Development Acquisition Group, LLC. v. Ea Consulting, Inc.

MEMORANDUM AND ORDER

Through this action, Defendant and Cross-Claimant EA Consulting, Inc. (“EA”) moves for partial summary judgment pursuant to Federal Rule of Civil Procedure 56.

EA seeks disposition of two issues: first, whether EA is entitled to the return of all interest paid to Plaintiff and Cross-Defendant Development Acquisition Group (“DAG”) under Cal. Civ.Code § 1916-2; and second, whether EA should be awarded treble damages on interest paid under Cal. Civ.Code § 1916-3. For the reasons set forth below, EA’s Motion is granted in part and denied in part.

BACKGROUND

In late 2006, DAG executed a $500,000 loan to EA pursuant to a Convertible Promissory Note secured by a Stock Pledge Agreement. In the Stock Pledge Agreement, EA’s CEO, Chin K. Wong (“Wong”), pledged his personal shares of stock in EA as security for the loan. (Undisp. Facts No. 1). The Convertible Promissory Note memorializing the loan set forth an interest rate of 8% over the course' of ninety days with a provision for an increase to 12% in the event of default. (Decl. of Chin K. Wong, Ex. 7).

EA defaulted on this loan and the parties thereafter negotiated a loan modification agreement memorialized by a…