ORDERED PUBLISHED

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re:

E. MARK MOON, 

 Debtor.

BAP Nos. NC-22-1103-SGB

 NC-22-1117-SGB

 (cross-appeals)

Bk. No. 20-30711

Adv. No. 20-03117

OPINION

MILESTONE FINANCIAL, LLC,

 Appellant/Cross-Appellee, 

v.

E. MARK MOON; LORI H. MOON, 

 Appellees/Cross-Appellants.

Appeal from the United States Bankruptcy Court

for the Northern District of California 

Dennis Montali, Bankruptcy Judge, Presiding

APPEARANCES: 

Bernard Kornberg, Esq. of Practus LLP argued for appellant/cross-appellee; 

John P. McDonnell, Esq. argued for appellees/cross-appellants. 

Before: SPRAKER, GAN, and BRAND, Bankruptcy Judges.

SPRAKER, Bankruptcy Judge:

INTRODUCTION

 When is a usurious forbearance not a usurious forbearance? 

According to the California Supreme Court, when it is a mere modification 

of a credit sale transaction under the “time-price” doctrine. Ghirardo v. 

Antonioli, 8 Cal. 4th 791, 804 (1994), as modified on denial of reh'g (Feb. 2, 

FILED

JAN 18 2023

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
2

1995). Ghirardo held that a pre-foreclosure modification of a credit sale 

transaction—including a forbearance on collection or enforcement of the 

underlying debt—is not subject to California’s usury laws. Id. (citing with 

approval DCM Partners v. Smith, 228 Cal. App. 3d 729, 739 (1991)). Ghirardo

reasoned that the seller otherwise can and likely will foreclose and then 

could charge a “new” buyer—including the prior owner—a high interest

rate free of usury law constraints as part of a new credit sale. Id. Ghirardo,

therefore, concluded that applying usury laws to credit sale modifications 

would elevate form over substance. Id.

Milestone Financial, LLC appeals from the bankruptcy court’s 

judgment that its Settlement Agreement, Indemnity and First Amendment 

to Promissory Note Secured by Deed of Trust (”Settlement Agreement”)

with chapter 71 debtor E. Mark Moon, and his wife Lori H. Moon, was a

usurious forbearance. It contends that Ghirardo’s holding should be 

extended to forbearances subject to California’s usury laws when the 

original loan transaction was subject to, but exempt from, those laws. We 

disagree with Milestone that Ghirardo can, or should be, extended to cover 

the Settlement Agreement. Accordingly, we AFFIRM the bankruptcy 

court’s usury ruling.

The Moons cross-appeal from the bankruptcy court’s award of postmaturity interest on the obligation underlying Milestone’s forbearance. 

1 Unless specified otherwise, all chapter and section references are to the 

Bankruptcy Code, 11 U.S.C. §§ 101–1532.
3

None of the Moons’ arguments persuade us that we should depart from 

the settled rule that creditors generally are entitled to interest at 

California’s legal rate when the loan matures but remains unpaid. Thus, we 

also AFFIRM the bankruptcy court’s post-maturity interest ruling.

FACTS2

A. The Milestone loan and the subsequent Settlement Agreement.

The Moons purchased their residence in 1993. In late 2014, facing 

foreclosure, Lori Moon filed bankruptcy but dismissed it several months 

later as part of the Moons’ efforts to refinance with Milestone. In May 2015, 

the Moons applied for a loan from Milestone to pay off the outstanding 

mortgage encumbering their residence. Roughly a month later, the Moons 

borrowed from Milestone $795,000, payable in two years, and used the loan 

to pay off all existing encumbrances against their residence. A licensed real 

estate broker represented the Moons in obtaining the Milestone loan. 

The Moons executed a promissory note (“Note”) in favor Milestone 

providing for interest only payments of $7,482.94 per month with a balloon 

payment for the balance due on July 31, 2017. The Note specified that 

interest would accrue on the loan at a rate of 11.30% per annum. The 

Moons secured the Note with a deed of trust against their residence.

Almost immediately, the Moons began to struggle to make the 

2 We exercise our discretion to take judicial notice of documents electronically 

filed in the underlying bankruptcy case and adversary proceeding. See Atwood v. Chase 

Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
4

required payments on the loan. At times, Milestone needed to advance tax 

and insurance payments for the residence. Roughly a year into the loan, in 

an attempt to stave off foreclosure, the parties entered into the Settlement 

Agreement. Neither party was represented by a real estate broker in 

entering into the Settlement Agreement.

The parties’ recitals reflect that the principal purpose of the 

Settlement Agreement was to extend the maturity date of the Note, which 

was reset to come due on July 31, 2019. Despite this evident purpose, the 

Settlement Agreement contained a provision stating that neither party 

intended or understood the Settlement Agreement to qualify as a loan or 

forbearance. The Settlement Agreement also identified the outstanding 

principal balance of the Note as $902,525.34 and reduced the interest rate 

from 11.30% to 11.05%. The new monthly payment under the Settlement 

Agreement was $8,310.75, which again paid interest only. The Settlement 

Agreement also added a provision that any past due payment, “including 

the final balloon payment,” would incur a 10% late charge. As 

consideration for the extension of the maturity date and for the interest rate 

reduction, the Moons agreed to pay Milestone $6,008.71.

B. The lawsuit, the bankruptcy filing, and the adversary proceeding.

The Moons again fell behind on their payments and other loan 

obligations. As a result, in February 2019, Milestone notified the Moons 

that it was accelerating the loan, that the entire loan balance needed to be 

paid off by March 3, 2019, and that a 10% late fee would be assessed unless 
5

the loan balance was paid by that date. 

The Moons did not pay off the loan balance. They did, however, seek 

to refinance the balance with a new lender and requested a payoff 

statement from Milestone to facilitate those efforts. According to the 

Moons, Milestone was slow to provide the payoff statement and issued

multiple quotes with differing amounts. They also contend that the quotes 

included inaccurate and illegal charges for late fees, interest accrual, and 

other charges, which significantly inflated the payoff amount. Each of the 

payoff quotes included a 10% “acceleration penalty.” Milestone explained 

that this was a late charge for nonpayment of the accelerated balloon 

payment as provided for in the Settlement Agreement.

In September 2019, Milestone recorded a notice of default. In

November 2019, the Moons sued Milestone in the San Mateo Superior 

Court. The operative complaint is the Moons’ first amended complaint for 

breach of contract, fraud, intentional interference with contract, and 

declaratory relief. The complaint sought damages and an injunction of 

Milestone’s foreclosure proceedings. The gravamen of the claims focused 

on Milestone’s conduct in providing the payoff quotes. For instance, the 

Moons alleged that Milestone breached its contract “by demanding a 

payoff amount far in excess of the amount required by any contract, and 

demanding amounts that were illegal under the law.”

Though the state court initially issued a temporary restraining order, 

it denied the Moons’ motion for a preliminary injunction. Shortly 
6

thereafter, Mr. Moon filed a voluntary chapter 13 petition, which he later 

converted to chapter 11. In October 2020, the Moons removed the state 

court litigation to the bankruptcy court thereby commencing the 

underlying adversary proceeding.

C. The cross-motions for summary judgment in the adversary 

proceeding.

The Moons moved for partial summary judgment, but their moving 

papers focused on three claims not raised in their complaint. They sought 

determinations that the Settlement Agreement was a usurious forbearance

which rendered the 11.05% interest rate void, that the 10% “acceleration 

fee” on the balloon payment was an illegal and unenforceable penalty, and 

that the other late fees Milestone assessed were unenforceable and 

improperly charged multiple times against a single missed payment. 

Milestone opposed the Moons’ summary judgment motion and 

moved for summary judgment to dismiss the four causes of actions stated 

in the first amended complaint. Milestone originally asserted that the 

Settlement Agreement was exempt from usury restrictions under Cal. Civ. 

Code § 1916.1 because Carolyn Stuart, one of Milestone’s owners, was a 

licensed real estate broker and was involved in the parties’ entering into 

the Settlement Agreement.3 Alternately, Milestone claimed that the

Settlement Agreement was neither a loan nor a forbearance subject to 

California’s usury laws under the holdings of Ghirardo v. Antonioli, 8 Cal. 

3 Milestone abandoned this argument on appeal.
7

4th 791, 804, (1994), as modified on denial of reh'g (Feb. 2, 1995); and DCM 

Partners v. Smith, 228 Cal. App. 3d 729, 739 (1991).

The court issued a memorandum decision in January 2022, resolving 

the cross-motions for summary judgment. It granted Milestone summary 

judgment dismissing the declaratory relief cause of action holding that the 

Moons failed to state a claim for relief. On the other hand, the court 

determined that there were triable issues of fact with respect to the Moons’ 

fraud and intentional interference claims. 

On the breach of contract claim, the court initially expressed an intent 

to deny summary judgment. According to the court, neither of the parties

established whether Milestone’s payoff demands were in excess of the 

contractual amount owed or whether Milestone thereby breached the 

parties’ contract. Even so, the court later granted summary judgment in 

favor of the Moons on their “Second Cause of Action” for breach of 

contract. However, it held only that the Moons were not liable for interest 

prior to the maturity date of the loan, or for the acceleration fee, and that 

the $902,525.34 principal amount owed needed to be reduced to the extent 

the Moons paid pre-maturity interest.

The court determined that Milestone’s charges for pre-maturity

interest were unenforceable because the Settlement Agreement was a 

usurious forbearance. It explained that Cal. Civ. Code § 1916.1’s exemption 

for broker-orchestrated loans and forbearances did not apply because 

Milestone’s forbearance was not connected to a contemporaneous or prior 
8

sale, lease, or exchange of real property. The bankruptcy court also rejected 

Milestone’s arguments positing that all forbearances arising from exempt 

loans also should be exempt from usury restrictions.

Though the court disallowed the acceleration fee, it validated 

Milestone’s other late fees as legally enforceable.

After further briefing, the court additionally held that even though 

Milestone’s charge for pre-maturity interest was unenforceable, California 

law was clear that the Moons were still liable for post-maturity interest at 

the legal rate. The Moons then advised the court that they were willing to 

dismiss their three surviving claims for relief.

The court entered final judgment on May 25, 2022. The judgment 

granted the Moons relief on their second cause of action for breach of 

contract “which reduces the amount owed to Milestone secured by [the 

Moons’ residence].” Per the Moons’ election, the bankruptcy court 

dismissed the remaining claims for relief with prejudice. The judgment 

specified that Milestone was owed $751,009.91, which reflected 

adjustments from the principal amount of $902,525.34 for payments made, 

amounts advanced, and post-maturity interest accrued.

Milestone appealed the bankruptcy court’s usury ruling. The Moons 

cross-appealed from the court’s ruling on post-maturity interest.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334. We 

have jurisdiction under 28 U.S.C. § 158.
9

ISSUES

1. Did the bankruptcy court err when it held that the Settlement 

Agreement was a usurious forbearance that was not exempt from 

usury restrictions under Cal. Civ. Code § 1916.1?

2. Did the bankruptcy court err when it held that Milestone was entitled 

to post-maturity interest?

STANDARD OF REVIEW

Both issues on appeal present questions of law, which we review de 

novo. Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014).

When we review a matter de novo, we give no deference to the bankruptcy 

court’s decision. Id.

DISCUSSION

A. Appeal from usury ruling.

1. California’s usury laws and the broker exemption. 

California’s Constitution, article XV, section 1, states: “No person, 

association, copartnership or corporation shall by charging any fee, bonus,

commission, discount or other compensation receive from a borrower more 

than the interest authorized by this section upon any loan or forbearance of 

any money, goods or things in action.” California’s usury law prohibits

receipt of interest in excess of the prescribed maximum when: (1) the 

transaction is a loan or forbearance; (2) the borrower’s obligation to repay 

both principal and interest is absolute; and (3) the lender consciously and 

voluntarily takes an amount of interest, which exceeds the prescribed 
10

maximum. Ghirardo, 8 Cal. 4th at 798 & n.2. During the period relevant to 

this appeal, the maximum amount of interest was 10% per annum.4

There are myriad exceptions to California’s usury laws. Sw. Concrete 

Prods. v. Gosh Constr. Corp., 51 Cal. 3d 701, 705 (1990). So many that it is 

sometimes said that “the law’s application itself seems to be the exception 

rather than the rule.” Ghirardo, 8 Cal. 4th at 807. The only exemption 

relevant to this appeal is the one for transactions made or arranged by 

licensed California real estate brokers (the “Broker Exemption”) set forth in 

Cal. Civ. Code § 1916.1.

5 The Broker Exemption provides:

The restrictions upon rates of interest contained in Section 1 of 

Article XV of the California Constitution shall not apply to any 

loan or forbearance made or arranged by any person licensed as 

a real estate broker by the State of California, and secured, 

directly or collaterally, in whole or in part by liens on real 

property. For purposes of this section, a loan or forbearance is 

arranged by a person licensed as a real estate broker when the 

broker (1) acts for compensation or in expectation of 

4 As amended in 1979, the constitution’s usury provision sets a 10% interest rate 

ceiling on all consumer loans (when the loan of “money, goods, or things in action [is]

for use primarily for personal, family, or household purposes”) but for other loans 

permits the interest rate to exceed 10%, so long as it is not more than 5% over the

prevailing rate “established by the Federal Reserve Bank of San Francisco on advances 

to member banks under Sections 13 and 13a of the Federal Reserve Act.” CAL CONST. 

art. XV, § 1 (amended 1979); see also Soleimany v. Narimanzadeh, 78 Cal. App. 5th 915, 920 

& n.4 (2022) (explaining interest rate caps). The parties agree that 10% was the 

maximum interest available under the applicable usury laws. 

5 In our discussion when we refer to an “exception” from the usury laws, we 

mean that it is not subject to the usury laws. When we refer to something as “exempt” 

from the usury laws, we mean that it is subject to California’s usury laws but has been 

declared exempt from them. This is a distinction that Milestone elides, but the 

distinction is fatal to its argument.
11

compensation for soliciting, negotiating, or arranging the loan 

for another, (2) acts for compensation or in expectation of 

compensation for selling, buying, leasing, exchanging, or 

negotiating the sale, purchase, lease, or exchange of real property 

or a business for another and (A) arranges a loan to pay all or 

any portion of the purchase price of, or of an improvement to, 

that property or business or (B) arranges a forbearance, 

extension, or refinancing of any loan in connection with that sale, 

purchase, lease, exchange of, or an improvement to, real 

property or a business, or (3) arranges or negotiates for another 

a forbearance, extension, or refinancing of any loan secured by 

real property in connection with a past transaction in which the 

broker had acted for compensation or in expectation of 

compensation for selling, buying, leasing, exchanging, or 

negotiating the sale, purchase, lease, or exchange of real property 

or a business. The term “made or arranged” includes any loan 

made by a person licensed as a real estate broker as a principal 

or as an agent for others, and whether or not the person is acting 

within the course and scope of such license.

The Broker Exemption was first enacted by voter constitutional 

initiative in 1979, which amended article XV, section 1, of the California 

Constitution to exempt from the usury laws, “any loans made or arranged 

by any person licensed as a real estate broker by the State of California and 

secured in whole or in part by liens on real property.” The constitutional

amendment did not speak at all about forbearances. This is consistent with 

the amendment’s underlying legislative purpose. The Broker Exemption 

was California’s response to “a widely perceived need . . . for a greater 

infusion of investment capital into the field of real estate lending.” Stickel v. 

Harris, 196 Cal. App. 3d 575, 581 (1987). The theory was that a usury 
12

exemption for loans made or arranged by real estate brokers was necessary 

to encourage mortgage bankers and brokers to make more real estate 

secured loans in California to remedy a “severely limited . . . flow of money 

to California to buy homes, create job opportunities, and for other 

purposes” resulting from high market rates of interest combined with 

relatively low usury caps on non-exempt loans. Del Mar v. Caspe, 222 Cal. 

App. 3d 1316, 1324-25 (1990).

The Broker Exemption was then refined and interpreted by the 

California legislature in 1983 when it enacted Cal. Civ. Code § 1916.1. The

new statute expanded the Broker Exemption by specifically including

forbearances. As amended in 1985, Cal. Civ. Code § 1916.1 construed what 

the constitution and the statute meant when they referred to loans and 

forbearances “arranged by” a real estate broker. As recognized in Winnett 

v. Roberts, 179 Cal. App. 3d 909, 921 (1986), “[t]he legislative interpretation 

of article XV contained in Civil Code section 1916.1 is not unreasonable. 

Accordingly it is entitled to, and we indulge, a strong presumption in its 

favor.” See also Zager v. Lara (In re Lara), 731 F.2d 1455, 1459 (9th Cir. 1984)

(“Because Section 1916.1 presents a reasonable interpretation of Proposition 

2, we must accept the legislature’s conclusion that a licensed real estate 

broker need not be acting in his licensed capacity for the usury exemption 

to apply.”).

2. Milestone’s arguments.

Milestone offers two somewhat inconsistent arguments why it 
13

believes the Settlement Agreement was not subject to usury laws. It asserts 

that a loan modification extending the Settlement Agreement’s maturity 

date is not a forbearance so long as the original loan was exempt. In this 

instance, the parties acknowledge that Milestone’s original loan was 

arranged by a real estate broker and was exempt from the usury laws 

under Cal. Civ. Code § 1916.1. Alternately, Milestone urges that even if the 

Settlement Agreement qualifies as a forbearance, Cal. Civ. Code § 1916.1

should be applied broadly to include any forbearance of a loan originally 

exempt under that statute. Neither argument persuades us.

a. The settlement agreement was a forbearance.

California’s usury laws apply to loans and forbearances. “A loan of 

money is the delivery of a sum of money to another under a contract to 

return at some future time an equivalent amount.” Sw. Concrete Prods., 51 

Cal. 3d at 705 (citing Boerner v. Colwell Co. 21 Cal. 3d 37, 44, n.7 (1978)). By 

way of comparison, “[a] forbearance of money is the giving of further time 

for the payment of a debt or an agreement not to enforce a claim at its due 

date.” Id.; see also 11 Miller & Starr, Cal. Real Est. § 37:6 (4th ed. 2022) (“A 

forbearance is the extension of additional time for the repayment of an 

obligation or an agreement not to enforce a claim on its due date, or 

releasing and extending the borrower’s obligation for repayment.”). Thus, 

“[a] forbearance occurs when the creditor, in exchange for consideration, 

agrees to wait for a period of time to collect the debt.” Sheehy v. Franchise 
14

Tax Bd., 84 Cal. App. 4th 280, 284 (2000).

Milestone contends that the Settlement Agreement was not a loan or 

forbearance because the agreement said so. But the substance of an 

agreement controls over its form. Ghirardo, 8 Cal. 4th at 799–800. It is well 

settled that the label used by the parties is not controlling. See id. at 802.

The Settlement Agreement provided for a two-year extension of the 

maturity date of the Note. It is undisputed that this was the principal 

purpose of the parties entering into the Settlement Agreement. It also 

provided the required consideration for a binding forbearance agreement 

in the form of a $6,008.71 “extension fee” to be paid by the Moons. As such, 

it falls squarely within the definition of forbearance applied in Southwest 

Concrete Products and Boerner. Whatever motive drove the parties to declare 

that the Settlement Agreement was neither a loan nor a forbearance, that 

label does not help Milestone. The bankruptcy court did not err in its 

finding that the Settlement Agreement constituted a forbearance for 

purposes of California’s usury laws.

b. Cal. Civ. Code § 1916.1 cannot be construed to exempt 

all forbearances of exempt loans.

Milestone alternately argues that even if the Settlement Agreement 

constitutes a forbearance, we should broadly read Cal. Civ. Code § 1916.1 

as being applicable to any subsequent modifications between the parties 

whenever the original loan was exempt. Milestone relies heavily on 

Ghirardo and DCM Partners. It argues that their holdings should be 
15

extended to the Settlement Agreement. These cases considered extensions 

of credit sale transactions and concluded that they are not loans or 

forbearances subject to the usury laws. According to both decisions, it 

made no difference whether the parties modified the applicable interest 

rate, or if it remained unchanged. Ghirardo, 8 Cal. 4th at 805-07; DCM

Partners, 228 Cal. App. 3d at 735. The modified credit sale’s terms were

excepted from usury law’s restrictions for the same reasons the original 

loans were excepted. Ghirardo, 8 Cal. 4th at 804; DCM Partners, 228 Cal.

App. 3d at 739.

Ghirardo’s and DCM Partners’ treatment of credit sale extensions is

grounded in the time-price doctrine as articulated in the courts of 18th 

century England. See Fox v. Federated Dep't Stores, Inc., 94 Cal. App. 3d 867, 

876 (1979) (citing Floyer v. Edwards, 98 Eng. Rep. 995 (K.B. 1774)). “This 

doctrine applies when property is sold on credit as an advance over the 

cash price. In these circumstances, the seller finances the purchase of 

property by extending payments over time and charging a higher price for 

carrying the financing.” Sw. Concrete Prods., 51 Cal. 3d at 705. The United 

States Supreme Court followed this doctrine in Hogg v. Ruffner, 66 U.S. 115, 

119 (1861), and virtually every state has adopted it. See Fox, 94 Cal. App. 3d 

at 876. California adopted the doctrine in Verbeck v. Clymer, 202 Cal. 557, 

563-64 (1927), which explained, “[t]he first element of a usurious 

transaction is that there be a loan or forbearance of money, for, if there is 

neither, there can be no usury, unless a statute has given some definition of 
16

usury inconsistent with that of the common law.” Id. at 563. A bona fide

credit sale is neither a loan nor forbearance subject to usury laws. Sw. 

Concrete Prods., 51 Cal. 3d at 705. As the California Supreme Court 

reasoned in Verbeck:

The owner of property, whether real or personal, has a right to name 

the price at which he is willing to sell. He may offer to sell at a 

designated price for cash, or at a much higher price on a credit, and a 

credit sale will not constitute usury, however great the difference 

between the cash price and the credit price, unless the whole 

transaction was in fact a mere pretense and a sham in order to 

camouflage the real facts.

Id. at 564 (quoting Holland-O'Neal Milling Co. v. Rawlings, 268 S.W. 683, 686 

(Mo. Ct. App. 1925)).

In the decades following Verbeck, the general rule seemed to be that 

the time-price doctrine did not apply to subsequent forbearances arising 

from credit sales between a buyer and seller.

6 See, e.g., Lakeview Meadows 

6 The annotation, Obligations covering deferred payments of purchase money, or 

extension thereof, as loan or forbearance within usury laws, 91 A.L.R. 1105 (1934), lucidly

explains why extensions of the maturity date of purchase money secured obligations 

traditionally have been treated as forbearances even when the original transaction was a 

credit sale transaction charging an otherwise usurious rate of interest:

The extension of the time of payment of a purchase-money obligation 

beyond that fixed for its maturity under the original contract would seem 

to constitute a “forbearance of a debt,” even if it be assumed that a 

purchase-money obligation bearing an excessive rate of interest during the 

time before its maturity would not be violative of the usury laws, on the 

theory of absence of an actual loan or a forbearance of a debt. It would seem 

that even under the view of those courts which hold such transactions 

immune from the ban of usury laws on the theory of absence of a loan or 
17

Ranch v. Bintliff, 36 Cal. App. 3d 418, 422-24 (1973) cited as unpersuasive in

DCM Partners, 228 Cal. App. 3d at 739 n.7; Clarke v. Horany, 212 Cal. App. 

2d 307, 309–10 (1963), also cited as unpersuasive in DCM Partners. Ghirardo

and DCM Partners rejected the traditional rule.

In Ghirardo, the Antoniolis sold real property to a third party who 

then resold it to Ghirardo. Both of these transactions were credit sales. 

Ghirardo and Antonioli later settled a payment dispute by which they 

restructured those debts. Ghirardo executed two “settlement notes,” both 

of which charged usurious rates of interest. Ghirardo, 8 Cal. 4th at 796-97.

Ghirardo later obtained a usury judgment against Antonioli. The California 

Supreme Court reversed, holding that the parties’ settlement was neither a 

loan nor a forbearance. Id. at 797, 808. According to the Ghirardo court, the 

settlement was merely a modification of the prior credit sale(s), so the 

forbearance of a debt (because forbearance presupposes a pre-existing 

indebtedness, not present in a sale), a purchase-money obligation, after the 

time of its maturity as fixed by the original contract, stands on a different 

footing. The moment such obligation falls due, its association with the 

sale is severed. It is no more a part of the consideration for the sale. It is 

an obligation absolutely owing, independent of the sale out of which it 

arose; and any agreement for its extension can be regarded as one relating 

not to the consideration of the sale, but to an independent obligation, and 

therefore constituting a "forbearance of a debt," within the meaning of 

the usury laws. The fact that under the original transaction (the sale) there 

was no element of a loan does not detract from the merits of this 

conclusion, because usury may exist in the forbearance of a debt, even in 

the absence of an actual loan, and a loan is not a necessary prerequisite 

of a forbearance of a debt.

Id. at 1110-11 (emphasis added) (listing cases). 
18

interest rates in the settlement notes were not subject to usury restrictions. 

Id. at 808.

The Ghirardo court reasoned that in negotiating their settlement in the 

shadow of foreclosure, the parties faced the same risks and economic 

incentives as do a buyer and seller subject to a credit sale. Id. at 804. Thus, 

the California Supreme Court explained, the same logic and policies 

underlying the time-price doctrine equally supported treating the 

settlement as a mere modification of the ongoing credit sale relationship 

between the parties and not as a forbearance subject to the usury laws. In 

Ghirardo’s own words:

We see no practical reason why the same rule should not obtain 

when the seller has already transferred title and is about to foreclose 

on the purchase money note. Just as he had an initial right to sell the 

property on any price terms he wished, he has the right to foreclose 

and to resell the property as he sees fit, at any interest rate, including 

reselling to the initial buyer. Precluding him from renegotiating with 

the buyer would elevate form over substance.

Id.

The California Supreme Court emphasized that, if the rule were that 

an otherwise exempt transaction could be brought within the ambit of the 

usury laws by the seller granting an extension to the buyer, sellers would 

have a disincentive to negotiate with buyers and instead would be 

motivated to foreclose, which would work to the detriment of both 

parties—but particularly to that of buyers who would then lose their 
19

property to foreclosure. Id. at 805-06.

Ghirardo drew heavily from DCM Partners, which utilized a virtually 

identical analysis to reach a similar result. In DCM Partners, the owner of 

real property (Smith) sold it to DCM Partners in exchange for cash and a 

$108,000 promissory note bearing 10% interest secured by a deed of trust.

The note provided for interest only payments, with the principal balance 

due upon the note’s maturity. DCM Partners, 228 Cal. App. 3d at 732.

Shortly before the due date for the balloon payment, the buyer determined 

that he would not be able to repay the note on or before its maturity date. 

Consequently, the buyer entered into negotiations with the seller by 

requesting an extension of the maturity date. The seller agreed, but 

required the interest rate be raised from 10% to 15% to reflect an increase in 

the market rate. The buyer paid the extended note, but then successfully

sued the seller for usury. Id.

Initially, the court of appeal rejected seller’s argument that the 

extension was not a forbearance because it was entered into before the note 

matured. The DCM Partners court held that the definition of forbearance 

was not as narrow as seller asserted and concluded that “forbearance 

within the meaning of the usury law is an agreement to extend the time for 

payment of the obligation due either before or after the obligation’s due 

date.” Id. at 735 (cleaned up). Nonetheless, DCM Partners ultimately held 

that the usury laws did not apply to “a modified purchase money secured 

note initially created in an exempt transaction, the bonafide sale and 
20

purchase of real property, where the modification, done at the request of 

the trustor, consisted solely of increasing the rate of interest to reflect 

market conditions in consideration of extending the due date of the note.” 

Id. at 732.

DCM Partners was even more candid and emphatic than Ghirardo that 

its decision was founded on the practical or economic effect of its decision 

and the perceived unfairness if it were to decide otherwise. It frankly 

admitted that “absent legislative direction or persuasive precedent a 

factor underlying our conclusion that this transaction was not usurious is 

the discomforting unfairness if we were to conclude otherwise.” Id. at 735 

(emphasis added).

Placing Ghirardo and DCM Partners in context, credit sales are not 

treated as loans nor forbearances under California law. It is for this reason 

that they are not subject to its usury laws. But the Broker Exemption has a 

drastically different origin from the time-price, credit-sale doctrine which 

traces its origins in the common law of 18th century England. Fox, 94 Cal. 

App. 3d at 876. In contrast, the Broker Exemption was formulated by voter 

initiative and refined by California’s legislature. We must presume that 

California’s voters and its legislature said what they meant and meant 

what they said when they amended California’s constitution and enacted 

Cal. Civ. Code § 1916.1. See Del Mar, 222 Cal. App. 3d at 1328. As Del Mar

explained: “It is a settled rule of statutory construction that unless 

otherwise clearly intended or indicated, statutes should be construed in 
21

accordance with the common or ordinary meaning of the language used, 

particularly when the law as so construed is consistent with the general 

policy of the state.” Id. (citations omitted).

Section 1916.1 statutorily creates an exemption to the usury laws 

otherwise applicable to loans and forbearances. Nowhere in the statute is 

there an exemption for a forbearance merely because the original loan 

transaction qualified for that exemption. As elucidated in In re Arce 

Riverside, LLC, 538 B.R. 563, 574 (Bankr. N.D. Cal. 2015):

CC 1916.1 extends the [Broker Exemption], in its opening sentence, to 

“any loan or forbearance” made or arranged by a licensed real estate 

broker. The second sentence narrows the field where it indicates that 

“for purposes of this section” the exemption applies only in three 

circumstances. The first applies to a loan (not applicable here). The 

second applies to “selling, buying, leasing, exchanging or negotiating 

the sale, purchase, lease, or exchange of real property or a business 

for another” and the broker either (A) arranges a loan or (B) 

“arranges a forbearance” in connection with that sale, purchase, 

lease, etc. . . . The third [circumstance] is found where the broker 

“arranges or negotiates for another a forbearance, extension, or 

refinancing of any [real property] loan . . . in connection with a past 

[real property sale/lease/exchange] transaction in which the broker 

had acted for compensation.”

Id.

On appeal, Milestone does not argue that the Settlement Agreement 

specifically falls within any of the three enumerated circumstances 

qualifying for the Broker Exemption. Indeed, the statute expressly exempts 

from usury any broker arranged or negotiated “forbearance or extension” 
22

to a real property secured loan when it is connected to a contemporaneous 

or past real property sale, lease, or exchange transaction in which the same 

broker acted for compensation. Cal. Civ. Code § 1916.1(2) and (3). Though a

broker represented the Moons in procuring the Milestone loan bringing it 

within the statutory exemption, no broker was involved with the 

Settlement Agreement. Thus, because no broker was involved with the 

forbearance, the Settlement Agreement did not meet the statutory 

requirements for the Broker Exemption.7

Milestone argues that we should extend Ghirardo and DCM Partners

because strict adherence to Cal. Civ. Code § 1916.1 can lead to absurd and 

inequitable results. It points to language in Ghirardo and DCM Partners

concluding that such results in the credit sale context were “somewhat 

absurd and clearly inequitable.” Ghirardo, 8 Cal. 4th at 806; see also DCM 

Partners, 228 Cal. App. 3d at 735. Milestone further argues that in departing 

from Ghirardo and DCM Partners, the bankruptcy court ignored sound 

reasoning why it makes no practical or economic sense to impose usury 

restrictions on non-exempt pre-foreclosure forbearances given that the 

creditor could simply foreclose and resell to a new buyer or even the prior 

owner and then charge any interest rate it desired under the shelter of the 

7 As the bankruptcy court emphasized, the Settlement Agreement also did not 

qualify for the Broker Exemption because it lacked the requisite connection to a past or 

contemporaneous sale, lease, or exchange of real property.
23

time-price doctrine.

Ghirardo and DCM Partners are the exception to the general rule that 

forbearances are assessed independently for usury purposes. See, e.g., Strike 

v. Trans-West Disc. Corp., 92 Cal. App. 3d 735, 744–45 (1979); see also 11 

Miller and Starr, Cal. Real Est. § 37:6 (4th ed. 2022) (“Although the original 

loan is not usurious, any extension or forbearance of the contractual due 

date of the loan may be a forbearance subject to the usury limitations, 

unless it is exempt by some other provision of the Usury Law.”). That 

exception is limited to credit sales because they fall outside of California’s 

usury laws. Milestone, however, entered into a loan, and then a 

forbearance, with the Moons. Both the loan and forbearance were subject to 

California’s usury laws. Milestone’s loan fell within the statutory Broker 

Exemption due to the involvement of Moon’s broker but the subsequent 

forbearance did not. 

The results Milestone assails are not so incongruous that we are 

prepared to rewrite the Broker Exemption on California’s behalf. If 

California wanted to exempt under Cal. Civ. Code § 1916.1 all forbearances 

of any loan originally subject to the Broker Exemption, it would have been 

a simple matter for the statute to say so. Instead, the California legislature 

took pains to set forth a more complex and more restrictive statutory 

scheme as to when the Broker Exemption should be applied to 

forbearances. Nor do we perceive our reading of this scheme as being at 
24

odds with the purpose and intent of the Broker Exemption. 

In short, we decline to second guess the plain meaning of Cal. Civ. 

Code § 1916.1 or to impose what would amount to a judicial amendment of 

the statute.

B. Cross-appeal from court’s award of post-maturity interest.

After deciding that the Settlement Agreement’s interest provision 

was void as usurious, the bankruptcy court nonetheless determined that 

Milestone was entitled to post-maturity interest. The bankruptcy court 

relied on Epstein v. Frank, 125 Cal. App. 3d 111 (1981), which held that even 

when a note includes an unenforceable usurious interest provision the 

lender is entitled to recover the principal amount of the debt upon maturity 

and interest at California’s legal rate if the principal is not repaid when it is 

due. Id. at 122-23; see also Soleimany, 78 Cal. App. 5th at 923-24 (explaining 

the scope and application of legal interest rate provisions in Cal. Civ. Code 

§ 3289 and CAL CONST. art. XV, § 1). The Epstein court noted that “denial of 

interest up until the maturity of the note is a sufficient deterrent against the 

exacting of usurious interest.” Epstein, 125 Cal. App. 3d at 123. If the note 

remains unpaid on maturity, the lender is entitled to prejudgment interest 

under California law. Id.; Soleimany, 78 Cal. App. 5th at 922-23.

The Moons do not dispute that under Epstein a lender is entitled to 

post-maturity interest on the unpaid principal at the legal rate even if the 

contract rate of interest was usurious. Instead, they rely upon a statement 

in Epstein that “[i]f the obligor improperly withholds payment of this 
25

obligation it is neither unjust nor contrary to policy that he be chargeable 

with interest at the legal rate from the date he was obligated to pay the note 

until the date he discharges that obligation, or to the date a judgment is 

rendered against him.” Epstein, 125 Cal. App. 3d at 123. They maintain that 

they properly withheld payment from Milestone because of Milestone’s 

misconduct. They argue that Milestone wrongfully refused to accept 

payment of a non-usurious amount and improperly calculated the loan 

balance with interest, fees, and charges as provided under the Settlement 

Agreement. According to the Moons, the bankruptcy court erred when it 

rejected their equitable and legal theories, which they believe excused them 

from paying any interest on the principal balance.

We agree with the bankruptcy court that the Moons failed to 

establish any legally cognizable basis to deny Milestone post-maturity 

interest at the legal rate. Under Epstein and Soleimany, the right to

prejudgment interest at the legal rate commenced upon the maturity of the 

loan. 

The Moons asserted claims against Milestone in an attempt to deny it 

any post-maturity interest. Those claims arguably could have supported an 

award of damages that the Moons could have used to offset their liability, 

but they have failed to offer any legitimate explanation how such claims 

could negate Milestone’s right to prejudgment interest on maturity of the 

loan under Epstein and Soleimany. We hold that the bankruptcy court 

correctly denied the Moons’ equitable defenses to the accrual of post-
26

maturity interest as a matter of law. But even if we were to consider the 

Moon’s arguments, they are unavailing.

1. Equitable estoppel does not justify a denial of post-maturity 

interest.

The Moons argue that Milestone’s conduct estopped it from seeking 

any post-maturity interest on the principal balance owed. They focus on 

the payoff demands Milestone provided containing the usurious interest

rate and the improper acceleration fee. The Moons also contend that the 

payoff demands were otherwise inaccurate and that Milestone failed to 

cooperate in their efforts to pay off the debt. But the bankruptcy court 

never made any determination regarding the accuracy of Milestone’s 

payoff demands or concerning Milestone’s cooperation. And the Moons 

acquiesced to dismissal of their surviving claims at the time the court 

entered summary judgment, thereby forfeiting any right to have these 

surviving issues determined.

More importantly, any holding that Milestone’s usurious interest rate 

or its improper acceleration fee precludes recovery of post-maturity 

interest would be wholly at odds with Epstein’s holding. Simply put,

Esptein upheld the lenders’ right to post-maturity interest despite usurious 

interest charges. 

On a more practical level, the Moons never explained how 

Milestone’s conduct satisfied the elements required to establish equitable 

estoppel. Equitable estoppel ordinarily requires: “(1) the party to be 
27

estopped must be apprised of the facts; (2) he must intend that his conduct 

shall be acted upon, or must so act that the party asserting estoppel had the 

right to believe that it was so intended; (3) the party asserting the estoppel 

must be ignorant of the true state of facts; and (4) he must rely on the 

conduct to his prejudice.” Butler Am., LLC v. Aviation Assurance Co., LLC, 55 

Cal. App. 5th 136, 147 (2020). If the party asserting the estoppel fails to 

show that he or she relied on the opposing party’s representation or 

conduct to his or her detriment, equitable estoppel does not apply. Id. at 

148. The Moons argue that calculating the payoff with the usurious interest 

and acceleration fee constitute inequitable conduct. But the Moons never 

claimed that they believed Milestone’s payoff demands were accurate or 

relied on them in the course of their dealings with Milestone. To the 

contrary, the record reflects that they strenuously disputed them. In short, 

equitable estoppel does not apply here, and it would not help the Moons

even if it did.

2. The doctrine of unjust enrichment does not justify denial of 

post-maturity interest.

Citing Beck v. West Coast Life Insurance Co., 38 Cal. 2d 643, 645 (1952), 

the Moons claim that the bankruptcy court’s order granting Milestone postmaturity interest violates Cal. Civ. Code § 3517 and the statutory 

prohibition against anyone profiting from their own wrong. They contend 

that any award of post-maturity interest violates this principle because 

they would have paid off the Note but for Milestone’s overstated payoff 
28

demand. Again, this argument is at odds with Epstein which specifically 

provided for post-maturity interest where the lender charged a usurious 

interest rate prior to the loan maturing. Under Epstein, Milestone is not 

profiting from its usurious interest rate; it is being compensated for the 

Moons’ failure to pay the outstanding balance of its loan when it came due. 

In any event, the Moons’ argument invoking Cal. Civ. Code § 3517 

lacks merit. Beck makes clear that Cal. Civ. Code § 3517 is a codification of 

unjust enrichment doctrine: “The general principle that precludes a 

wrongdoer from unjustly enriching himself has been codified in section[s]

2224 and 3517 of the Civil Code and applied in a variety of situations.” 38 

Cal. 2d at 645 (footnotes omitted). Unjust enrichment is an equitable 

remedy. Levine v. Blue Shield of Cal., 189 Cal. App. 4th 1117, 1138 (2010); 

Ramona Manor Convalescent Hosp. v. Care Enters., 177 Cal. App. 3d 1120, 

1140 (Ct. App.), as modified on denial of reh'g (Mar. 5, 1986). Courts do not 

apply equitable remedies when there is an adequate remedy at law—like 

readily ascertainable damages. DVD Copy Control Assn., Inc. v. Kaleidescape, 

Inc., 176 Cal. App. 4th 697, 725–26 (2009); Ramona Manor Convalescent Hosp., 

177 Cal. App. 3d at 1140.

The record reflects that the Moons failed to plead or prove an 

entitlement to an unjust enrichment remedy, but they did assert breach of 

contract and other claims against Milestone. Perhaps the Moons could have 

proven that damages arose from Milestone’s overstatement of its payoff 

demand, but they chose not to do so. Instead, they voluntarily dismissed 
29

their remaining claims for relief and acquiesced to entry of final judgment

adjusting the balance due to exclude the usurious interest and 

unenforceable acceleration fee.

3. The Moons failed to establish that Milestone’s so-called

breach of contract excused their duty to pay interest.

The Moons also argue that Milestone breached its contractual 

obligations by overstating its payoff demand. They point to the bankruptcy 

court’s judgment which granted relief on their claim for breach of contract. 

Milestone’s breach of contract, they argue, excuses them from paying any 

interest on the Note. There are several problems with their breach of 

contract argument.

First, promissory notes are generally considered to be a unilateral 

contract. See E.B.C. Tr. Corp. v. JB Oxford Holdings, Inc., Case No. CV008812-RMTMCX, 2004 WL 5641999, at *1 (C.D. Cal. Oct. 26, 2004) (citing 

Haulman v. Crumal, 13 Cal. App. 2d 612, 619 (1936)); 1 Witkin, Summary 

11th Contracts § 107 (2022) (including a promissory note as an illustration 

of a unilateral contract). Upon lending the money to the Moons, Milestone 

had no further contractual obligations. Though the bankruptcy court 

entered judgment on the Moons’ second cause of action in the Amended 

Complaint for breach of contract including the failure to provide an 

accurate payoff demand, it is unclear how any such contractual obligation 
30

arose.8

Second, the bankruptcy court’s grant of summary judgment on the 

Moons’ breach of contract claim was based solely on the court’s

determination that Milestone charged usurious interest in violation of 

California law and that the acceleration fee also was unenforceable. Even 

though these charges were legally unenforceable under California law, 

Milestone’s payoff demands including these charges still were calculated in 

accordance with the terms of the parties’ Settlement Agreement. It defies 

logic to say that Milestone’s adherence to the agreed upon terms of the 

parties’ contract—before those terms were declared legally 

unenforceable—somehow constituted a breach of contract claim that 

excused the Moons’ performance of their obligation to repay the principal 

balance with post-maturity interest. To the extent that the Moons stated 

affirmative claims on other theories based on Milestone’s conduct, they 

voluntarily forfeited those claims by electing not to pursue them in the 

bankruptcy court.

8 Under California law, there is a statutory duty to provide a payoff demand 

under Cal. Civ. Code § 2943(c), which in relevant part provides: “[a] beneficiary, or his 

or her authorized agent, shall, on the written demand of an entitled person, or his or her 

authorized agent, prepare and deliver a payoff demand statement to the person 

demanding it within 21 days of the receipt of the demand.” See generally Black v. 

Sullivan, 48 Cal. App. 3d 557, 566-67 (1975) (treating willful failure to provide a payoff 

demand statement as required by § 2943 as a “civil wrong” and tortious conduct).
31

4. The Moons forfeited any other arguments they might have 

raised.

The issue of whether the Moons might have made an appropriate 

tender was raised for the first time in Milestone’s brief responding to the 

Moons’ cross-appeal. A full and unconditional tender of the amount owed 

on a promissory note will discharge the payor’s liability for all future 

interest, costs, and attorney's fees. Still v. Plaza Marina Com. Corp., 21 Cal. 

App. 3d 378, 385 (1971); see also U.S. Bank Nat’l Ass'n v. Friedrichs, 924 F. 

Supp. 2d 1179, 1185–86 (S.D. Cal. 2013) (“In order for [an offer of 

performance] to be valid, it must be made in good faith, unconditional, 

offer full performance, and [the offeror] must be able to perform.”). The 

record does not reflect that the Moons ever tendered any amount to 

Milestone for the payoff of their loan. 

The bankruptcy court had no opportunity to pass upon this

inherently factual issue. Nor was this issue raised in the Moons’ opening 

cross-appeal brief. Consequently, the Moons forfeited this issue as well. See

Mano-Y&M, Ltd. v. Field (In re Mortg. Store, Inc.), 773 F.3d 990, 998 (9th Cir.

2014) (“In general, a federal appellate court does not consider an issue not 

passed upon below. A litigant may waive an issue by failing to raise it in a 

bankruptcy court.” (cleaned up)); Samson v. W. Cap. Partners, LLC (In re 

Blixseth), 684 F.3d 865, 872 n.12 (9th Cir. 2012) (appellate court may decline 

to address argument not raised before bankruptcy court); Christian Legal 

Soc'y v. Wu, 626 F.3d 483, 487–88 (9th Cir. 2010) (issues not specifically and 
32

distinctly argued in the appellant’s opening brief can be deemed forfeited).9

CONCLUSION

For the reasons set forth above, we AFFIRM the bankruptcy court’s 

judgment.

9 The Moons made passing reference to Milestone’s alleged failure to mitigate 

near the end of their closing cross-appeal brief. It was not mentioned at all in their 

opening appeal brief. Thus, we decline to consider this issue as well. Christian Legal 

Soc'y, 626 F.3d at 487–88.