Johnson v. Milestone Financial CA3

California Court of Appeal Oct 14, 2022 No. C094370Unpublished

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Holding. The court affirmed the trial court's order confirming an arbitration award in favor of a lender, holding that the appellant failed to demonstrate that the award violated public policy or legislative mandates regarding attorney's fees. The court further held that while the respondent was entitled to appellate costs and attorney's fees, such fees would not be assessed against the appellant in his personal capacity.

Issues

Whether the arbitration award should be vacated for violating public policy protecting elders.
Whether the arbitration award of attorney's fees contravened legislative policy.
Whether the appellant should be personally liable for the respondent's appellate costs and attorney's fees.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Errors of fact and law are not reviewable, with few exceptions.”

“Because Daniel failed to prove there was any elder abuse, his contention in this court that the arbitration award must be vacated because it violates the public policy against elder abuse cannot succeed.”

“The award of costs and attorney’s fees did not contravene legislative policy.”

Filed 10/14/22 Johnson v. Milestone Financial CA3 NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento) ----

DANIEL JOHNSON, JR., as Conservator, etc.,

Plaintiff and Appellant, C094370

v. (Super. Ct. No. 34-2018- 00243733-CU-FR-GDS) MILESTONE FINANCIAL, LLC,

Defendant and Respondent.

Daniel Johnson, Jr., conservator for Arletha Mae Johnson, appeals the confirmation of an arbitration award in favor of Milestone Financial, LLC (Milestone) after Daniel1 sued Milestone for various causes of action relating to Milestone’s lending of money, secured by real property, to Arletha. Daniel contends the arbitration award must be vacated because (1) it contravenes public policy protecting elders and (2) it contravenes legislative policy concerning attorney’s fees awards. Milestone, for its part, contends (3) we should award costs and attorney’s fees for this appeal against Daniel as conservator and in his personal capacity. Finding no error, we will affirm the trial court’s order confirming the arbitration award and award costs and attorney’s fees on appeal to Milestone, but not against Daniel in his personal capacity.

1 We refer to Johnson family members by their first names for clarity.

BACKGROUND Arletha, who was 94 years old at the time of the arbitration in this case, has four children: Janice, Charletta, Kevin, and Daniel. Arletha owned several rental properties in Sacramento and Vallejo. At the time of her husband’s death in 2013, none of the properties were encumbered with debt. Arletha’s son Kevin became involved in two cannabis-related companies and needed funds for the businesses. Kevin approached Arletha about obtaining loans on her properties to provide him funding for the businesses, and she agreed , while being clear he would be required to pay off the loans. The loans relevant to this action were obtained from Milestone in 2016 and 2017. The loans were hard money loans. As explained in the arbitration panel’s final award, “[t]he hard money lending industry serves a relatively small cohort of borrowers, those whose credit or income either cannot qualify for conventional loans, or those whose exigent need for loan funds makes the longer wait-time to complete conventional loan processes unworkable. Hard money lenders like Milestone work only with borrowers who are represented by brokers. Hard money lenders make loans for commercial purposes and Arletha confirmed in her applications that this was the general purpose for the loans. For this reason, too, these types of loans are secured only by commercial properties and not private residences. The experts in this arbitration are in agreement that hard money lenders look only to the value of the property securing the loan and not to the creditworthiness of the borrower. It is the likelihood of recovering the value of the loan and fees through foreclosure and not the repayment of the periodic payments that drives the lending process. This is why the loan-to-value ratios for hard money loans are significantly lower than those in conventional lending. In fact, Johnson’s expert witness agreed that Milestone did not violate any California law, rule or regulation relating to hard money lending in its underwriting of these loans to Arletha. [¶] These facts being undisputed, arguably it would ‘exceed the scope of its conventional role as a mere lender

Johnson v. Milestone Financial CA3

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