Court Opinion

ID: 1013908
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:08:30.273539+00
Date Added: 2024-06-11T09:48:10.940618
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

QUESTECH FINANCIAL, LLC,               
                Plaintiff-Appellant,
                 v.
ASHWIN TRIVEDI; MEENA TRIVEDI,
             Defendants-Appellees,              No. 03-2444
                and
SHREE HARIJI, INCORPORATED; AMMA,
INCORPORATED,
                        Defendants.
                                       
           Appeal from the United States District Court
         for the Eastern District of Virginia, at Richmond.
                  Robert E. Payne, District Judge.
                           (CA-03-470)

                      Submitted: June 30, 2004

                       Decided: July 27, 2004

            Before MOTZ and KING, Circuit Judges,
             and HAMILTON, Senior Circuit Judge.

Vacated and remanded with instructions by unpublished per curiam
opinion.

                            COUNSEL

Christopher Todd McGee, TAVENNER & BERAN, P.L.C., Rich-
mond, Virginia, for Appellant. Ashwin Trivedi, Meena Trivedi,
Appellees Pro Se.
2                   QUESTECH FINANCIAL v. TRIVEDI
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

   Questech Financial, LLC, appeals from the district court’s orders
granting partial default judgment in its favor and denying its motion
to alter or amend the judgment. For the reasons that follow, we vacate
the district court’s orders and remand with instructions to enter judg-
ment including the default interest rate of 18 percent as stated in the
loan agreement entered into by the parties.

   In August 2002, Questech loaned $646,000 to Shree Hariji, Inc.,
Amma, Inc., Ashwin Trivedi, and Meena Trivedi (the "Borrowers").
The Progress Funding Rider ("Rider") attached to the Note and Secur-
ity Agreement ("Agreement") provided for interest at the rate of 12.75
per cent per annum. The Rider also provided that, in the event of
default by the Borrowers, interest at the rate of 18 percent per annum
would accrue on any unpaid principal amount due and owing at the
time of default until paid in full. The Borrowers defaulted on the loan
in March 2003 and Questech filed the underlying suit in district court
on May 30, 2003. The Borrowers failed to respond to the complaint
and Questech subsequently filed a motion for default judgment. At a
hearing on the default judgment motion, Questech stated that it sought
accrued interest of $6,210.96, as well as default interest, pursuant to
the terms of the loan agreement, in the amount of $70,728.94. At the
conclusion of the hearing, during which Questech’s attorney stated—
erroneously—that Questech sought total interest at the rate of 30 per-
cent, the district court granted Questech’s motion for default judg-
ment but refused to provide any default interest. Questech’s motion
to alter or amend the judgment to add the default interest was also
denied. Questech noted a timely appeal.*

   *Shree Hariji, Inc., and Amma, Inc., have filed for bankruptcy protec-
tion under Chapter 11 of the Bankruptcy Code; therefore, the action is
stayed against these two Defendants pursuant to 11 U.S.C. § 362 (2000).
                     QUESTECH FINANCIAL v. TRIVEDI                       3
   The Agreement provides that Connecticut law applies. See Mastro-
buono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995) (uphold-
ing a choice-of-law provision and arbitration clause in a form
customer agreement); see also Barnes Group, Inc. v. C&C Prods.,
Inc., 716 F.2d 1023, 1029 n.10 (4th Cir. 1983) (noting that "parties
enjoy full autonomy to choose controlling law with regard to matters
within their contractual capacity," citing Restatement (Second) of
Conflicts § 187(1) (1971)).

   The Rider provides for a default interest rate of 18 percent. The
district court’s refusal to recognize this part of the contract constituted
an impermissible revision of the contract. See Guaranty Bank and
Trust Co. v. Dowling, 494 A.2d 1216 (Conn. App. Ct. 1985). In that
case, the Connecticut appellate court found that the trial court erred
in failing to award default interest or attorney’s fees, as provided for
in the contract, noting:

     Whether interest is a proper element of damages is primarily
     an equitable determination and is a matter which lies within
     the discretion of the trial court . . . . Where, on the other
     hand, the parties have expressly contracted for the payment
     of interest, the court does not have this latitude. Where the
     payment of interest is contractually agreed upon, interest is
     recoverable.

Id. at 1221. See also Federal Deposit Ins. Corp. v. Napert-Boyer, 671
A.2d 1303 (Conn. App. Ct. 1996) (recognizing validity of default
interest rate agreed to by the parties but disallowing late fees in addi-
tion to the default interest). Because the Rider expressly provides for
a special default interest rate, the district court erred in refusing to
apply its terms.

   At the hearing on the default judgment motion, Questech’s attorney
argued that the default interest was in addition to the 12.75 percent
interest, resulting in a total effective interest rate of 30 percent. How-
ever, a review of Questech’s interest calculation submitted with its
supplemental affidavit in support of the default judgment motion
reveals that Questech did not calculate the interest at 30 percent.
Rather, interest claimed was as follows: $6,210.96 for interest accru-
ing prior to default, for the month of February 2003, at 12.75 percent;
4                   QUESTECH FINANCIAL v. TRIVEDI
plus $70,728.94 for interest on the outstanding principal accruing
after default and up to the date of judgment, at 18 percent.

   The district court denied Questech’s request for default interest
because it believed that a 30 percent interest rate was usurious. While
we express no opinion as to whether such an interest rate would vio-
late Connecticut’s usury laws, we find that the 18 percent interest rate
in this case does not violate the Connecticut usury statute. See Conn.
Gen. Stat. § 37-9(4) (exempting from usury statute business loans in
excess of $10,000).

   We therefore vacate the district court’s orders and remand with
instructions to enter judgment including the default interest as pro-
vided in the Rider. We dispense with oral argument because the facts
and legal contentions are adequately presented in the materials before
the court and argument would not aid in the decisional process.

              VACATED AND REMANDED WITH INSTRUCTIONS