Cases

A commercial mortgage loan guaranty purported to waive any defense of illegality that the borrower might have against collection. A U.S. bankruptcy court had previously determined that, as to the borrower, the late fee was an unenforceable penalty that violated public policy. However, relying on the waiver provision, the superior court enforced a late fee against GMSR’s clients, the borrower’s guarantors.

The Court of Appeal reversed. It agreed with GMSR that the late fee was an illegal penalty that was as unenforceable against the guarantors as a matter of public policy and that the waiver was unconscionable.

Case Briefs

• Appellants' Opening Brief - View Document
• Appellants' Reply Brief - View Document
• California Court of Appeal Opinion - View Document