M&A due diligence checklist

Plaintiff shareholder appealed a judgment from the Superior Court of Los Angeles County (California), which, after sustaining a demurrer without leave to amend, dismissed his derivative action alleging breaches of fiduciary duty by defendant corporate officers and directors.

M&A due diligence checklist

The court affirmed the trial court's ruling sustaining the demurrer without leave to amend and affirmed the ensuing dismissal.

The Superior Court of Los Angeles County (California) granted judgment in favor of plaintiff neighbors in their action against defendant pawnbroker based on a finding that the broker loaned money at a usurious interest rate to a neighbor in a non-pawn transaction. The broker appealed.

The trial court found that Cal. Const. art. XV, prohibiting usurious contracts, applied to the broker's loan to the neighbors, and that the 20 percent interest rate was usurious. In converting the neighbors' car, the broker acted with malice, deceit, misrepresentation, and fraud. The broker argued that the trial court erroneously determined that the 20 percent interest rate in the promissory note was usurious. The appellate court noted that the exemption of Cal. Const. art. XV did not apply to a personal, non-pawn loan made by a licensed pawnbroker. The broker did not take possession of property in pledge as security for the loan to the neighbors, who retained possession of the property. The loan was not a pawn transaction under Cal. Fin. Code § 21002(a). The two-year term of the broker's loan exceeded the four-month period of a pawn contract, the loan was not made at the broker's licensed pawnbroker address, and the promissory note did not comply with requirements for a written pawnbroker loan contract in Cal. Fin. Code § 21201. The broker did not require the neighbors' fingerprints on the loan contract. The broker's loan was outside the scope of his pawnbroker license.

The judgment was affirmed.

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