Crowder et al v. Kaufman et al

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INFORMATION

GPO

Entered on Docket
May 12, 2008

GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Inte
CHARELL CROWDER, No. 07-10848
Debion(s).

JEFFRY LOCKE, Trustee, et al.,

Plaintiff(s),
V. A.P. No. 07-1092
ROBERT C. KAUFMAN, etal,

Defendant(s). /

Memorandum on Motion for Summary Judgment

In May of 1998, Chapter’7 debtor and co-plamtff Charell Crowder purchased a mobile home as her
residence. She financed the purchase with a loan of $26,645.25 from defendant Kaufman Family Revocable
Living Trust. The note provided for 12 percent interest, which Crowder and Jeffry Locke, the bankruptcy
trustee, allege wes usurious. By this adversary proceeding, Crowder and Locke seek declaratory relief and
damages on account of usury.

Defendants responded to the complaint by filing motion to dismiss. The court denied, the motion, but

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s 07-01092 Doc#16 Filed: 05/12/08 Entered: 05/12/08 09:49:24 Page1of3

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agreed to treat the motion as one for summary judgment as permitted by Rule 12(d) of the Federal Rules of
Civil Procedure. After a reasonable opportunity to present pertinent material, that motion is now before the
court.
Defendants’ motion is based on three arguments: that the transaction is exempt from usury laws
because it was made or arranged by a broker; that the “time-price” doctrine excludes a claims for usury; and
that the “savings clause” in the loan documents operated to reduce the interest rate to the maximum that was
not usurious.
There is a factual dispute as to whether the real estate broker involved in the transaction participated
sufficiently so that the loan can be considered to be made or arranged by her. There being no undisputed
evidence that the broker acted as an intermediary, set the terms of the loan, and structured the loan, summary
judgment cannot be granted on this ground. Gibbo v. Berger, 123 Cal.App.4th 396, 403 (2004).
There is no evidence that any of the defendants was a seller of the mobile home. At the very least
there is a disputed fact as Crowell states in her declaration that a third party was the seller. The time-price
doctrine is only applicable to seller financing. Accordingly, summary judgment cannot be granted on this
ground.
Defendants are correct in noting that one of the elements plaintiffs must prove is that defendants
intended to charge a rate of interest which was usurious. In re Dominguez, 995 F.2d 883, 887n2 (9th
Cir.1993). The savings clause may be evidence of lack of intent. 995 F.2d at 886-87. However, it is by no
means conclusive evidence, especially when the savings clause is generic and not specific to interest. “A
savings clause does not preclude, as matter of law, a finding of usury, but is one factor to be considered when
determining whether a lender intended to exact usurious interest.” 47 C.J.S. Interest & Usury § 223. In any
event, this is an issue of fact to be determined at trial and cannot be the basis for summary judgment. In re
Dominguez, 995 F.2d at 887.
For the foregoing reasons, defendant’s motion for summary judgment will be denied. Coulse for
plaintiffs shall submit an appropriate form of order.
Dated: May 11, 2008
Case: 07-01092 Doc# 16 Filed: 05/12/08 Entered: 05/12/08 09:49:24 Page 2 of 3

Alan Jaroslovsky U.S. Bankruptcy Judge
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Case: 07-01092 Doc# 16 Filed: 05/12/08 Entered: 05/12/08 09:49:24 Page 3 of 3
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