Judge: Thomas Falls, Case: 22PSCV00559, Date: 2022-10-17 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling. Counsel may submit on the tentative rulings by calling the clerk in Dept. R at 909-802-1117 before 8:30 the morning of the hearing.

Case Number: 22PSCV00559    Hearing Date: October 17, 2022    Dept: R

STEVEN PEREZ vs ARTURO HERNANDEZ, et al. (22PSCV00559)

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Plaintiff’s APPLICATION FOR DEFAULT JUDGMENT

Tentative Ruling

Plaintiff’s APPLICATION FOR DEFAULT JUDGMENT is DENIED without prejudice.

Background

This is a contracts case. Plaintiff Steven Perez (“Plaintiff”) alleges the following against Defendants Arturo Hernandez and Evelyn Hernandez (collectively, “Defendants”): In 2018, Plaintiff loaned Defendants $60,000. Defendants were to repay the loan in 6 months, in addition to $36,000 in interest. To date, Defendants have not paid Plaintiff $96,000. 

On June 9, 2022, Plaintiff filed the instant suit.

On June 9, 2022, Defendants were served via personal service (POS filed on 07/14).

On July 14, 2022, default was entered against Defendants. That same day, Plaintiff filed the instant application for entry of default judgment.

Discussion

Plaintiff seeks entry of default judgment in the total amount of $134,319.10. The break-down is as follows:

Demand of complaint: $96,000

Interest: $38,319.10.

The complaint fails for the following four (4) reasons.

1.      Entity Defendant

First, the contract appears to be between Plaintiff and a company, Primera Avocados. (Complaint, Ex. A.) To the extent that Plaintiff seeks to hold individual Defendants liable, Plaintiff is to provide an explanation.

2.      Usurious Interest Rate

Second, Plaintiff imposed a 10% interest per month.

“‘“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 10% per month, that is unconstitutional.

Therefore, while the contract remains valid, Plaintiff is not entitled to the $36,000 in interest.

3.      No Calculation of Pre-Judgment Interest Rate

Third, Plaintiff has not provided a calculation of its pre-judgment interest.

4.      Incomplete Proposed Order

Fourth, Plaintiff’s proposed order form does not provide the total judgment sought.

All in all, there are significant defects in the application that preclude entry of default judgment.

Conclusion

Based on the foregoing, the application for default judgment is denied without prejudice.