Lender Liability - 4th Edition - Hardcover
Lender Liability - 4th Edition - Electronic
Default And Acceleration - Chapter 8 - Preview Page
§ 8.01 Overview
When a lender declares a default and accelerates a loan, a huge
potential for litigation exists. These acts can destroy a borrower's
business in a remarkably short period of time, particularly if there is
more than one loan and they are cross-collateralized.
A great deal of litigation has been filed over demand notes and over
what rights these notes give lenders. The law in this area is in a state of
flux, with some courts imposing requirements of reasonableness and
good faith, while others allow demand notes to be called for any reason
or no reason. Equally inconsistent are the decisions on whether notice
must be given prior to calling a demand note; some courts are requiring
advance notice while others are not.
When a lender regularly ignores breaches by a borrower or
establishes some other course of dealing, difficulties arise when that
course of dealing is changed. While some courts are allowing lenders to
change their course of dealing where that right is supported by the loan
documents, others insist on advance notice before a change is made,
regardless of what the loan documents provide.
§ 8.02 Notice of Default
Promissory notes and other loan documents generally list a series of
events that will constitute a default, such as failure to make a timely
payment or a material adverse change in the borrower's financial status.
If the note is not a demand note, the lender must generally provide notice
of the borrower's default and give sufficient time to cure the default. If
the default is not cured, then the lender may pursue its contractual and
statutory remedies, such as foreclosure or repossession.
§ 8.01 Overview
§ 8.02 Notice of Default
§ 8.03 Improper Declaration of Default
§ 8.04 --"Technical" Default Versus "Material" Branch
§ 8.05 --Inadequate Notice
§ 8.06 Demand Notes
§ 8.07 --Cases Upholding Right to Immediate Payment upon Demand
§ 8.08 --Cases Requiring Good Faith and Reasonable Notice
§ 8.09 Improper Acceleration
§ 8.10 Deviating from Established Course of Dealing
A. Barry Cappello, Managing Partner, of the Santa Barbara law firm of Cappello & Noël, LLP. Mr. Cappello, who founded the firm in 1977, is recognized as one of the nation's leading trial lawyers and authorities on complex commercial litigation specializing in lender liability. He has represented both large and small businesses against most of the nation's major banks in litigation nationwide. His practice also involves class actions against lenders and other large corporations, bad faith insurance litigation and other complex business and tort litigation matters.
A fierce advocate for his clients, Mr. Cappello has been described by California Lawyer magazine as "Santa Barbara's Resident Barracuda," a reputation Cappello does not dispute. He has successfully tried jury trials with total verdicts in excess of $300 million and negotiated more than $1 billion in settlements and workouts for his clients.
Mr. Cappello has contributed numerous articles on complex business litigation, lender liability andadvanced trial techniques to business, legal, accounting and trade publications. Publications include Trial, The Daily Journal, The National Law Journal, Small Business Advisor and The Commercial Real Estate Journal. Mr. Cappello speaks to legal and business audiences around the country.
Before entering private practice, Mr. Cappello served a seven-year tenure as City Attorney of Santa Barbara. He was the chief litigator against the oil companies that caused the massive 1969 Santa Barbara Channel oil spill. The disaster and the ensuing litigation awakened the nation's conscious to the dangers to our environment and the tragic consequences if not protected. The case was settled in 1974 shortly before trial for $9.45 million, considered a huge sum at the time.
Prior to being appointed City Attorney of Santa Barbara, he was Assistant District Attorney and Chief Trial Deputy in the Santa Barbara County District Attorney's Office. Mr. Cappello also served as a Deputy Attorney General for the State of California assigned to the Special Trials and Investigations Division. Mr. Cappello prosecuted numerous murder, business crime and major felony cases.
Mr. Cappello has been listed in Best Lawyers in America since 1992 and in Who's Who in America. He was named a "Super Lawyer" in 2007 - 2009, and he was selected as one of the Top 100 Trial Attorneys in California for 2007 by the American Trial Lawyers Association.