## Facts

- Dorothy Del Mar received a series of personal loans from Ole Mohus beginning in the 1950s.
- In 1982, Mohus retained Dennis G. Caspe, a licensed attorney and real estate broker, to assist with updating the loan documents.
- Caspe reviewed Del Mar’s payments, calculated amounts due (principal and interest), selected interest rates based on market information, and prepared promissory notes and deeds of trust secured by a second deed of trust on Del Mar’s residence.
- The notes generally carried interest rates between 13% and 15% and stated they replaced prior notes; at least one note was executed while Caspe’s broker license was inactive for an approximately eight-month period.
- After Mohus’s death, Caspe (as executor) demanded payment; Del Mar paid and then sued to recover treble damages for allegedly usurious interest.
- The trial court found none of the notes usurious and entered judgment for the estate; it later denied Caspe’s motion for attorney’s fees under fee clauses in the notes, reasoning the action did not “involve” the notes.

## Issues

1. Whether the promissory notes were exempt from California’s constitutional usury cap as loans “made or arranged” by a licensed real estate broker and secured by real property.
2. Whether the trial court erred in denying contractual attorney’s fees on the ground that a usury action did not “involve” the notes containing the fee provisions.

## Decision

- The Court of Appeal held that notes executed while Caspe was a licensed real estate broker, and as to which he materially participated for compensation, fell within the real-estate-broker usury exemption and were not usurious.
- The Court of Appeal held that the note executed when Caspe’s broker license was inactive did not qualify for the exemption and was usurious.
- The Court of Appeal rejected reliance on statutory exemptions from broker licensing requirements as creating usury exemptions.
- The Court of Appeal held the trial court erred in denying attorney’s fees categorically; the action arose out of and concerned the notes and therefore “involved” them for purposes of the fee clauses.
- The judgment was reversed in part and the matter remanded for further proceedings, including determination of attorney’s fees in light of the mixed usury outcome.

## Legal Principles

- A real-property-secured loan may be exempt from California’s constitutional usury limit if it is “made or arranged” by a person who is a duly licensed real estate broker at the time of the transaction.
- Under Civil Code section 1916.1, “made or arranged” is construed broadly; a broker “arranges” a loan when, for compensation or expectation of compensation, the broker solicits, negotiates, or otherwise materially participates in putting the loan transaction together.
- The broker’s license status at the time the loan is made or arranged is a required condition of the exemption; an inactive license defeats the exemption for that transaction.
- Statutory exemptions from real estate broker licensing requirements (e.g., under the Business and Professions Code) do not themselves create exemptions from usury laws.
- A usury action seeking recovery of interest paid under promissory notes “involves” those notes for purposes of contractual attorney-fee provisions contained in the notes.

## Conclusion

The court held that broker participation can bring a real-property-secured loan within California’s broker-based usury exemption only when the broker is licensed at the time of the transaction; one note made during a license lapse was usurious. It also ruled that a usury suit based on interest paid under promissory notes triggers the notes’ attorney-fee clauses, requiring a remand to determine fees in light of the partial reversal.


Del Mar v. Caspe, 222 Cal. App. 3d 1316 (Cal. Ct. App. 1990)