judgment debtor that is separate from the judgment to which it applies. Consequently, a forbearance agreement must be enforced in a separate contract action and is subject to standard contractual defenses such as duress and unconscionability.”

   Mr. Daymude consults with clients and accepts cases involving California’s usury law and cases to enforcement judgment. For other types of cases accepted, please scroll this page and visit My Practice page. If you are seeking a legal consultation or representation, call Michael Daymude at 818-971-9409.

Civil Code Section 1717: Restrictions on Prevailing Party Fee Awards

  Civil Code section 1717, which authorizes an award of attorney fees to the prevailing party in a contract action, was intended to establish uniform treatment of fee recovery in actions on contracts containing attorney fee provisions and to eliminate distinctions between fee awards based on contract or statute. Thus, restrictive language in a contractual attorney fee provision will not always be given effect as equitable and public policy considerations under section 1717 prevail over technical rules of statutory construction. Continue reading

Petitions to Compel Arbitration and Attorney Fees: The Rules

  Contracts frequently contain a prevailing party attorney fee provision and a provision requiring that any controversy arising under the contract be decided by binding arbitration. Where both parties agree to arbitration there is no tension between these two provisions. The prevailing party and the award of reasonable attorneys fees will be determined by arbitration.

  There can be tension, however, where the parties do not agree that the controversy between them is governed by the contract provision requiring arbitration. In that case a party may file a petition to enforce the arbitration agreement or the party may file a lawsuit. If a party files a lawsuit the defendant may respond with a petition to compel arbitration. If there is a pending action, a petition to compel arbitration must be filed in that action. Continue reading