96 Blooming Terrace No. 1, LLC , 446 P.3d 834 ( 2017 )

COLORADO COURT OF APPEALS 2017COA72
Court of Appeals No. 16CA1096
City and County of Denver District Court No. 16CV31461
Honorable J. Eric Elliff, Judge
Blooming Terrace No. 1, LLC,
Plaintiff-Appellant,
v.
KH Blake Street, LLC; and Kresher Holdings, LLC,
Defendants-Appellees.
JUDGMENT AFFIRMED AND CASE
REMANDED WITH DIRECTIONS
Division I
Opinion by JUDGE GRAHAM
Taubman, J., concurs
Navarro, J., dissents
Announced May 18, 2017
Reilly Pozner LLP, John M. McHugh, Denver, Colorado, for Plaintiff-Appellant
Moye White LLP, David A. Laird, Jason D. Hermele, Denver, Colorado, for
Defendants-Appellees
¶1 When a borrower obtained a large bridge loan to purchase
commercial real estate and defaulted, it agreed to pay forbearance
fees and related charges. It paid off the loan in full and then sued
the lender for usury. Blooming Terrace No. 1 LLC (Borrower) now
appeals from the district court’s order granting the motion to
dismiss filed by KH Blake Street, LLC and Kresher Holdings, LLC
(referred to collectively as Lender). Borrower also appeals the
district court’s award of attorney fees to Lender. We affirm.
I. Background
¶2 The bridge financing took place in April 2013. As set forth in
Borrower’s complaint, Lender loaned $11,000,000 for an origination
fee of $220,000. The loan was secured by a deed of trust and
memorialized by a promissory note (Note) that contained an accrual
interest rate of eleven percent per annum, a default interest rate of
twenty-one percent per annum, a five percent late charge on any
late monthly payments, and a $110,000 exit fee. Under the Note,
Borrower was required to pay a monthly interest payment
calculated at the rate of eight percent per annum (based on a 360-
1
day year),1 but none of the monthly payments applied to the
principal. The Note matured on May 1, 2014.
¶3 Borrower defaulted on the Note in April 2014. Lender sent
Borrower notices of default on April 2 and again on April 17, 2014.
On April 22, 2014, the parties executed a forbearance agreement
whereby Lender agreed to forbear until May 1, 2014, from
foreclosing on the deed of trust in exchange for a $110,000
forbearance fee plus continued accruing default interest, late
charges, and certain additional fees.2 At the time the parties
executed the forbearance agreement, the amount of interest
(including default interest), late charges, exit fee, and estimated
legal fees then outstanding was $778,583.33.
¶4 The loan was not paid by May 1, 2014. The parties then
amended the forbearance agreement on May 13, 2014, whereby
Borrower agreed to pay Lender a total forbearance fee of $220,000
to extend its obligation to repay the loan until 1 p.m. on May 16,
1 For example, for a 30-day month, the payment would be
$73,333.33 (($11,000,000 x .08 = 880,000)/360 = $2444.44 per day
x 30 days = 73,333.33).
2 Some of these additional fees were attorney fees and costs
associated with enforcing the Note. Borrower did not itemize those
fees in the complaint and does not identify them in its brief.
2
2014. On May 15, Borrower paid off the loan including all
outstanding interest, fees, and costs. Borrower does not identify
the exact amount of payoff in its complaint.
¶5 Borrower sued Lender claiming the fees, interest, costs, and
expenses payable “for the forbearance period and the amended
forbearance period” exceeded the forty-five percent per annum
interest allowable under Colorado’s usury law, section 5-12-103,
C.R.S. 2016. However, Borrower’s first claim for relief incorporates
all prior allegations in the complaint and those allegations include
the entirety of the loan transaction, not just the forbearance period.
Borrower also brought a claim for unjust enrichment based on the
usury allegation.
¶6 Lender filed a C.R.C.P. 12(b)(5) motion to dismiss, arguing that
the loan fees charged did not constitute interest above the
maximum allowable rate. The district court agreed, concluding that
the effective rate of interest for the loan was 12.924 percent based
on the total amount of interest charged during the life of the loan.3
3The district court computed $1,507,333.5 in total interest
payments over the life of the loan (387 days) and then converted the
daily rate to a per annum rate applied against the principal amount
3
Because the interest was not usurious, the court dismissed the
complaint in its entirety.
¶7 Lender then sought attorney fees pursuant to Section 14.c of
the Note, which required Borrower to reimburse Lender “for any
costs, including but not limited to, reasonable attorneys’ fees . . .
incurred in . . . pursuing or defending any litigation based on,
arising from, or related to any Loan Document.” The district court
awarded attorney fees to Lender in the amount of $15,407.20.4
II. Usury
A. Standard of Review
¶8 We review de novo a district court’s grant of a motion to
dismiss. Miller v. Bank of N.Y. Mellon, 2016 COA 95, ¶ 15.
¶9 A motion to dismiss under C.R.C.P. 12(b)(5) for failure to state
a claim tests the formal sufficiency of a plaintiff’s complaint. Dwyer
v. State, 2015 CO 58, ¶ 43. To survive summary dismissal for
failure to state a claim under C.R.C.P. 12(b)(5), a party must plead
sufficient facts that, if taken as true, suggest plausible grounds to
of the loan (($1,507,333.53/387 = 3,894.919/day) x 365 =
1,421,645.32/year)/$11,000,000 = .12924 x 100 = 12.924%.
4 The court also awarded costs in the amount of $244.31 to Lender.
Borrower does not appeal the costs award.
4
support a claim for relief. Warne v. Hall, 2016 CO 50, ¶ 24
(adopting a heightened standard of pleading in Colorado that
requires a complaint to allege plausible grounds for relief, not
merely speculative grounds). In reviewing a trial court’s ruling on a
C.R.C.P. 12(b)(5) motion, we accept the material factual allegations
in the complaint as true and view them in the light most favorable
to the nonmoving party. Id.
B. Usury Statute
¶ 10 Interest is compensation for the use, detention, or forbearance
of money or its equivalent. Stone v. Currigan, 138 Colo. 442, 445,
334 P.2d 740, 741 (1959). “If there is no agreement or provision of
law for a different rate, the interest on money shall be at the rate of
eight percent per annum, compounded annually.” § 5-12-101,
C.R.S. 2016.
¶ 11 Under section 5-12-103(1), “[t]he parties to any . . . promissory
note . . . may stipulate therein for the payment of a greater or
higher rate of interest than eight percent per annum, but not
exceeding forty-five percent per annum, and any such stipulation
may be enforced in any court of competent jurisdiction in the state.”
5
The rate of interest shall be deemed to be
excessive of the limit under this section only if
it could have been determined at the time of
the stipulation by mathematical computation
that such rate would exceed an annual rate of
forty-five percent when the rate of interest was
calculated on the unpaid balances of the debt
on the assumption that the debt is to be paid
according to its terms and will not be paid
before the end of the agreed term.
Id.
C. Dikeou v. Dikeou
¶ 12 In 1996, the Colorado Supreme Court decided Dikeou v.
Dikeou, 928 P.2d 1286 (Colo. 1996). Dikeou addressed whether a
late payment charge in a nonconsumer loan was interest or an
unenforceable penalty under Perino v. Jarvis, 135 Colo. 393, 312
P.2d 108 (1957).
¶ 13 In Dikeou, a creditor loaned $900,000 secured by a promissory
note in which the debtor agreed to pay interest of $9,750 per
month, or 13% per annum, with the entire principal due and
payable in a balloon payment on the note’s maturity date. 928 P.2d
at 1287. The note provided that late payment charges in the
amount of $700 per day would accrue on payments more than one
day late. Id. The debtor failed to make numerous payments, and
6
ultimately the creditor demanded payment of both the note in full
and the late charges, calculated at a rate of $413.33 per day. Id.
The creditor filed suit to enforce the note, and while the district
court entered judgment in the creditor’s favor on the principal
amount of the note, the district court “refused to enforce the daily
late charge provision based on its conclusion that the late charges
bore ‘no relationship . . . to any possible damage’ that the creditor
might have suffered due to the debtor’s failure to repay the note
according to its terms.” Id. at 1287-88. The court of appeals
affirmed and the supreme court reversed, concluding that a default
interest rate is enforceable and reasonable when it is less than
forty-five percent.
¶ 14 Dikeou first concluded that late charges were interest for
purposes of the usury statute. Id. at 1293. The supreme court also
interpreted the usury statute to require that a default interest rate
or late charge be applied retrospectively in order to avoid the literal
reading of the statute. The statute’s provision that a “rate of
interest shall . . . be excessive . . . only if it could have been
determined at the time of the stipulation . . . that such rate would
exceed an annual rate of forty-five percent . . . on the unpaid
7
balances” would seem to require that the interest rate could only be
computed by looking forward from the date of the agreement. § 5-
12-103(1). According to the supreme court, however, this would be
an absurd result because the effective rate of default interest can
never be computed at the outset. Obviously, no one could
anticipate the length of a default and the amount of late fees at the
outset of a loan when all parties anticipate timely payments. The
supreme court therefore held that for nonconsumer loans, “the
applied per annum rate [of default interest], when added to the
initial rate charged on the outstanding principal” must be less than
forty-five percent. Dikeou, 928 P.2d at 1295 (emphasis added). The
court also concluded that “an effective interest rate is
retrospectively computed after all forms of interest charges have
been assessed.” Id. at 1294-95 (emphasis added). Dikeou does not
use the term “annualized.” It does, however, offer a partial
mathematical computation that appears to annualize the late
charge it was considering. Nevertheless, the mathematical
computation does not exactly track the Dikeou court’s explanation
that “an applied rate of interest that is under 45% is reasonable.”
Id. at 1295 (emphasis added).
8
¶ 15 Unfortunately, Dikeou’s interchangeable use of several terms
makes the application of the usury statute in this case difficult.
Indeed, the parties here could not agree at oral argument how it
should be applied and provided no less than three ways it might be
applied to the current circumstances. The difficulty arises from
Borrower’s contention that the charges during the forbearance
period should be annualized.5 By annualizing, Borrower computes
a daily charge during the forbearance period and then treats that
charge as though it was applied from the outset, during the entirety
of the loan. By annualizing the charges during the twenty-four-day
forbearance period, an interest charge of over 60% can be
computed.
5 Adding to the complexity is the parties’ disagreement over how
many extensions of credit were involved in the loan, with Borrower
taking the position that there were three (the loan, and each of the
forbearance periods) and Lender suggesting there could be one or
two (the loan and the forbearance periods combined or the loan and
one forbearance period). We believe, as the district court must have
assumed, that there was one extension of credit, modified to allow a
late payment. See § 5-12-103(2), C.R.S. 2016 (“‘[I]nterest’ as used
in this section means the sum of all charges payable directly or
indirectly by a debtor and imposed directly or indirectly by a lender
as an incident to or as a condition of the extension of credit to the
debtor . . . .”) (emphasis added).
9
¶ 16 But applying Dikeou’s ruling that an effective rate of interest
should be applied to all charges retrospectively does not appear to
require that we annualize the charges in the forbearance period in
this case.
D. Application of Interest
¶ 17 In this case, Borrower urges us to annualize the forbearance
charges. In doing so, we would be required to compute a daily rate
during the forbearance period and then apply that daily rate to the
entire lending period of the loan, treating the daily charge as though
it had been charged to Borrower every day for over one year. In
other words, Borrower would seek to add all charges during the
forbearance period (yielding a daily charge of $15,495 each day for
the twenty-four-day forbearance period) and then annualize that
amount by treating it as though it had been charged on an annual
basis for the entirety of the lending period (387 days multiplied by
$15,495 = $5,996,565).
¶ 18 In sharp contrast to this application of interest, the district
court measured the interest charged on a purely per annum rate
based on the entire amount of interest charged over the life of the
10
loan (387 days) without using a daily rate for the forbearance
period.
¶ 19 Section 5-12-103 and our understanding of Dikeou require
that we determine whether the effective interest rate is usurious by
retrospectively applying it to the entire principal over the life of the
loan. Borrower’s computation would treat the actual interest
charged as though it had been charged at the same rate for the
entire period of the loan. In our view, that would not accurately
reflect the rate of interest charged during the forbearance period
nor would it accurately apply a per annum rate retrospectively.
¶ 20 Based upon the complaint and the exhibits attached to it, we
conclude that, although the district court did not accurately apply
all of the charges as contemplated by Dikeou, its conclusion that
the interest charges were not usurious was nevertheless correct and
the complaint failed on its face to allege a claim for which relief
could be granted under the usury statute.6 See People v. Chase,
2013 COA 27, ¶ 17 (“[W]e may affirm a trial court’s ruling on
6 Consequently, the unjust enrichment claim fails as well.
11
grounds different from those employed by that court, as long as
they are supported by the record.”).
¶ 21 Here, the record and the allegations of the complaint establish
the following amounts of interest, default interest, and forbearances
charges paid by Borrower on the $11,000,000 principal loan:
 $220,000 origination fee;
 $220,000 total forbearance fee;
 $110,000 exit fee;
 $1,200,000 per annum interest at 11%;
 $90,410.95 default interest to May 1, 2014;
 $96,250 default interest for May 2014; and
 $366.66 5% late fee on April payment.
Total interest and related charges amounted to $1,937,027.61.
¶ 22 On an applied per annum basis, these charges amount to an
interest rate of 17.60%.7
7 We recognize that the district court found total interest and
charges to be a smaller number and calculated a per annum
applied interest rate of 12.924%. Based upon our review of the
complaint, the Note, and the forbearance agreements, we conclude
that the district court overlooked some of the charges. But this
difference does not alter the district court’s correct conclusion that
the Note and forbearance agreements were not usurious.
12
¶ 23 Of course, the difference between our calculation and
Borrower’s is that Borrower seeks to annualize the forbearance fees
over the entire loan period, effectively applying them at fifteen times
their applied rate rather than on a per annum basis. We decline
the invitation to apply the fees on any basis other than a per
annum basis. See Dikeou, 928 P.2d at 1294-95.
III. Attorney Fees
A. Contractual Fee Shifting
¶ 24 Borrower next contends the district court erred in granting
attorney fees under the terms of the Note. We disagree.
¶ 25 We review a district court’s interpretation of a contractual fee-
shifting provision de novo. S. Colo. Orthopaedic Clinic Sports Med. &
Arthritis Surgeons, P.C. v. Weinstein, 2014 COA 171, ¶ 8. We review
an award of attorney fees and costs for an abuse of discretion. Id.
¶ 26 Colorado courts follow the American rule, which requires
parties to a lawsuit to pay their own legal expenses. Id. at ¶ 10. An
exception to this rule occurs when the parties agree in a contract
clause (often known as a fee-shifting provision) that the prevailing
party will be entitled to recover its attorney fees and costs. Id.
13
¶ 27 The Note states that “[i]mmediately upon Lender’s demand,
Borrower shall reimburse Lender for any costs, including but not
limited to, reasonable attorneys’ fees . . . incurred in . . . pursing or
defending any litigation based on, arising from, or related to any
Loan Document.” Neither forbearance agreement contains a similar
fee-shifting provision.
¶ 28 The Note defines “Loan Documents” as “[t]his Note and all
other documents now or hereafter evidencing, securing, or relating
to the Loan or any subsequent modification of the Loan” and
specifies that the list of Loan Documents includes, but is not
limited to, the deed of trust, security agreement, and fixture filing;
assignment of leases and rents; continuing unlimited guarantee by
guarantor; an environmental indemnity agreement; Borrower’s
closing affidavit; and UCC-1 financing statements.
¶ 29 The district court concluded that Lender was entitled to
attorney fees because (1) both forbearance agreements were Loan
Documents because they were “documents . . . relating to the
Loan”; and (2) even if the forbearance agreements were not Loan
Documents, the litigation in the case was “related to” the Note — a
Loan Document as defined in the Note.
14
¶ 30 Assuming without deciding that Borrower is correct in arguing
that the forbearance agreements were not Loan Documents under
the terms of the Note because the forbearance agreements expressly
restrict the term Loan Documents to documents enumerated in the
Note,8 we discern no error in the district court’s conclusion that this
litigation was “related to” a Loan Document entitling Lender to
attorney fees.
¶ 31 Borrower’s argument that because the forbearance agreements
were not Loan Documents, the litigation regarding those
agreements is not related to any Loan Document is unavailing. The
term “related” is defined as “connected by reason of an established
or discoverable relation.” Webster’s Third New International
Dictionary 1916 (2002). “We should give an unambiguous fee-
shifting provision its plain and ordinary meaning, and we should
interpret it in a ‘common sense manner.’” Weinstein, ¶ 11 (quoting
8 The original forbearance agreement contained a section titled
“Loan Documents; No Merger,” which appears to exclude the
forbearance agreement from the Note’s defined Loan Documents.
The forbearance agreement also contains a provision that “[i]n the
event of any inconsistency between the provisions of this Agreement
and the Loan Documents, the provisions of this Agreement shall
control.”
15
Morris v. Belfor USA Grp., Inc., 201 P.3d 1253, 1259 (Colo. App.
2008)).
¶ 32 This litigation concerns the amount of interest charged by
Lender under the terms of both the Note and the forbearance
agreements. Indeed, under Dikeou, it is necessary to know the
initial base interest rate in the Note to reach a conclusion regarding
whether the agreement is usurious. 928 P.2d at 1295. Thus, there
was no error in the district court’s conclusion that this litigation
“related to” the Note and was, therefore, subject to the fee-shifting
provision in the Note.
B. Reasonableness of Fees
¶ 33 Borrower further contends that the district court abused its
discretion in calculating the amount of fees awardable to Lender.
We reject this contention.
¶ 34 We afford the district court considerable discretion in
determining the reasonableness of attorney fees. Weinstein, ¶ 23.
In doing so, courts first calculate a lodestar amount. Payan v. Nash
Finch Co., 2012 COA 135M, ¶ 18. “The lodestar amount represents
the number of hours reasonably expended on the case, multiplied
by a reasonable hourly rate.” Id. The district court then has
16
discretion to make upward or downward adjustments to the
lodestar amount based on factors set forth in Colo. RPC 1.5(a).
Weinstein, ¶ 24.
¶ 35 After careful review, the district court awarded Lender
$15,407.20 in fees. The court considered Borrower’s arguments
that (1) there was no breakdown of what work was done for Lender
and for Lender’s affiliate; (2) Lender failed to prove the fees were
reasonable; (3) counsel provided inadequate explanation for entries;
(4) counsel included improper block billing; (5) counsel failed to
exercise billing judgment; and (6) counsel’s fees were excessive.
Our review of the record convinces us that the court rejected each
of these contentions after careful consideration and that the district
court’s ultimate conclusion to award fees was not an abuse of
discretion. Regarding apportionment, the district court found, with
support, that all the fees were incurred by KH Blake Street on
behalf of its affiliate.
¶ 36 Nor are we persuaded by Borrower’s argument on appeal that
the court placed the burden on it to show Lender’s attorney fees
were unreasonable. The court in fact accepted Borrower’s
argument on reasonableness, concluding the court was “unable to
17
judge the reasonableness of the requested fees based on the
information provided,” and thus reduced the amount of requested
fees.
¶ 37 Accordingly, we do not disturb the district court’s findings on
fees and costs.
IV. Appellate Attorney Fees
¶ 38 Pursuant to Section 14.c of the Note, Lender is entitled to
appellate attorney fees. Pursuant to C.A.R. 39.1, we exercise our
discretion and remand to the district court to determine the amount
of reasonable attorney fees to be awarded to Lender.
V. Conclusion
¶ 39 The judgment is affirmed, and the case is remanded to the
district court for a determination of reasonable appellate attorney
fees.
JUDGE TAUBMAN concurs.
JUDGE NAVARRO dissents.
18
JUDGE NAVARRO, dissenting.
¶ 40 Everyone agrees that Dikeou v. Dikeou, 928 P.2d 1286 (Colo.
1996), controls the question presented in this case — did Lender
charge Borrower usurious interest? But almost no one agrees on
how to apply Dikeou to this case in order to determine whether the
effective interest rate that Lender charged during the forbearance
period was usurious. The parties disagree with each other. On
appeal, both parties disagree with the district court’s calculation.
The majority disagrees with both parties’ calculations as well as the
district court’s. Likewise, I disagree with everyone else’s
calculation. Perhaps this case presents a good opportunity for the
supreme court to clarify Dikeou.
¶ 41 For my part, I cannot reconcile the majority’s computation of
the effective interest rate with the supreme court’s calculation in
Dikeou itself. So, I respectfully dissent.
¶ 42 The majority accurately discusses the facts of Dikeou, and I
will not repeat them here. Based on those facts, the supreme court
decided that the flat daily rate of late fees imposed upon default
constituted default interest under the usury statute, section 5-12-
103, C.R.S. 2016. See id. at 1293. The court then held that, for
19
nonconsumer loans like the one at issue in Dikeou, “a default
interest rate is . . . reasonable and enforceable so long as the
applied per annum rate, when added to the initial rate charged on
the outstanding principal, is less than 45% of the unpaid principal
balance at the time of the default.” Id. at 1295 (emphasis added).
The court decided that the applied per annum rate imposed by the
late fee there was 31.9%. When this rate was added to the initial
rate of 13%, the total effective rate during the default period
equaled 44.9%, just a hair under the statutory barrier (the
creditor’s selection of the daily late fee amount was not
coincidental). Id.
¶ 43 The majority reasons that Dikeou’s use of various phrases
interchangeably (e.g., “per annum” and “applied rate of interest”)
makes application of the usury statute to this case difficult.
Assuming that is so, the best way to resolve this difficulty — to
determine what the supreme court meant by “the applied per
annum rate” — is to examine how the court actually applied that
key phrase in Dikeou.
¶ 44 The supreme court did not show all its mathematical work in
Dikeou, but we can easily deduce its calculations from the numbers
20
the court gave us.1 To compute the applied per annum rate of
default interest, the supreme court started with the interest charged
per day during the period of default: the $413.33 late fee. Id. To
translate the daily rate into a “per annum” rate, the court multiplied
it by 365 days to arrive at $150,865.45. The court then divided
that amount by $472,764.45, the total unpaid balance at the time
of default, to arrive at a default interest rate of 31.9%. Adding that
default interest rate to the original interest rate of 13% resulted in a
total effective rate of 44.9%. See id.
¶ 45 I apply the same analysis here. (Because they are sufficient to
show a violation of the usury statute — and thus sufficient to defeat
Lender’s motion to dismiss — I consider only the forbearance fee
and the interest imposed by the original loan document during the
forbearance period, not any other fee.) The total forbearance period
covered 24.5 days; on this point I agree with both the majority and
Lender. The total forbearance fee was $220,000, which converts to
1 The supreme court identified the daily late fee ($413.33), the
unpaid balance of the loan at the time of default ($472,764.45), the
resulting default interest rate (31.9%), the initial interest rate (13%),
and total effective rate during the default period (44.9%). Dikeou v.
Dikeou, 928 P.2d 1286, 1295 (Colo. 1996).
21
$8979.59 per day (220,000 ÷ 24.5). Following Dikeou, I compute
the per annum rate by multiplying the daily rate by 365 to arrive at
$3,277,551.02. Dividing that number by the unpaid principal
balance at the time of default ($11,000,000) results in a default
interest rate of 29.8%. I cannot stop there, though, because the
Dikeou court was quite clear that we must add this default interest
rate to the interest rate the original loan document applied to the
unpaid principal during the same forbearance period: 21%. (Here
again, I accept Lender’s calculation of the interest rate imposed by
the original loan document after a default.) So, the total effective
interest rate during the forbearance period was at least 50.8%,
which violated the usury statute.
¶ 46 Notably, on appeal Lender calculates the default interest rate
imposed by the forbearance agreement in the same way I do (i.e.,
using the Dikeou method), and Lender arrives at the same figure:
29.8%. But Lender declines to add that number to the 21% interest
imposed by the original loan document upon default. As explained,
however, Dikeou requires us to combine these interest rates to
determine the effective rate applied to the unpaid loan balance
during the forbearance period. Id. Dikeou explained that this
22
effective interest rate must be “computed after all forms of interest
charges have been assessed.” Id. at 1294-95. After all, Lender
charged both the 21% interest and the 29.8% interest on the same
unpaid balance ($11,000,000) during the forbearance period.
¶ 47 Lender suggests on appeal that the original loan document
and forbearance agreement might be two entirely separate
extensions of credit. But I agree with the majority and the district
court that “there was one extension of credit, modified to allow a
late payment.” Supra ¶ 15 n.5 (majority opinion). The forbearance
fee was akin to the late charge in Dikeou, which constituted “a
condition of extending credit after the initial default” and
“compensate[d] the creditor for the increased risk and expense of
lending money [the creditor] incurred when extending credit to a
debtor who already had failed to make timely payments.” Dikeou,
928 P.2d at 1290.
¶ 48 Indeed, Lender argued in its motion to dismiss in the district
court that this case concerns only one extension of credit. Lender
explained that “all of the charges paid by [Borrower] (including the
Forbearance Fees) were tied to the extension of $11,000,000 in
credit to [Borrower]. Accordingly, all of the charges paid
23
(Forbearance Fees included) were part and parcel of the
$11,000,000 Loan.” Although Lender seems to retreat from this
position on appeal, Lender ultimately agreed at oral argument that
it would be fair to characterize the original loan and the forbearance
as one extension of credit.
¶ 49 As a result, we must add the 21% interest imposed by the
original loan document upon default to the 29.8% default interest
imposed by the forbearance agreement. Because the total effective
interest rate of 50.8% during the forbearance period violated the
usury statute, I would reverse the judgment dismissing Borrower’s
claims and reverse the order awarding attorney fees to Lender.
¶ 50 In light of my analysis, I necessarily dissent from the
majority’s award of appellate attorney fees to Lender.
24