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Needle v. Hoyte

July 25, 1994


Appeal from the Superior Court of the District of Columbia; (Hon. Robert A. Shuker, Motions Judge)

Before Wagner, Chief Judge,* and Farrell, and King, Associate Judges.

The opinion of the court was delivered by: Wagner

WAGNER, Chief Judge: Appellees, the heirs and co-personal representatives of the estate of Alfred F. Hoyte, deceased, (hereinafter referred to as the Hoytes) filed an action in the trial court to quiet title and for declaratory and injunctive relief against appellants (hereinafter the trustees), the beneficiaries and the trustees of certain deeds of trust on the Hoyte family home at 7734 Sixteenth Street, N.W., Washington, D.C. The trial court (Judge George Mitchell) granted a temporary restraining order enjoining the trustees from foreclosing upon the subject real property. Subsequently, the trial court (Judge George Goodrich) granted a preliminary injunction precluding the trustees from foreclosing. In granting the preliminary injunction, the trial court concluded that it was likely that the Hoytes would succeed on the merits of their claim because it determined that the law of the District of Columbia controlled and that the interest terms of the trustees' deed of trust are usurious. Thereafter, the parties filed cross motions for partial summary judgment. Adopting the rationale of Judge Goodrich, the trial court (Judge Robert A. Shuker) granted partial summary judgment for the Hoytes and decreed the amount of the lien of the deed of trust and awarded attorney's fees to the Hoytes, subject to further documentation. The trial court certified the partial summary judgment in favor of the Hoytes as a final order pursuant to Super. Ct. Civ. R. 54 (b), and the trustees timely noted an appeal. *fn1 The trustees argue that the interest rate in the deed of trust is not usurious under the law of the state of Maryland which should apply. Alternatively, they argue that even assuming the applicability of District of Columbia law, the statute and regulation in effect at the relevant time exempted the deed of trust from the usury provisions. We agree with appellants' alternative argument, and therefore we reverse.


The material facts are not in dispute. On November 30, 1978, Alfred F. Hoyte executed the promissory note and a second deed of trust, which is the subject of the present challenge, in favor of Anthony Burgwald and James Johnson or assigns. Hoyte executed both documents in Silver Spring, Maryland, and a Maryland notary notarized the deed of trust. Both the note and the deed of trust contain the following language:

It is stipulated by the parties hereto that this is a Commercial Loan in excess of $5,000.00 as defined by Regulation 74-21 Title III Section 301 of the District of Columbia.

The note authorized any "Justice of the Peace, or Clerk of any Court of Record in Maryland or elsewhere" to enter judgment by confession.

Although Hoyte actually borrowed $46,000 from Burgwald and James Johnson, the principal amount of the note is $57,500 bearing interest at the rate of 10 percent, with an acceleration provision in case of default at the rate of 20 percent per annum on the unpaid balance. The difference between the face amount of the note and the actual loan amount represents a discount fee of $11,500, which the parties agree is, in fact, interest. The note is for a two-year period with an option to extend the maturity date for an additional two years upon payment of an extension fee of 25 percent of the principal balance. The deed of trust makes reference to the execution of the promissory note, the indebtedness of $57,500, and the interest rate of ten percent, but it does not incorporate the note.

Hoyte died in 1986, having made payments upon principal in the amount of $9,200. After notice of foreclosure, the Hoytes filed this action alleging that the note and deed of trust were usurious. They contended that the rate of interest exceeded the legal limits imposed by District of Columbia law and that enforcement of the deed of trust was barred to the extent that any balance included usurious sums. *fn2 In granting partial summary judgment, the trial court decreed that the amount of the lien for the deed of trust is $36,800 (on a principal sum of $46,000 less payments of $9,200).


The decision of the trial court granting summary judgment can be affirmed only if there are no genuine issues of material fact and, upon the facts, the moving party is entitled to judgment as a matter of law. Cooke v. Griffiths-Garcia Corp., 612 A.2d 1251, 1255 (D.C. 1992); Williams v. Gerstenfeld, 514 A.2d 1172, 1175-76 (D.C. 1986). The facts pertinent to our review are not disputed, and the trustees challenge solely the application and interpretation of the law relied upon by the trial court in granting the motion. On the other hand, the Hoytes argue that the trial court properly relied upon, and applied, the law of the District of Columbia in deciding the case.

The trustees argue that the trial court erred in applying District of Columbia law in determining the usury issue because the statute, by its plain language, covers only contracts made in the District of Columbia, while the deed of trust was executed in the state of Maryland. *fn3 We need not resolve whether District or Maryland law is controlling because the result is the same under the law of either jurisdiction. We conclude that in 1978, the law of the District exempted the transaction involved in this case from the usury ceiling.

The usury statute in effect in the District on November 30, 1978 provided:

Except as otherwise provided . . . the parties to an instrument in writing for the payment of money at a future time may contract therein for the payment of interest on the principal amount ...

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