Honchariw

BACKGROUND

A detailed summary of the underlying facts is presented in our prior opinion, Honchariw v. FJM Private Mortgage Fund, LLC (2022) 83 Cal.App.5th 893 (Honchariw). The Honchariws obtained a $5.6 million loan with an 8.5 percent interest rate from FJM Private Mortgage Fund, LLC (FJM), secured by a deed of trust on real property. (Id. at p. 898.) They missed a $39,667 payment, and FJM imposed a default interest rate surcharge of nearly 10 percent against the total unpaid balance of the loan and “a one-time 10 percent fee assessed against the overdue payment ($3,967).” (Ibid.) Representing himself and his wife, Nicholas filed a demand for arbitration, primarily arguing the late fees were a penalty that violated Civil Code section 1671. (Honchariw, supra, 83 Cal.App.5th at p. 898.) Among other things, they sought to recover unlawful late charges ($105,138, or three times the amount of the prohibited amount of the late charges imposed by FJM), $5 million in punitive damages, and reasonable attorney fees. An arbitrator disagreed and denied the claim. The Honchariws petitioned to vacate the arbitration award, which the trial court denied. (Id., at pp. 898– 899.) This court…