East West Bank v. Altadena Lincoln Crossing, LLC

This matter arises out of an appeal of an order of the Bankruptcy Court. Appellant East West Bank ("EWB") appeals the Bankruptcy Court's order disallowing its claim for default interest against the Debtor-Appellee Altadena Lincoln Crossing, LLC ("Altadena"). More specifically, EWB appeals the Bankruptcy Court's Order Regarding Debtor's Objections to Secured *636 Creditor East West Bank's Proof of Claim Nos. 9 and 11 ("Order re Objections"), which expressly incorporates the Bankruptcy Court's Findings of Fact and Conclusions of Law ("Findings" or "Conclusions"). (BK Docs. 564 & 643.)

Altadena took out a loan from EWB to finance a construction project but was unable to repay the loan upon maturity. Nonpayment triggered a default interest rate provision and led to a series of forbearance agreements between the parties over the course of eight years. After EWB refused to renew the last forbearance agreement, Altadena filed for bankruptcy. At issue in the present appeal is whether the default interest rate provision is enforceable under California law. The Bankruptcy Court concluded it was not. On appeal, this Court disagrees.

Therefore, as set forth herein, the Court REVERSES the…