In HJOE's case the entire note was due but $2,000
Post# of 15187
Posted On: 06/20/2016 2:42:41 PM
In HJOE's case the entire note was due but $2,000 a day comes out to $730,000 a year on a $43k note. I can't see anyway a court would grant that from all the cases I've found they won't grant a late fee that's usurious by itself.
Pisane v Feig, 2015 N.Y. Misc. LEXIS 1722 (N.Y. Sup. Ct. May 19, 2015)
A case out of Kings County, New York, involving two former business partners that had dissolved their corporation. Pursuant to the dissolution proceedings, the defendant was required to make monthly payments to the plaintiff on a ten year promissory note. After the defendant defaulted, a dispute arose regarding the total amount due.
The plaintiff alleged that the defendant was liable for a 2% monthly late fee based on the total balance of the note at the time of the default. The defendant argued that the plaintiff’s calculation would lead to an inequitable recovery and that the plaintiff was only entitled to a 2% fee based on the amount past due at the time of the default rather than the total balance on the note.
The court agreed with the defendant and rejected the plaintiff’s request. It stated that if “the Court were to accept the plaintiff’s interpretation of the late fees provision, such penalty would be unenforceable as the multi-million dollar damage award sought by plaintiff is unreasonable and disproportionate to the actual loss sustained by plaintiff as a result of defendant’s delay in making payments on the Note.”
The court also noted that “the 2% monthly late fee compounds to 24% per annum, which is just shy of the 25% penal usury rate which would have been illegal and contrary to public policy (Penal Law § 190.40), particularly when added to the 4.5% interest provided under the terms of the Note. To permit recovery of a monthly 2% late fee upon the entire not-yet-due principal balance on the Note would clearly violate the usury statute and constitute an unenforceable penalty.”
Pisane v Feig, 2015 N.Y. Misc. LEXIS 1722 (N.Y. Sup. Ct. May 19, 2015)
A case out of Kings County, New York, involving two former business partners that had dissolved their corporation. Pursuant to the dissolution proceedings, the defendant was required to make monthly payments to the plaintiff on a ten year promissory note. After the defendant defaulted, a dispute arose regarding the total amount due.
The plaintiff alleged that the defendant was liable for a 2% monthly late fee based on the total balance of the note at the time of the default. The defendant argued that the plaintiff’s calculation would lead to an inequitable recovery and that the plaintiff was only entitled to a 2% fee based on the amount past due at the time of the default rather than the total balance on the note.
The court agreed with the defendant and rejected the plaintiff’s request. It stated that if “the Court were to accept the plaintiff’s interpretation of the late fees provision, such penalty would be unenforceable as the multi-million dollar damage award sought by plaintiff is unreasonable and disproportionate to the actual loss sustained by plaintiff as a result of defendant’s delay in making payments on the Note.”
The court also noted that “the 2% monthly late fee compounds to 24% per annum, which is just shy of the 25% penal usury rate which would have been illegal and contrary to public policy (Penal Law § 190.40), particularly when added to the 4.5% interest provided under the terms of the Note. To permit recovery of a monthly 2% late fee upon the entire not-yet-due principal balance on the Note would clearly violate the usury statute and constitute an unenforceable penalty.”
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