DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
ELIAS MARCHELOS and MARTHA MARCHELOS,
AMILCAR J. ADAO,
[April 28, 2021]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Marina Garcia-Wood, Judge; L.T. Case No. CACE16-
Gregory P. Borgognoni of Borgognoni Law, P.L., Coral Gables, and
Robert Fast of The Fast Law Firm, Fort Lauderdale, for appellants.
Marc Edward Rosenthal, Paul David Edwards, Casey Ryan Cummings,
and Joseph Thomas Dunn of Rosenberg Cummings & Edwards PLLC, Fort
Lauderdale, for appellee Amilcar J. Adao.
The borrowers appeal from the circuit court’s final order dismissing
their counterclaim against the lender for civil usury arising from a 2004
promissory note which the borrowers executed in the lender’s favor. The
borrowers argue the note’s pre-default interest, when combined with the
note’s post-default interest, yielded an effective interest rate exceeding the
maximum interest rate permitted under Florida law. The borrowers’
argument relies upon the lender’s indebtedness affidavit, which claimed
that, upon the borrowers’ default, the note permitted the lender to
compound the interest owed.
We affirm the circuit court’s final order. Before providing our
reasoning, we first recognize the borrowers correctly argue that the note’s
terms did not permit the lender to compound the interest owed on the
principal. See Morgan v. Mortg. Disc. Co.,
129 So. 589
, 590 (Fla. 1930)
(“compound interest” involves addition of interest to principal to form a
new principal and computation of interest on such new principal); Cohen
219 So. 3d 100
, 100 (Fla. 3d DCA 2017) (“[I]t is well-settled that
where the note contains no express provision for the compounding of
interest, the holder of the note is entitled only to simple interest.”).
However, the lender’s incorrect interpretation of the note does not alter
the note’s terms. A mere demand for usurious interest, unjustified by any
contractual requirement to pay it, does not render the loan itself usurious.
McTigue v. Am. Sav. & Loan Ass’n of Fla.,
344 So. 2d 254
, 255 (Fla. 4th
DCA 1977). As our supreme court recognized in Home Credit Co. v. Brown,
148 So. 2d 257
[C]omputations under the usury law must be based on a
determination of the scope of acceleration rights which a note
or contract purports to give a lender or holder and not upon
the sums actually claimed by [the lender or holder]. This
follows necessarily from the principle that the vice of usury is
one which inheres in the parties’ agreement itself.
Id. at 260;
McTigue, 344 So. 2d at 256
(“[A]n otherwise non-
usurious loan does not become usurious merely because usurious interest
is claimed or demanded under it.”).
Here, the note itself was not usurious. The note provided, in pertinent
FOR VALUE RECEIVED the undersigned, promises to pay
to … [the lender] the principal sum of Three Hundred
Thousand and 00/100 ($300,000.00) Dollars together with
interest thereon at the rate of ten (10%) per annum from the date
hereof until maturity … such principal sum and interest
payable as follows:
Payable in consecutive monthly installments of interest
only in the sum of Two Thousand Five Hundred and 00/100
($2,500.00) Dollars … until the entire indebtedness evidenced
hereby is fully paid, except that any remaining indebtedness,
if not sooner paid shall be due and payable on the [maturity
All payments shall apply first to accrued interest, and the
remainder, if any, to reduction of principal. If any installment
of principal or interest is not paid when due, or upon any
default in the performance of any of the covenants or
agreements of this Note ... the whole indebtedness (including
principal and interest) remaining unpaid, shall, at the option
of the holder, become immediately due, payable and
collectible, and while in default, this Note and deferred interest
shall bear interest at the rate of eighteen percent (18%) … per
annum from maturity until paid ….
The fact that the note charged interest upon past-due interest in the
event of default did not make the note usurious. As our sister court
recognized in North Dade Church of God, Inc. v. JM Statewide, Inc.,
194 (Fla. 3d DCA 2003):
A provision in a promissory note calling for the payment of
interest on deferred or past-due interest does not make the
note usurious, because computing interest upon interest
supplies the place of prompt payment and indemnifies the
creditor for his or her forbearance.
Id. at 196
Here, under the note, neither the ten percent interest rate imposed on
the principal, nor the eighteen percent interest rate imposed upon the
principal and past-due interest upon default, violated the civil usury
statute, which provides, in pertinent part:
[I]t shall be usury and unlawful for any person … to … take
for any loan … a rate of interest greater than the equivalent of
18 percent per annum simple interest, either directly or
indirectly … by any contract … whereby the debtor is required
or obligated to pay a sum of money greater than the actual
principal sum received, together with interest at the rate of
the equivalent of 18 percent per annum simple interest.
§ 687.03(1), Fla. Stat. (2004); see also N. Dade Church of God,
851 So. 2d
at 195-96 (interest charged on outstanding principal and past-due interest
was within legal limits and not usurious).
Based on the foregoing, we affirm the circuit court’s final order
dismissing the borrowers’ counterclaim against the lender for civil usury.
CIKLIN and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.