Category Archives: State Court

Court Finds Contract to Be Sale of Property Not Loan of Money, Usury Claim Rejected

A buyer purchased an apartment from a seller. The contract for deed required the buyer to make a down payment and 180 equal monthly payments of amortized principal and interest.  Following the last payment, title to the apartment would pass from … Continue reading

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Erroneous Interest Calculation Dooms Criminal Usury Defense – Part II

As previously discussed, the method used to calculate an interest rate is a critical part of any usury action. This was again highlighted in a recent a New York state case. The plaintiff had filed an action to recover on a loan it had … Continue reading

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California Lender Subject to Compound Interest Disclosure Requirement Despite Exemption from Usury Restrictions

An insurance company provided four loans to a customer. The policies were secured by the value of the customer’s life insurance policies. The policy documents provided that any loans taken out against the policies would charge compound interest. After taking the loans, the customer … Continue reading

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Administrative Order Related to Alleged Usury Violations Unenforceable Against Indian Tribe

In October 2014, the Connecticut commissioner of banking sent a cease and desist order to two limited liability companies allegedly created by a federally recognized Indian tribe. The commissioner alleged that the companies had made usurious consumer loans and had operated … Continue reading

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Estoppel Argument Successfully Counters Usury Defense

The plaintiff made a loan to the defendant, a family friend, using funds that were to pay her daughter’s college tuition. The plaintiff alleged the defendant was a real estate expert that needed the funds to develop an affordable housing project. The … Continue reading

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Borrowers’ Equitable Recoupment Claim Fails, Criminal Usury Claim Survives

Plaintiff-borrowers filed a complaint against the defendant-lender alleging that the lender had made four usurious loans to the borrowers. The borrowers sought to recoup allegedly usurious interest payments they had paid on a satisfied loan and to void three outstanding loans. … Continue reading

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Defendants Neglect to Allege Usurious Intent, Criminal Usury Defense Fails

A creditor purchased two convertible promissory notes from a company. The notes bore interest at 8% and 10%, respectfully. At the creditor’s option, the notes could be converted into unrestricted common stock of the company. After the purchase, the creditor elected to convert … Continue reading

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The Many Hurdles of a Successful Usury Defense

A recent Texas state court decision highlights the many challenges a defendant may face when alleging usury as a defense to a breach of contract action. In the case, the defendant argued that the 30% interest rate the plaintiff charged pursuant to … Continue reading

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Court Finds Loan to be Usurious, Permits Recovery of Legal Interest Rate

In a recent case in California, a trial court found that the interest rate charged on a loan exceeded the state’s usury cap but still permitted the lender to recover the legal rate of interest. The lender had made a … Continue reading

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Business Loan Enforceable Even Though Rate Exceeds Criminal Usury Cap

Last October, a Pennsylvania trial court found a business loan contract to be enforceable even though the interest rate charged on the loan exceeded Pennsylvania’s criminal usury statute. The court found that because the civil usury cap provided an exception … Continue reading

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