Golden Forest Properties, Inc. v. Columbia Savings & Loan Ass'n

Introduction

Plaintiff, Golden Forest Properties, Inc. (Golden), appeals from the judgment entered in favor of defendants, Columbia Savings and Loan Association and Columbia Financial Corporation (collectively, Columbia) following a court trial determined upon stipulated facts. We are asked to interpret the prepayment charge clauses of a first promissory note and first deed of trust held by Columbia to determine whether Columbia was entitled to retain prepayment charges where the prepayment of a secured home loan resulted from acceleration upon the default of the borrower and subsequent trustee sale.

The Facts

The material facts are undisputed. On June 15, 1981, Angelo and Drucilla Typaldos borrowed $405,500 from Columbia. The promissory note in the principal sum of $405,500 was secured by a first deed of trust on certain residential real property in Rolling Hills, California. The first trust deed was recorded in the office of the Los Angeles County Recorder on June 19, 1981.

The first promissory note provided for payment of monthly installments of $5,738.34, interest of 17 percent on the unpaid balance of the loan, and a balloon payment upon a specified maturation…