MARK McDOWELL CORPORATION v. LSM 128

This case presents the single issue of whether, under present California usury law, where an agreement is found to provide a usurious rate of interest, the court may award the creditor the 10 percent rate of interest prescribed by Civil Code section 3289, subdivision (b), from the date of the breach. LSM 128, a limited partnership (LSM), appeals after the trial court entered a judgment against it and in favor of Mark McDowell Corporation (McDowell), a California corporation. The judgment includes 10 percent interest for LSM’s breach of a contract found to contain a usurious interest provision applicable to sums LSM did not pay. LSM contends no interest is awardable under the circumstances and requests that we reverse the judgment as it relates to the award of prejudgment interest.

Finding LSM’s argument unmeritorious, we affirm.

Facts

A September 29, 1986, construction contract between LSM and McDowell provided that McDowell, as subcontractor, would perform certain rough grading work for LSM, owner. The total original price to be paid was $967,459. Subcontractor was to invoice owner for work performed according to unit prices in an exhibit, and owner was to pay the…