Del Mar v. Caspe

• Decision Date: 16 August 1990
• Docket Number: No. H004243,H004243
• Citation: 222 Cal.App.3d 1316,272 Cal.Rptr. 446
• Parties: Dorothy DEL MAR, Plaintiff and Appellant, v. Dennis G. CASPE, as Executor, etc., Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

Page 446

272 Cal.Rptr. 446

222 Cal.App.3d 1316

Dorothy DEL MAR, Plaintiff and Appellant, v. Dennis G. CASPE, as Executor, etc., Defendant and Appellant.

No. H004243.

Court of Appeal, Sixth District, California.

Aug. 16, 1990.

Robert C. Landry, for plaintiff and appellant, Dorothy Del Mar.

Robert K. Johnson, James A. Kerr, Wyckoff, Richardson, Sanson, Allen & Locke-Paddon, for defendant and appellant, Dennis G. Caspe.

CAPACCIOLI, Associate Justice.

Statement of the Case

Plaintiff Dorothy Del Mar filed an action against defendant Dennis G. Caspe as executor of the estate of decedent Ole Mohus, seeking treble the amount of allegedly usurious interest she paid to the estate on three promissory notes. She now appeals from a judgment entered after the trial court found that the notes were not usurious. On appeal, she claims the notes were usurious.

Defendant cross-appeals from a post-judgment order denying his motion for an award of attorney's fees based on fee provisions in the notes. (Code Civ.Proc., § 904.1, subd. (b).)

We conclude that one of the notes was usurious. We further conclude that it was error to deny fees on the ground the action did not involve the notes. Consequently, we reverse the judgment and remand the matter for further proceedings.

Facts

The facts are essentially undisputed.

Mohus and Del Mar had been personal friends since 1954. At various times from 1975 to 1986, Mohus loaned her money.

In 1982, Mohus retained Caspe, a licensed attorney and real estate broker. He told Caspe about the loans to Del Mar and explained that periodically he would have a new promissory note and deed of trust drawn up and executed. At that time, he presented Caspe with various checks from Del Mar and asked him to figure out the current amount due, calculate the interest on advances, and prepare a new note and deed of trust. Caspe also checked for prior encumbrances on Del Mar's real property and discovered that Mohus had a second deed of trust.

Caspe calculated the balance due of $37,430.84, and prepared the note. It provided a 15 percent interest rate, which, based upon information from lender quotations and industry publications, he determined to be below the market rate for second deeds of trust. The note was payable on August 1, 1982, or upon the sale of Del Mar's residence, the real property securing the note, and it "replace[d] all prior notes between the parties." On March 19, 1982, Mohus, Caspe, and Del Mar met, and Del Mar executed the note.

Between April and August 1982, Mohus made numerous advances to Del Mar, and in September, Mohus instructed Caspe to prepare a new note and trust deed reflecting the advances. Caspe did as he had done before. The new note was for $42,430.84, provided for 15 percent interest, came due on August 1, 1983, or upon sale of Del Mar's residence, and superseded all previous notes. On September 10, 1982, Del Mar executed this note.

Thereafter, at various times until January 1986, Mohus advanced Del Mar additional sums. In January, Caspe had several conversations with Mohus and Del Mar about a new note. Del Mar expected an interest rate of 12 percent, whereas Mohus expected the same 15 percent he had previously received. Caspe negotiated between them, and they eventually agreed to a rate of 13 percent, which was below the market rate. Caspe then prepared the note, including the advances. It was for $80,933.21, provided for 13 percent interest, came due on April 30, 1986, or upon the sale of Del Mar's residence, and superseded all previous notes. Del Mar executed this note on January 30, 1986.

Mohus died before this last note came due. On May 2, 1986, Caspe, executor of Mohus' estate, wrote Del Mar and demanded payment plus interest. Del Mar paid the note in full "under extreme protest."

At all relevant times, Caspe was an attorney licensed to practice in California. Caspe was also a licensed real estate broker from October 1977 to October 1985, and from June 1986 to the date of trial.

Discussion

The Appeal

Del Mar contends that the trial court erred in concluding that because the three notes were "made or arranged" by a licensed real estate broker and/or licensed attorney, they were exempt from the constitutional prohibition against usury. (See Cal. Const., art. XV.)

The Law

Article XV of the California Constitution (hereafter "article XV") provides, among other things, that the maximum allowable rate of interest that may be charged on a loan for "personal, family, or household purposes" is 10 percent per year. ¹ (Cal. Const., art. XV, § 1, subd. (1).)

In the 1979, the Legislature proposed and the electorate enacted Proposition 2, an amendment to article XV. Among other things, Proposition 2 exempted from the interest rate ceiling "any loans made or arranged by any person licensed as a real estate broker by the State of California and secured in whole or in part by liens on real property." (Assem. Const.Amend. No. 52 (Stats. 1979 (Reg.Sess.) Res. ch. 49, pp. 4860-4862.).)

In 1983, the Legislature sought to explain the scope of article XV by adding section 1916.1 to the Civil Code (hereafter "section 1916.1"). (Stats.1983, ch. 307, § 1, p. 899.) As amended in 1985 (Stats.1985, ch. 489, § 1, pp. 1837-1838), section 1916.1 provides in relevant part, "The restrictions upon rates of interest contained in Section 1 of Article XV of the California Constitution shall not apply to any loan or forbearance made or arranged by any person licensed as a real estate broker by the State of California, and secured, directly or collaterally, in whole or in part by liens on real property. For purposes of this section, a loan or forbearance is arranged by a person licensed as a real estate broker when the broker (1) acts for compensation or in expectation of compensation for soliciting, negotiating, or arranging the loan for another.... The term 'made or arranged' includes any loan made by a person licensed as a real estate broker as a principal or as an agent for others, and whether or not the person is acting within the course and scope of such license." ²

The Trial Court's Findings

In its statement of decision, the trial court found that Caspe "did make and arrange" all three loans from Mohus to Del Mar.

The trial court based this finding on the following facts: "(1) Caspe conducted an informal title search by obtaining recorded encumbrances against the Plaintiff's property. [p](2) Caspe reviewed the recorded encumbrances and prior notes and deeds of trust executed by Plaintiff to determine their effect on subject transaction. [p](3) Caspe consulted with the lender, Ole Mohus, and advised the lender, Ole Mohus, of his rights and obligations as well as the potential problem areas of the subject transaction. [p]4. Caspe reviewed the advance clauses contained in the deeds of trust and discussed the effect of the advance clauses with the lender, Ole Mohus, and cautioned the lender, Ole Mohus, about the legal consequences of making advances without a prior signed promissory note. [p]5. Caspe reviewed the checks and other documents evidencing advances made by the lender, Ole Mohus, to the borrower, Plaintiff. [p]6. Caspe calculated the principal amount of the prior loan and the principal amount of future advances. [p]7. Caspe calculated interest on the prior principal amount and calculated interest on future advances. [p]8. Caspe calculated the amount of the new note by totalling the prior principal plus interest on principal plus the amount of the new advances plus interest on the new advances. [p]9. Caspe prepared three promissory notes and two deeds of trust. Caspe secured the January, 1986 note by the January, 1982 deed of trust. [p]10. Caspe discussed the terms of the new notes and deeds of trust with the lender, Ole Mohus, and advised lender how calculation was made. [p]11. Caspe discussed terms of new notes and deeds of trust with borrower (Plaintiff) and advised borrower how principal and interest on notes was calculated. [p]12. Caspe obtained borrower's signature on new notes and deeds of trust. [p]13. Caspe notarized deeds of trust. [p]14. Caspe caused deeds of trust to be recorded. [p]15. Caspe negotiated interest on January, 1986 loan with borrower and lender. [p]16. Caspe calculated and collected payoff of January, 1986 note (i.e. calculated amount of principal and interest due for payoff of January, 1986 note and made demand on escrow holder). [p]17. Caspe charged a fee for his services in making and arranging the loans."

Del Mar does not claim that these preliminary factual findings are not supported by substantial evidence. Rather, she challenges the court's conclusion that these acts constitute "making" or "arranging" a loan within the meaning of article XV and section 1916.1. She argues that they are insufficient as a matter of law.

The Standard of Review

"In usury cases the trier of fact is vested with the power to resolve many issues attending and including the ultimate question of whether a particular transaction is usurious." (Stickel v. Harris, supra, 196 Cal.App.3d 575, 584, 242 Cal.Rptr. 88.) This power includes the determination as to whether a particular loan was "made or arranged" by a licensed real estate broker. (Ibid.) Our task on appeal is merely to view all factual matters in favor of the prevailing party and in support of the judgment, disregarding evidence to the contrary, and decide whether there is any substantial evidence, contradicted or uncontradicted, to support the findings and conclusions of the trier of fact. (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925, 101 Cal.Rptr. 568, 496 P.2d 480; Estate of Teel (1944) 25 Cal.2d 520, 527, 154 P.2d 384; Stickel v. Harris, supra, 196 Cal.App.3d 575, 584, 242 Cal.Rptr. 88; Louis & Diederich, Inc. v. Cambridge European Imports, Inc. (1987) 189 Cal.App.3d 1574, 1584, 234 Cal.Rptr. 889.)

The Meaning of "Made or Arranged"

In this case, we agree with Del Mar that the evidence of...