Legal Question in Civil Litigation in California
I lent someone $1,200. We have a signed contract by him and I which says that it will accrue a late penalty of $20 a day for each day past September. Basically the total now owed is $4,000-$5,000.
I have sent him monthly statements with the balance owed, and he has continued to try to pay me back, however he says he keeps falling on hard times (obviously). He recently wrote me a check, written by his mom, and it bounced. Here are my questions:
1. If I sue in small claims, will the judge find this contract unconscionable due to the late penalty?
2. Can I now sue his mom in part because she wrote a $300 check?
3. Any other things I should be aware of?
3 Answers from Attorneys
The judge will find the penalty to really be usury [interest higher than 10% per year] and will strike all interest payments. You will likely need to find a citation [can do on line] for the principal that the whole contract is not voided,just the "penalty" part. Ask for pre and post judgment interest of 10% per year. Sue just for the $1,200 and cost of the bounced check; you can also sue the mom in the same suit for the bounced check charge to try to get her to pay some of the debt. Your problem will being able to collect anything.
Nice try, no brass ring. You can sue to try to get a judgment and then try to recover your $1200, but can not collect usurious interest.
1. The late payment is usurious if it can be construed as interest. Contrary to what Mr. Shers states, you are not entitled to any interest, including legal interest, if the loan was usurious. The court punishes you by not giving you any interest, not rewriting the agreement to make it legal.
2. You can sue the mother for the bad check, but must follow the procedures set forth in Civil Code section 1719, carefully.
3. I suggest speaking to an attorney, at least to go over all the facts and make sure there are no issues that you are missing.
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