Legal Document: EDUARDO PANIAGUA ET AL VS. MILESTONE FINANCIAL, LLC ET AL

On November 13, 2018 a APPENDIX OF EVIDENCE IN SUPPORT OF BRIEF RE AMOUNT OF USURY INTEREST DAMAGES (TRANSACTION ID # 100226452) FILED BY DEFENDANT MILESTONE FINANCIAL, LLC A CALIFORNIA CORPORATION STUART, WILLIAM R. AN INDIVIDUAL STUART, CAROLYN T. AN INDIVIDUAL HAMILTON, ZOE AN INDIVIDUAL BEAR BRUIN VENTURES, INC. was filed involving a dispute between Asturias, Elena, Paniagua, Eduardo, Bear Bruin Ventures, Inc., Hamilton, Zoe, Milestone Financial, Llc, Stuart, Carolyn, Stuart, William, and Bear Bruin Ventures, Inc., Does 1 To 100 Inclusive, Hamilton, Zoe, Milestone Financial, Llc, Stuart, Carolyn T., Stuart, William R., Paniagua, Eduardo, for BUSINESS TORT in the District Court of San Francisco County.

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1 MEYLAN DAVITT JAIN AREVIAN & KIM LLP
VINCENT J. DAVITT, ESQ. (State Bar No. 130649)
2 444 South Flower Street, Suite 1850 ELECTRONICALLY

3
Los Angeles, California 90071 FILED
Telephone: (213) 225-6000 / Fax: (213) 225-6660 Superior Court of California,
County of San Francisco
4 Email: vdavitt@mdjalaw.com
01/25/2024
Clerk of the Court
5 HARRIS L. COHEN, A PROF. CORP. BY: WILLIAM TRUPEK
HARRIS L. COHEN, ESQ. (State Bar No. 119600) Deputy Clerk
6 5305 Andasol Avenue
Encino, California 91316
7
Telephone: (818) 905-5599 / Fax: (818) 905-5660
8 Email: hcohen00@aol.com

9 Attorneys for Defendants and Cross-Complainants
Milestone Financial, LLC; Bear Bruin Ventures, Inc.;
10 William R. Stuart; Carolyn Stuart; and Zoe Hamilton
11

12 SUPERIOR COURT OF THE STATE OF CALIFORNIA

13 FOR THE COUNTY OF SAN FRANCISCO

14 Eduardo Paniagua and Elena Asturias, CASE NO. CGC-18-571279
individuals,
15 DEFENDANTS AND CROSS-
Plaintiffs,
vs. COMPLAINANTS’ APPENDIX OF
16
EVIDENCE IN SUPPORT OF BRIEF RE
17 Milestone Financial, LLC, a California AMOUNT OF USURY INTEREST
corporation, Bear Bruin Ventures, Inc. a DAMAGES
18 California Corporation, William R. Stuart, an
individual, Carolyn Stuart, an individual, Zoe Hon. Curtis E.A. Karnow
19 Hamilton, an individual, and DOES 1-100, Dept. 611
inclusive,
20
Defendants. Date: January 30, 2024
21 Time: 9:00 a.m.
Milestone Financial, LLC, a California Limited Place: Dept. 611
22
Liability Company, Bear Bruin Ventures, Inc.,
23 William Stuart, Carolyn Stuart and Zoe Hamilton,
Cross-Complainants, Action filed: November 13, 2018
24
v. Trial Dates: October 24-26 2023 &
25 Eduardo Paniagua and Roes 1-100, November 6-8

26 Cross-Defendants.

27
28
1
Defendants/Cross-Complainants’ Appendix of Evidence ISO Brief re Amount of Usury Interest Damages
1 Defendant Milestone Financial, LLC (“Milestone”) submits the following exhibits in support of

2 its Brief on the Amount of Usury Interest Damages.
3
EVIDENCE
4
Ex. No. Document
5
1 1/3/24 Statement of Decision
6

7 2 4/4/18 Demand Loan Payoff (Borrower: Eduardo Paniagua)
(Bates-stamped PANIAGUA 001049-50)
8

9 3 3/12/14 Credit Report (Borrower: Eduardo Paniagua)
(Bates-stamped PANIAGUA 000311-12)
10
4 The Court’s Draft order ruling on objections to testimony presented by way of declaration
11

14
DATED: January 24, 2024 MEYLAN DAVITT JAIN AREVIAN & KIM LLP
15

16
By: ____________________________________
17 Vincent J. Davitt
Attorneys Defendants and Cross-Complainants
18 Milestone Financial, LLC; Bear Bruin Ventures, Inc.;
William R. Stuart; Carolyn Stuart; and Zoe Hamilton
19

21 DATED: January 24, 2024 HARRIS L. COHEN, A PROF. CORP.
22

23 By: /s/ Harris L. Cohen
Harris L. Cohen
24 Attorneys Defendants and Cross-Complainants
Milestone Financial, LLC; Bear Bruin Ventures, Inc.;
25 William R. Stuart; Carolyn Stuart; and Zoe Hamilton
26

28
2
Defendants/Cross-Complainants’ Appendix of Evidence ISO Brief re Amount of Usury Interest Damages
EXHIBIT 1 3
1
2
Fl LED
Stln Francisco Co11nty Si r~rinr Gnu~

3 JAN 3 - 2024
4
BY~LE~m C?URT
5 Deputy Clerk
SUPERIOR COURT OF CALIFORNIA
6
COUNTY OF SAN FRANCISCO
7

8 EDUARDO PANIAGUA, et al.,
Case No. CGC 18-571279
9· Plaintiff,
10 vs. STATEMENT OF DECISION
11 . MILESTONE FINANCIAL LLC., et al.

12 Defendants.

13
Eduardo Paniagua and his spouse Elena Asturias sued Milestone Financial, LLC, and
\
14
related parties.
15
Milestone provided a loan to Paniagua, secured by a property on Funston A venue in San
16

17 Francisco (the Property). The proceeds were planned to be used, and were indeed used, to

18 renovate the Property. When Paniagua was unable to make payments on the loan, Milestone

19 twice extended the term. Paniagua alleges the loan was illegal on a variety of theories.
20 The first amended complaint (FAC) was filed February 1, 2019. It combines causes of
21
action under single rubrics and seems to repeat claims. It alleges as a first cause of action both
22
fraud and misrepresentation; misrepresentation is also a second cause of action. As a third cause
23
of action it charges a violation of the UCL (B+P § 17200), as well as B+P § 17500 (false
24

25 advertising) and CC§ 1750 (consumer legal remedies act [CLRA]). A fourth cause of action

26 alleges the loan was usurious; there are a fifth cause of action for rescission and sixth cause of

- 1-
4
1 action for declaratory relief. Plaintiffs' post-trial briefing argues other bases for relief as well,
2
although no motion to amend was made and none granted.
3
Some of the claims have been dropped: Asturias dismissed all her claims and plaintiff
4
Paniagua dismissed his claims for recission and declaratory relief in January of2023. Nor does
5

6 Paniagua make an argument under B+P 17500, or the CLRA, abandoning them.

7 Following trial ending in November 2023, the two sides each presented initial post-trial

8 briefs and then responsive briefs. They agreed I would then issue a statement of decision.
9 The PAC alleges that an acquaintance of Mr. Paniagua, one Jose Ruffrage, falsely held
10
himself out to be a broker and introduced Paniagua to Milestone and assisted securing the loan at
11
issue. FAC ~ 15. (Unaccountably, Ruffrage did not testify at trial and Paniagua claims, as
12
detailed next, that Milestone told Paniagua that someone else was his broker.) The FAC also.
13

14 alleges Milestone secured a broker (MJF Funding) for Paniagua, but also that MJF was not really

15 his broker. FAC ~ 16. Plaintiff and Milestone agreed to what Paniagua calls a residential or

16 consumer mortgage loan secured by the Property, PAC,, 18-19, but Milestone was not licensed
17
to do so. FAC, 20. Penalties, interest, and other payments made by the plaintiff to Milestone
18
are the damages claimed here.
19

20
The Role of Jose Ruffrage
21

22 Although as noted the F AC claims Ruffrage misled Paniagua by suggesting he was

23 broker, no testimony at trial supports that. Rather, Paniagua and Ruffrage were friends, dating

24 back to 2010 or 2011. Oct. 24 PM Tr. at 20, 57. Ruffrage helped Paniagua get loans, and
25
Paniagua provided information to lenders though Ruffrage. Id. at 21, 48, 57, Oct. 25 Tr. at 15 ff,
26
21. Ruffrage helped negotiate the extensions, Oct 24 PM Tr. at 46 and was an intermediary on
27

-2-
5
1 many of the other loans Paniagua took out on the Property. Id. at 56, 57-58, Oct. 26 PM Tr. at
2
27. The two negotiated Ruffrage's fees. Oct 24, PM Tr. at 58. Ruffrage introduced Paniagua to
3
Milestone, Oct. 25 Tr. at 1O; communications between M,ilestone and Paniagua went through
4
Ruffrage. Id. at 13, 105. Ruffrage contacted Milestone and apparently was responsible for the
5

6 involvement of the broker, MJF. Hamilton trial declaration at,, 11, 14-16, 19. Ruffrage acted

7 as Paniagua's agent, id. at 18, and Paniagua relied on him. Id. at 48; Oct. 26 PM Tr. at 8, 11, 24.

9
First and cause of action: Fraud and intentional misrepresentation; second cause of action:
10 misrepresentation

11 The asserted misrepresentations are (i) Milestone falsely said it was licensed by the

12 California bureau of real estate to enter into residential loan agreements (FAC ,, 42, 45); there is
13 I

also a vague claim that Milestone falsely misrepresented it had required licenses; it may be that
14
the FAC also pleads some other undescribed representations. FAC , 44. In his post-trial
15
briefing, Paniagua now asserts a claim that Milestone needed a mortgage loan originator (MLO)
16
endorsement.
17

18 But Paniagua didn't rely on any such assertions, and none was material to his decisions to

19 enter into agreements with Milestone.

20 The premise of Paniagua's claim here is that the loan (and its extensions) were for
21
personal or consumer purposes, so a broker was required; Milestone told him there was a broker.
22
But there was no broker, he says.
23
The notions of a "residential mortgage loan" and "consumer home loan" appear to be
24

25 interchangeable. In fact, plaintiff didn't seek or obtain a consumer or residential loan. The

26 Property was rented out, and plaintiff's residence was elsewhere in San Francisco. He never

27 lived at the Property. In this way the central premise of the claims is flawed. Paniagua said he

-3-
6
1 intended to use the proceeds from the renovation (and supsequent commercial exploitation of the
2
Property) for his family members-to help with a family member's retirement and someone's
3
medical treatment. This is irrelevant- it doesn't convert the loan into a consumer loan.
4
A residential mortgage loan is one which is primarily for personal, family or household
5

6 use (BCP 10166.0l(d)), see also 15 USC 1602(d)(5)), which was not the case here. The loan
/

7 and its extensions were obtained, as all the documents pertaining to those transactions plainly

8 state, for commercial purposes: to renovate a house not used as a dwelling by the borrower, but
9
rather rented out and, in this case, with the hope that one day it would be sold for a profit.
10
Paniagua himself signed a variety of documents exactly to this effect, i.e., that the loan was not
11
for personal use or for his residential property.## 31, 32, 33, 36; 1 Oct. 25 Tr. at 43; 642
12
(plaintiffs obtained rental income from property). The money loaned to him wasn't used for any
13

14 personal or family purposes: it was used to renovate a home which was not his residence. E.g.
-
15 Oct. 25 Tr. at 65; 83.

16 Anyway, none of the proceeds of the renovations ever ended up used for the putative
17
'personal' or family purposes. See e.g., 25 Oct. Tr. at 53, 65-66 (proceeds didn't go for
18
[personal or family] cancer treatment or retirement expenses).
19
Indeed, plaintiff secured a variety of loans from other lenders for the same Property for
20
the same purpose, and those, too, were not consumer or residential loans. E.g., Stuart trial
21
22 , declaration at~ 28; 3 Oct. 25 Tr. at 60, 74 83, 56-7.

23 Thus Milestone did not need a broker's license.

25
1
An exhibit is noted by "#".
26 2 Unfortunately, the trial transcript was not numbered consecutively, so more than one volume commences with a
"page 1". Thus the date of the transcript is sometimes provided here for clarity.
27 3 The parties agreed that some direct testimony in this case could be provided by way of declaration, with declarants

subject to live cross examination.

-4-
7
1 Milestone only makes non-consumer loans, and only via brokers. Stuart trial declaration
)
2
~~ 9, 11. Milestone was under the impression-based on a variety of documents sent in
3
connection with the loan in~luding from Paniagua's agent, Ruffrage-that the loan was for a
4
commercial purpose. Stuart trial declaration at e.g., ~ 19; Hamilton trial declaration~ 15 ff.
5

6 As intimated, by the time of post-trial briefing Paniagua claimed a series of other

7 misrepresentations. These are not a basis for recovery, because they were never pleaded. 4 In

)8 any event they do not have merit. Paniagua' s opening brief listing all these new claims of
9
misrepresentation (see id. at 15-16) cites no evidence. The additional claims (see plaintiffs
IO
opening brief at 15 ff.) seem to be that Milestone told plaintiffs: MJF was the broker; that
11
Ruffrage was getting a processing fee when he actually got a broker's fee, and that a broker's fee
12
was really a processing fee; that Milestone's Hamilton said she was authorized to have Paniagua
13

14 sign documents, and that Milestone's Stuart misled Paniagua into thinking Stuart had a MLO

15 endorsement. But none of these misrepresentations, if they were made, was material, or was

16 relied on by Paniagua, or caused him damage.
17
It was Paniagua and his agent Ruffrage who told Milestone that MJF was the broker, in a
18
series of documents Paniagua signed (see evidence cited at defendant's reply brief at 7-8).
19
Whether a fee is properly characterized as a processing or broker's fee did not cause Paniagua
20
any harm; there's no evidence Hamilton said she was authorized in any material way to do
21

22 anything; it doesn't matter if Stuart had a MLO endorsement, 5 and there's no evidence of

24 4 E.g., "Had Borrowers wished to raise the unpleaded issue of a claimed material defect as to the date of default as
reflected in the Default Notice, they were required to move to amend before the summary judgment hearing." Knapp
25 v. Doherty (2004) 123 Cal.App.4th 76, 97; Vulk v. State Farm General Insurance Company (2021) 69 Cal.App.5th
243, 255.
26 5
Another new claim is that defendants were not licensed under CFC 22057. The claim that Milestone
misrepresented its licensing status including a MLO license are without merit because, among things, even if the
27 representations were made, there was no evidence they ever mattered to Paniagua: he didn't rely on these asserted
representations and they weren't material.

8
1 communication between Stuart and Paniagua on the issue: indeed, there's no evidence cited of
2
any communication between the two before the loan documents were signed.
3
I also note that Paniagua cannot claim fraud based on the terms of the agreement when
4
those terms were in the agreements, and Paniagua had the time-as he did-to review the
5

6 documents. Golden Gate Way, LLC v. Enercon Services, Inc. (N.D. Cal. 2021) 572 F.Supp.3d

7 797, 823 (California law).

8 There's also a new claim that Milestone injured Paniagua by calling the loan extension
9
documents "settlement agreements." But that's actually what they were called, and they did in
IO
fact settle and resolve the then-outstanding dispute between the parties by extending the loan.
11
Paniagua's complaints about misrepresentations on fees and interest are unsupported by his
12
identification of any fee charged which was not in fact disclosed to him before he signed the
13

14 relevant loan documents. The evidence is that Paniagua-- with access to his legally trained

15 spouse who in fact assisted on some of these matters--simply signed the documents at issue in

16 this case without care about their contents. See note 10 below.
17

18
Third cause ,of action: UCL, B+P 17200; B+P 17500 (false advertising); CC 1750 (consumer
19 legal remedies act [CLRA)

20 Plaintiffs' opening brief discusses the § 17200 claim, but not B+P § 17500 nor CC §
21
1750.
22
The § 17200 claim seems premised on the illegal prong,6 and relies on argument that
23
Milestone violated Financial Code§ 22602. Plaintiffs' opening brief at 19:5. The brief also
24

25 generally suggests that Milestone violated other laws, id. at 19:10.ff., as well as suggesting

26
6
Classically § 17200 includes three prongs: unlawful, unfair, and fraudulent actions. E.g., Durell v. Sharp
27 Healthcare (2010) 183 Cal.App.4th 1350, 1355; Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230,
251.

-6-
9
1 defendants' actions were "immoral, unethical, oppressive" and so on. 7 But without any
2
specification nor citation to evidence-there is no such citation, at all, in Paniagua's discussion
3
of the third cause of action in his opening brief-plaintiffs have not sustained their burden.
4
Section 22602 doesn't apply to commercial loans, which is the situation here. In any event
5
6 plaintiff has not shown conditions of22602(a) do not apply.

8 Fourth cause of action for usury
9 Paniagua claims usury because the interest rates imposed by the loan agreement, and its
10
extensions, are in excess of the legal rate. California Constitution Art. XV § 1. The issue
11
devolves to the application of the broker exception. CC §1916.1. Paniagua's position is that the
12
putative broker, Marc Fournier of MJF, was not in fact the broker. Fournier himself says he
13
I

14 wasn't, and he disclaimed the signatures which appeared to be his. Paniagua agrees there are

15 representations to the contrary in the loan documents-that is, the documents expressly state

16 Fournier and his firm is the broker-but Without citation of authority Paniagua argues that these
17
documents may be disregarded. Plaintiffs' closing brief at 21:5-6; Plaintiffs' reply briefat 6:4-5.
18
In response, Milestone invokes Ev. C. § 622 to the effect that the acts recited in the loan
19
documents are "conclusively presumed to be true as between the parties." Apparently, it doesn't
20
matter what the truth is; as between the parties, one is estopped from denying the truth of these
21
22 sorts of facts:

23 Even if the estoppel certificate contains an erroneous recitation of the lease terms, the
facts contained in the certificate are_~on.clusively presumed to be true under section 622.
24
25
26
7
This might be a throw-away effort to invoke the "unfair" prong of a§ 17200 claim. But there's no argument and no
27 effort to address the test under this prong. Compare William L. Stem, BUSINESS & PROFESSIONS CODE SECTION
17200 PRACTICE ~ 3: 115 (2023 ).

-7-
10
1 Plaza Freeway Ltd Partnership v. First Mountain Bank (2000) 81 Cal.App.4th 616, 628, 629
2
(note omitted).
3
Paniagua signed some of the documents without reading them (see footnote 10), and
4
signed others knowing that the broker's signature was already on them(## 32, 33, 43).
5

6 An exception to§ 622 exists when there is no arm's length negotiation, Knapp v.

7 Ginsberg (2021) 67 Cal.App.5th 504, 528, but Paniagua doesn't claim that; and indeed he had

8 available the assistance of his lawyer spouse. E.g., 25 Oct. Tr. at 56, 68; 99 (second settlement
9
agreement).
10
The parties' arguments on this key issue-whether a broker was involved or not-are
11
ships passing in the night, with each side ignoring the arguments of the other.
12
For its part, Milestone, as indicated, emphasizes the wording of the documents as well as
13

14 some of the surrounding circumstances: Many documents signed by Paniagua plainly show the

15 involvement of the broker Marc Fournier and his company, MJF, a/k/a Blue Water. See e.g.,

16 Oct. 24 Tr. A.M. at 49 (escrow instructions); 50, 51, 56-57 (wire transfer of broker fee to MJF,
17
and no one returned this as an unearned fee); 63 (Fournier had no idea why there would be
18
broker fees coming in where MJF wasn't the broker); 65-66 (wire instructions etc. re broker's
19
fees in this case consistent with the instructions MJF usually used on loans); see e.g. 25 Oct Tr.
20
at 36, 37, 44, 51, 52, 93, 107, 109 (documents showing MJF as broker); Hamilton trial
21

22 declaration if 17 ff. Eric Ciavarelli, the operations manager at MJF, swore in his trial declaration

23 that Fournier arranged as broker a series of loans from Milestone, and confirms the authenticity
24 of two documents suggesting the Paniagua loan was brokered by MJF. Many documents
25
received by Milestone on Paniagua's behalf show he had a broker. Stuart trial declaration at~
26
21.
27

-8-
11
I Plaintiff, for his part, presents evidence from Fournier himself, who disclaims any
2
involvement in the deal. E.g., Fournier trial declaration at e.g.,~ 20. He doesn't recall getting
3
any commission from the deal (Oct. 24 A.M. Tr. at 53-54), wasn't copied on emails he normally
4
would have been (id. at 68), says the signature which appears to be his, is not, in fact (id. at 73).
5

6 Whereas Ciavarelli says Fournier received commissions on Milestone loans, Fournier denies

7 this. Oct 24 a.m. Tr. at 44. [# 147, however, suggests he did receive his commission. 8] Fournier

8 testified that he never signed Paniagua-related loan document (id. at 45), never spoke to
9
Paniagua (id. at 53), and indeed never even heard of this loan until he was subpoenaed for trial.
10
(id. at 57). 9 Paniagua himself confirms this: he didn't know Fournier (Oct. 24 PM Tr. at 25), and
11
has never seen him (id. at 106). He apparently thought MJF was some part of Milestone,
12
although, aside from the fact that some documents citing MJF came from Milestone, Paniagua
13

14 had no basis to so conclude: documents showed different contact information and addresses for

15 Milestone and MJF/Blue Waters. Id. at 108-9.

16 Fournier agrees that he was supervising broker at MJF during the relevant time, was
17
responsible for the firm's work (id. at 45); that MFJ and Blue Waters are the same firm (Oct. 24
18
A.M. Tr. at 32-33; 31) and he authenticated the usual MFJ email format on Paniagua-related
19
papers. (Id. at 36) While he denies the firm did any Milestone deals, he also said he argued
20
about doing Milestone deals, in effect conceding deals with Milestone were done but-
21

22 perhaps-without his advance knowledge:

23 Q. Okay. And he also states that you and he discuss many Milestone loans that were
brokered by MJF. Do you disagree with that?
24 A. No, we did. We argued quite a bit about it once I found out these loans were going
25 through.

26 8 Nevertheless, the evidentiary value of# 143 is no more than the testimony ofCiavarelli who provides the
foundational support.
27 9 As I have noted in my discussion ofRuffrage's role above, it was Ruffrage as Paniagua's agent and not Paniagua

who interacted with Milestone, which explains some ofFournier's testimony.

-9-
12
1
,2 Oct. 24 AM Tr. at 44. This Milestone-related activity happened while Fournier was supervising

3 broker. Id. at 45. Thus, supposedly, Fournier would have known what was occurring. Fournier

4 doesn't know why MJF ordered a credit report on the Paniagua deal (id. at 45) which was done
5 )

through the same agency MJF usually used (id. at 45), and he confirmed that the form of e.g.
6
wire instructions were in the usual MJF form. Id at 65-66. But Fournier noted that the fees were
7
much less than usual. Id. at 76, 75.
8'
The quoted trial transcript above is a clue as to what might have transpired: perhaps loan
9

10 brokerage activity was instigated by Ciavarelli, leading to disagreements with the supervising

11 licensed broker (Fournier). But this remains speculation: Neither party has tried to explain the
12 situation or offered to resolve-indeed, to even address-- the disagreements between Fournier
13
and Ciavarelli, or between the testimony of Fournier and Paniagua on the one hand, and the
14
documentary record on the other hand.
15
Significantly, no party has expressly argued, or provided evidence, that MJF (or at least
16
Ciavarelli) and Milestone were in cahoots in an effort to paper the Paniagua loan as broker-
17

18 mediated in an effort to avoid e.g. the usury laws. Hamilton denies it. See E.g. Hamilton trial

19 declaration~ 20. The inference isn't expressly argued by plaintiffs. The FAC, too, doesn't allege l,
20 this sort of conspiracy, i.e., some sort of fraud agreed-to between MFJ and Milestone; the fraud it
21
alleges is that Milestone misrepresented its licensing. See e.g., FAC ~ 41 ff. As far as this
22
record is concerned, Milestone had good reason to conclude that Paniagua was working with a
23
broker: All the documents-including documents Paniagua signed, with his signature next to the
24
25 MJF signature-confirm this. 10

26
10Paniagua testified that he didn't recall if Fournier' s signature was present or not on various documents (25 Oct Tr.
27 at 34, 36, 49), didn't read documents before signing (id. at 35, 48, 51), might have done so, and equivocated whether
he had done so. (Id. at 96, 109, 110) Some documents he read "to some extenf' or "to some degree." Oct. 25 Tr. at

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13
1 Certainly from the perspective of Milestone-the entity which is meant to be governed
2
by the usury laws, and which had a reasonable basis to understand a broker was involved (Nov. 8
3
Tr. at 48)-I find the loan was indeed broker-mediated and so was not subject to the usury laws.
4
This is supported by (a) Ev. C. § 622, (b) the conflicts in Foumier's testimony, and (c) the
5

6 weight of the evidence.

7 The Extensions

8 At Paniagua' s request, the loan was modified and extended by documents titled
9
'settlement agreement' by Milestone. The first is #61, dated January 26, 2016; the second is #66,
10
dated January 20, 2017. In each case, the loan was extended; the interest rate is dropped in the
11
first extension and remains the same in the second; both call for interest-only payments; neither
12
was mediated by a broker; and in each case the interest rate is usurious unless an exception
13
14 applies, such as the involvement of a broker.

15 Milestone makes two arguments in its defense: (1) because the original loan is not

16 usurious (having been mediated by a broker), neither are the two extensions; (2) Paniagua
17
released and waived his claim of usury.
18
In support of the first argument Milestone cites (in its initial post-trial brief at 20, see also
19
id. at 22) Ghirardo v. Antonioli (1994) 8 Cal.4th 791 (presumably at page 804) which holds that
20
a non-usurious transaction- a credit sale-does not become a usurious loan though a
21

22 modification that implies an interest rate above the constitutional threshold. The emphasis of the

23 opinion is that the original transaction was non-usurious because it involved a sale of property,

25 109. See also e.g., id. at 89 (Paniagua reviewed docun;ients regarding the second settlement agreement). I conclude
Paniagua either did read the documents, or, if he did not, had plenty of opportunity to so and willfully did not. One
26 is of course bound by contractual documents even if one declines to read them, if one knows they are of a
contractual nature. E.g., Pinnacle Museum To~er Assn. v. Pinnacle Market Development (US), LLC (2012) 55
27 Cal.4th 223, 236; Markborough California, Inc. v. Superior Court (1991) 227 Cal.App.3d 705, 716. There's no
suggestion Paniagua signed documents thinking they weren't some sort of contract.

-11 -
14
1 i.e., a credit sale transaction, Ghirardo, 8 Cal.4th at 805, see e.g., DCM Partners v. Smith (1991)
2
228 Cal.App.3d 729, 737. Such is not the case here.
3
In response Paniagua just argues that because the underlying loan was usurious, so too
4
the extensions. Paniagua cites Hardwickv. Wilcox (2017) 11Cal.App.5th975, 989. There, the
5

6 "particular release" at issue was held not to waive the protection of usury law. The facts were

7 just the opposite of those here, for in Hardwick we had "an extension of the underlying usurious

8 loan transaction," 11 Cal.App.5th at 989, whereas here the underlying loan is not usurious. In
9
his reply brief at 7, Paniagua cites a few cases that he says are concerned with the impact of
10
extensions-but they are not, and they do not assist Paniagua. Winnett v. Roberts (1986) 179
11
Cal.App.3d 909, 921; Stickel v. Harris (1987) 196 Cal.App.3d 575, 584; Gibbo v. Berger (2004)
12
123 Cal.App.4th 396, 402 n.3. These cases do not discuss the impact of extensions on an
13

14 originally non-usurious loan.

15 In re Moon (B.A.P. 9th Cir. 2023) 648 B.R. 73, 85 expressly distinguishes Ghirardo and

16 DCM Partners as treating "credit sales," 648 B.R. at 86, which are exceptions to ''the general
17
rule that forbearances are assessed independently for usury purposes." 648 B.R. at 87. The
18
agreements in this case appear to be indistinguishable from those issued by Milestone in the In re
19
Moon case. Accordingly, the extensions here are usurious.
20
Milestone's other argument is that Paniagua released and waived claims of usury. The
21
22 agreements do purport to provide a CC § 1542 waiver and release of claims which I assume

23 extends to usury claims. But these releases are not effective. Hardwick v. Wilcox (2017) 11
24 Cal.App.5th 975, 989; see also Grados v. Shiau (2021) 63 Cal.App.5th 1042, 1055.
25
It follows that Paniagua is awarded interest paid under the two extension agreements. 11
26
27 11
Milestone does not argue that this claim is barred by the statute of limitation. A two-year statute of limitations
applies. It doesn't commence "until the debtor has paid the entire principal amount of the debt," Hardwick v.

- 12-
15
1 Treble interest
2
Paniagua seeks treble damages in his initial brie:f. He provides no argument or citation.
3
The matter is for the court's discretion. Bisno v. Kahn (2014) 225 Cal.App.4th 1087, 1108;
4
Gibbo v. Berger (2004) 123 Cal.App.4th 396, 404. The trebling is not awarded. The caselaw
5
6 which reveals the interest on the extension to be illegal (despite the facts that (i) the original loan

7 was not usurious and (ii) the extensions did not raise the interest rate) was not apparent until last

8 year, In re Moon (B.A.P. 9th Cir. 2023) 648 B.R. 73, years after this suit was filed. Hence there
9 is no need to punish Milestone.
10
Late Fee
11
Paniagua was charged a 10% liquidated damages fee, i.e. $50,508. Defendant's post-trial
12
brief at 24: 15. The parties do not disagree about the law.
13

14 A liquidated damages clause will generally be considered unreasonable, and hence
unenforceable under section 167l(b), if it bears no reasonable relationship to the range of
15 actual damages that the parties could have anticipated would flow from a breach. The
amount set as liquidated damages "must represent the result of a reasonable endeavor by
16 the parties to estimate a fair average compensation for any loss that may be sustained."
[Citation] ... "A penalty provision operates to compel performance of an act [citation]
17
and usually becomes effective only in the event of default [citation] upon which a
18 forfeiture is compelled without regard to the damages sustained by the party aggrieved by
the breach [citation]. The charactetj.stic feature of a penalty is its lack of proportional
19 relation to the damages which may actually flow from failure to perform under a
contract .... "
20
Ridgley v. Topa Thrift & Loan Ass'n (1998) 17 Cal.4th 970, 977.
21

22 The key issue then is this: does the penalty- here $10%- fairly estimate the damages?

23 Paniagua has no evidence on the issue.

24 Milestone points to the trial declaration of Stuart ~~ 41 ff. Stuart notes that a borrower's
25
failure to repay causes not just the loss of the income, but also the loss of perhaps 10% of the
26

27 Wilcox (2017) 11 Cal.App.5th 975, 991 which seems to have been in 2018. #119 (demand loan payoff). This suit
was filed in 2019.

-13 -
16
1 sum which could have been reloaned out; i.e., a 10% which represents "points" and other fees
2
which Milestone might have brought in but for the default. Stuart trial declaration at if 42. It is
3
Paniagua's burden to show the late fees a,re an illegal penalty, Vitatech Internal., Inc. v. Sporn
4
(2017) 16 Cal.App.5th 796, 806 (non-consumer contract); Krechuniak v. Noorzoy (2017) 11
5

6 Cal.App.5th 713, 726. He has not shouldered the burden.

7 Dispute on amount

8 The parties disagree on the amount received by Miles~one as interest under the first and
9
second extension. See Defendant's reply brief at 14:1-1 L They should confer and brief the
. 10
issue. I return to this in the conclusion of this Statement.
11

12
Firth Cause of action (recission) and Sixth cause of action (declaratory relief)
13

14 These claims were dismissed January 25, 2023.

16 Cross claims
17
These claims are for contractual indemnity, and assume Milestone's victory on
18
Paniagua's claims founded on the first and second extension. Given that Paniagua recovers
19
interest under those extensions, I find against Milestone on the cross claims. 12
20

22 Conclusion

23 On the operative complaint, I find for Paniagua on the usury claims related to the first

24 and second extensions. Otherwise I fmd for Milestone.
25
On the cross complaint I find for Paniagua.
26

27 12
Milestone says that it is entitled to some recovery in any event because Asturias dismissed her claims. This seems
to imply Asturias was party to the first and second extensions, which isn't true.

- 14-
17
,: ... a:r-
1 The parties must confer and seek agreement on the sum to be awarded under the
2
reasoning of this Statement, that is, the interest paid by Paniagua under the two extensions. If
3
they agree, they should not later than January 17, 2024 file a terse statement to that effect and
4
state the amount; and provide me with a proposed judgment. If they cannot agree they must not
5

6 later than January 17, 2024 contact the clerk of this department and set a hearing date to resolve

7 the matter. Not less than three court days in advance, each side should file up to three pages

8 explaining its calculation of the sum to be awarded, citing only admitted evidence. A paper
9
courtesy copy of the filing is due on the date of filing.
10

12
Dated: January 3, 2024
13

22
23

26
27

-15 -
18
CERTIFICATE OF ELECTRONIC SERVICE
(CCP 1010.6(6) & CRC 2.260(g))

I, DANIAL LEMIRE, a Deputy Clerk of the Superior Court of the County of San
Francisco, certify that I am not a party to the within action.

On JAN 3 - 2024 , I electronically served THE ATTACHED
DOCUMENT via File & ServeXpress on the recipients designated on the Transaction Receipt
located on the File & ServeXpress website.

Dated: JAN 3 - 2024

DANIAL LEMIRE, Deputy Clerk

19
EXHIBIT 2 20
DocuSign Envelope ID: 2AC628BF-2E86-4F89-86B1-DC28DAF820DD
Statement Date: 04/04/2018

Demand Loan Payoff
From Borrower
Borrower Eduardo Paniagua Servicer Del Toro Loan Servicing, Inc.
176 Randall St PO Box 211000
San Francisco CA 94131 Chula Vista CA 91921
Account: 64000429NDD (619) 474-5400
You are authorized to use the following amounts to pay off the above mentioned loan. All necessary legal documents will be
forwarded to the trustee for Full Reconveyance upon receipt of payment in full.
Payoff Date 4/3/2018
Maturity Date 3/31/2019
Next Payment Due 7/25/2017
Interest Rate 19.7500 %
Current Rate 19.7500 %
Interest Paid to Date 7/25/2017
Unpaid Principal $444,478.48
Deferred Unpaid Principal $0.00
Accru. Int Balance from 7/25/2017 to 4/3/2018 $60,607.38
Unpaid Interest -$7.69
Deferred Unpaid Interest $0.00
Unpaid Fees $0.00
Acc. Late Charges(Calculated through Payoff Date) $3,583.62
Unpaid Late Charges $0.00
Deferred Unpaid Late Charges $0.00
Unpaid Charges $55,612.88
Other Fees $400.00
Suspense Balance -$8,023.56
Escrow Balance $0.00
Credit Payments Made to INCS -$22,492.49
Prepayment Penalty $0.00
Other Payments $0.00
To Payoff Your Loan , Please Pay: $534,158.62

Daily Interest Amount (After 4/4/2018 ) $240.51
* Based on unpaid balance and unpaid charges combined.

*** If a payment or payoff is not received during the payment grace period, a late charge will be included in payoff of the loan,
Outstanding Checks:
Special Instructions:
Only Certified Funds, Wire Transfer or Title Company Check will be accepted
PLEASE CALL TO VERIFY PAYOFF AMOUNT AND FEES DUE, PRIOR TO ISSUING PAYMENTS.
We reserve the right to amend this demand should any changes occur that would increase the total amount for payoff. Please note this demand expires on
04/10/2018, at which time you are instructed to contact this office for additional instructions (DEMAND FORWARDING FEES ARE DUE EVEN UPON
CANCELLATION OF YOUR ESCROW).

Please make your disbursement payable to: Del Toro Loan Servicing, Inc.

Sincerely,
Diana Carrada
Diana Carrada
Del Toro Loan Servicing, Inc.

PANIAGUA_
Del Toro Loan Servicing, Inc. * PO Box 211000 * Chula Vista * CA 91921 * NMLS 351720 * BRE 01525608 * www.deltoroloanservicing.com 21
001049
DocuSign Envelope ID: 2AC628BF-2E86-4F89-86B1-DC28DAF820DD

Payment Note Payment Apply To Unpaid Int Principal
Due Date Rate Amount Principal Interest Reserve Impound Other Unp. Int. Acc Late Chg Balance Balance

07/25/2017 19.7500% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
08/01/2017 19.7500% $ 1,683.54 $ 0.00 $ 1,683.54 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
09/01/2017 19.7500% $ 7,455.67 $ 0.00 $ 7,455.67 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
10/01/2017 19.7500% $ 7,215.16 $ 0.00 $ 7,215.16 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
11/01/2017 19.7500% $ 7,455.67 $ 0.00 $ 7,455.67 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
12/01/2017 19.7500% $ 7,215.16 $ 0.00 $ 7,215.16 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
01/01/2018 19.7500% $ 7,455.67 $ 0.00 $ 7,455.67 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
02/01/2018 19.7500% $ 7,455.67 $ 0.00 $ 7,455.67 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
03/01/2018 19.7500% $ 6,734.15 $ 0.00 $ 6,734.15 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 398.18 -$ 7.69 $ 444,478.48
04/01/2018 19.7500% $ 7,455.67 $ 0.00 $ 7,455.67 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 -$ 7.69 $ 444,478.48
04/03/2018 19.7500% $ 481.01 $ 0.00 $ 481.01 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 -$ 7.69 $ 444,478.48
$ 60,607.38 $ 0.00 $ 60,607.38 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 3,583.62

** This transactio

Case Info

Judge

Curtis E.A. Karnow Track Judge’s New Case

Case No.

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Document Filed Date

January 25, 2024

Case Filing Date

November 13, 2018

County

Parties

ADELAARS, SARAH Attorney
ADELAARS, SARAH Attorney for the Appellant
ADELAARS, SARAH Attorney for the Plaintiff
ASTURIAS, ELENA Appellant
ASTURIAS, ELENA Plaintiff
BEAR BRUIN VENTURES, INC. Cross Complainant
BEAR BRUIN VENTURES, INC. Defendant
BURNS, ELKANAH J. Attorneys for Plaintiffs
BURNS, ELKANAH J. Attorney for the Defendant
BURNS, ELKANAH J. Attorney for the Plaintiff
COHEN, HARRIS L Attorneys for Defendants
COHEN, HARRIS L Attorney for the Appellant
COHEN, HARRIS L Attorney for the Defendant
DAVITT, VINCENT J. Attorneys for Defendants
DAVITT, VINCENT J. Attorney for the Appellant
DAVITT, VINCENT J. Attorney for the Defendant
DOES 1 TO 100 INCLUSIVE Defendant
HAMILTON, ZOE Cross Complainant
HAMILTON, ZOE Defendant
LAU, JOYCE K. Attorney
LAU, JOYCE K. Attorney for the Appellant
LAU, JOYCE K. Attorney for the Defendant
MARQUEZ, VICTOR MANUEL Attorneys for Plaintiffs
MARQUEZ, VICTOR MANUEL Attorney for the Appellant
MARQUEZ, VICTOR MANUEL Attorney for the Plaintiff
MILESTONE FINANCIAL, LLC Appellant
MILESTONE FINANCIAL, LLC Cross Complainant
MILESTONE FINANCIAL, LLC Defendant
PANIAGUA, EDUARDO Appellant
PANIAGUA, EDUARDO Cross Defendant
PANIAGUA, EDUARDO Plaintiff
PANIAGUA, EDUARDO Respondent
ROES 1-100 Cross Defendant
SHAPERO, SARAH Attorneys for Plaintiffs
SHAPERO, SARAH Attorney for the Plaintiff
STUART, CAROLYN Cross Complainant
STUART, CAROLYN T. Defendant
STUART, WILLIAM Cross Complainant
STUART, WILLIAM R. Defendant
Jessica Adair Attorneys for Plaintiffs
Stephanie Warden Attorneys for Plaintiffs
Anita Jain Attorneys for Defendants
Neil Chan Attorneys for Plaintiffs
Joyce Liou Attorneys for Defendants
Stephanie Silvers Attorneys for Defendants
Stefani Silverman Attorneys for Plaintiffs
Edward Jamison Attorney
Nathaniel Fisher Attorney
Stephanie Wald Attorney
Marie Fournier Attorney
Bernard Kornberg Attorneys for Defendants
John McDonnell Attorney

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Document for EDUARDO PANIAGUA ET AL VS. MILESTONE FINANCIAL, LLC ET AL

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