Judge: Christian R. Gullon, Case: 23PSCV01785, Date: 2023-11-07 Tentative Ruling

Case Number: 23PSCV01785    Hearing Date: November 7, 2023    Dept: O

Tentative Ruling

Plaintiff’s Application for Default Judgment is DENIED without prejudice due to usurious interest.

Background

This arises from the breaches of Equipment Finance Agreements (“Agreements”).

On June 15, 2023, Plaintiff PAWNEE LEASING CORPORATION filed suit against Defendants LITTLE FAT TRUCKING, a CALIFORNIA CORPORATION dba LITTLE FAT TRUCKING; XING WANG.

On October 11, 2023, default was entered against defendants. That same day, Plaintiff filed the instant application.

Discussion

The only defect noted is usurious interest. Plaintiff seeks interest at a rate of 24.0% per annum for two of the agreements and 18.0% per annum on the other agreement.

“‘“Usury is the exacting, taking or receiving of a greater rate than is allowed by law, for the use or loan of money.” [Citation.] A transaction is usurious if there is a loan at greater than the legal rate of interest or an exaction at more than the legal rate for the forbearance of a debt or sum of money due. [Citation.]’ [Citation.] 

“California Constitution, article XV, section 1 limits the interest rate for a ‘loan or forbearance’ of money not primarily for personal, family or household purposes, to the higher of: (1) 10 percent per annum or (2) 5 percent plus the rate of interest prevailing on the 25th day of the month preceding the earlier of the date of the extension of the contract to make the loan or forbearance or the date of making the loan or forbearance, established by the Federal Reserve Bank of San Francisco on advances to member banks under sections 13 and 13(1) of the Federal Reserve Act. [Citation.]” [Citations.] 

“‘When a loan is usurious, the creditor is entitled to repayment of the principal sum only. He is entitled to no interest whatsoever. [Citations.]’ [Citation.]” [Citation.] “The attempt to exact the usurious rate of interest renders the interest provisions of a note void. [Citations.]” [Citation.]” (Hardwick v. Wilcox¿(2017) 11 Cal.App.5th 975, 978–979) (emphasis and underline added). “Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in party, the contract is void as to the latter and valid as to the rest.” (MKB Management, Inc. v. Melikian (2010) 184 Cal.App.4th 796, 803 (quoting Civil Code § 1599).) “If, on the other hand, a contract has only a single object and that object is unlawful, in whole or in part, the entire contract is void.” (Id. (citing Civil Code § 1598).) 

Here, as Plaintiff is seeking more than 10% interest, the interest is usurious.

Conclusion

Based on the foregoing, the application is denied without prejudice.