Opinion
FSTCV166028988S
03-06-2018
110 PARKLANDS, LLC v. Robert J. GILLON, Jr.
UNPUBLISHED OPINION
OPINION
POVODATOR, J.
The court often has observed that the manner in which an issue is framed often is intended to steer the discussion in a desired manner- towards a desired outcome. Here, the defendants have attempted to frame the issue in a manner laden with language portraying them as victims, suggesting that a judgment in favor of the plaintiff would have ominous impact on commercial lending.
This case hinges on a simple legal question: can a contracting party enforce a convoluted and confounding contract provision that punishes another contracting party in the event a third party exercises a lawful right to file for bankruptcy protection under Title 11 of the United States Code? The Plaintiff in this matter seeks to do just that- punish the Defendants for the lawful conduct of another. The lawful conduct in question is the right to file a bankruptcy petition, a right that courts have recognized as inviolate. Although this case is easily reduced to this simple issue, a ruling in favor of the Plaintiff would both conflict with well-established precedent and, more important, inhibit commercial parties from exercising legitimate legal protections that the Bankruptcy Code affords them. (Page 1 of defendants’ brief (# 121.00); citation omitted.)
A somewhat more neutral statement of the issue, however, might be: to what extent should the court enforce- or decline to enforce- the liability of guarantors when there is differing borrower liability depending upon the details of the act of default- and in particular, whether the borrower files for bankruptcy. Even more simplistically: does public policy limit the ability of a lender to seek to recover on a guaranty, when the borrower on the underlying obligation files for bankruptcy?
In this case, the liability of the borrower generally was to be non-recourse in nature, limited to the security provided by certain property of the company. The liability of the guarantors generally tracked the liability of the borrower. However, the note provided that in the event that the borrower filed for bankruptcy, the indebtedness would become full recourse in nature, which in turn would affect the liability of the guarantors who, by virtue of their guaranty, are generally liable to the extent of the borrower. The final " whereas" clause in the guaranty recites that the guarantors own a beneficial interest in the borrower such that the loan to the borrower is a benefit to them in an individual sense.
As discussed below, there were other events that would also trigger recourse liability.
The operative document is identified as an indemnity and guaranty agreement, and the defendants collectively are referred to as " indemnitor" - notwithstanding that nomenclature, the court will use the more direct terminology of referring to the defendants as guarantors and to the agreement as a guaranty agreement (except as might otherwise be appropriate).
This case was submitted to the court on stipulated facts. The defendants do not dispute the essential elements of the affirmative claim being presented by the plaintiff- they guaranteed an obligation of the borrower, the borrower did not make all required payments and instead filed for bankruptcy, the filing for bankruptcy is identified as a basis on which the borrower’s obligation would be treated as a recourse obligation rather than a non-recourse obligation, and they have not made any payments facially obligated under the guarantee. The plaintiff is the lawful successor of the lender, both as to the debt and guaranty obligations. The defendants focus essentially solely on their special defense to the effect that the treatment of the borrower’s obligation as a recourse obligation premised on the bankruptcy filing was contrary to public policy and should not be enforced on that basis.
Before addressing the merits of the defendants’ contentions, a preliminary matter should be resolved. In response to the defendants’ post-hearing brief, the plaintiff filed a brief in which it attempted to rely on language relating to the waiver provisions of the various instruments as affecting the defendants’ right to assert their defense. In their reply brief, the defendants contend that the plaintiff cannot invoke contractual waiver language, given the failure to assert that contention in the pleadings.
In a theoretical sense, the defendants are correct- if a party wishes to assert facts in avoidance of a special defense, that should be done by way of a reply to the special defense. (See, Practice Book § 10-57.) The court recognizes that in practice, parties often- too often- simply assert a denial of a special defense, but however prevalent the practice may be, that does not make it correct. The court further notes, however, that appellate-level decisions sometimes recognize the pleading deficiency but then proceed to address the merits of the underlying contention.
Thus, in Haynes v. City of Middletown, 314 Conn. 303, 307, 101 A.3d 249, 251 (2014), the court discussed the procedural history in which it had remanded the matter on an earlier occasion, overruling the Appellate Court’s determination that the failure to plead- affirmatively- the identifiable victim (class of victims) exception to an asserted special defense of governmental immunity precluded the issue of the exception from being considered.
The court does not believe that it is appropriate or necessary to resolve the issue of whether the waiver issue can be considered, for other somewhat-technical reasons. It is far from clear that a " defense" premised on non-enforceability of a contractual provision, based on public policy, is an affirmative defense that must be asserted as a special defense. Practice Book § 10-50 implicitly defines a special defense: " Facts which are consistent with [the statements in the complaint] but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged." The special defense asserted by the defendants, however, does not assert " facts which are consistent with" the complaint " but show, notwithstanding, that the plaintiff has no cause of action," but instead the " defense" is effectively a legal-type of argument:
The Guaranty (as Plaintiff defines that term in its Complaint) violates principles of comity and public policy and is unenforceable and void as against public policy. Plaintiff alleges that the Guaranty morphs from a nonrecourse/limited recourse obligation into full recourse/indemnity against the Defendants in the event a third party exercises its federal rights to file a petition for protection under the United States Bankruptcy Code. As such, the Guaranty clause on which Plaintiff relies to hold Defendants liable for the full amount of the subject loan constitutes a punishment and/or penalty to Defendants simply because another party has asserted its lawful right to file a bankruptcy petition. Insofar as the Guaranty effectively punishes Defendants, by purporting to entitle Plaintiff to full recourse on the loan which underlies the Guaranty, jointly and severally, the Guaranty is void and/or unenforceable as against public policy. The Guaranty, as Plaintiff construes it and is purporting to use it against Defendants, constitutes an unlawful penalty, punishment, and fine and interferes with a non-party’s rights lawfully to pursue relief under the United States Bankruptcy Code. As such, the Plaintiff’s claims fail and judgment should enter in favor of Defendants.
Even if the court were to assume that this is a proper special defense, a claim that a particular course of action or contract provision offends public policy, and therefore should not be enforceable, is not a consideration that is within the control of the parties as contemplated by the concept of waiver. A court’s refusal to enforce a contract or otherwise endorse a course of action implicates the court’s protection of its own integrity and societal mandates, and only to the extent that if an issue is not raised, the court might not address it, can there be anything approaching waiver as to matters that are sufficiently offensive to public policy as to warrant non-enforcement.
In Burns v. Koellmer, 11 Conn.App. 375, 379, 527 A.2d 1210, 1213 (1987), the court stated that " [a] court will not grant any relief to a plaintiff who rests his claim upon an agreement which is against public policy, for that would be to lend its aid to an illegal transaction." (Internal quotation marks and citation, omitted.)
In Antonucci v. Antonucci, 164 Conn.App. 95, 117, 138 A.3d 297 (2016), the court explicitly characterized the issue of whether a contract provision violated public policy so as to be unenforceable to be a matter of law (" Whether a contract is against public policy is a question of law dependent on the circumstances of the particular case" ). The court went on to observe that the rule against enforcement of the contract provisions that violate public policy was not an absolute, but rather required the court to consider the strength of the public policy that was involved, and the source of that policy (e.g., statute, case law).
In the context of arbitration and the public policy exception to judicial enforcement of arbitration awards, the Supreme Court recently stated:
A challenge that an award is in contravention of [law or] public policy is premised on the fact that the parties cannot expect an arbitration award approving conduct which is illegal ... to receive judicial endorsement any more than parties can expect a court to enforce such a contract between them ... When a challenge to the arbitrator’s authority is made on public policy grounds, however, the court is not concerned with the correctness of the arbitrator’s decision but with the lawfulness of enforcing the award ... (Internal quotation marks and citation, omitted; emphasis as in cited case.) Town of Marlborough v. AFSCME, Council 4, Local 818-052, 309 Conn. 790, 804, 75 A.3d 15, 25 (2013).
None of these cases suggests any level of control of the parties with respect to a determination of the enforceability, except, again, to the extent that the court might not address an issue not brought to its attention. Indeed, it would be something of an oxymoron to state that a contract provision that is so noxious that the court would/should decline to enforce it, becomes enforceable if the parties agree that the court should enforce it, or, more directly applicable here, if there is a technical defect in the manner in which the issue has been raised.
The defendants’ argument is that there is something wrong about " penalizing" the guarantors because the borrower exercised its right to file for bankruptcy. The fundamental problem is that even if the situation/transaction were to be so characterized, whatever public policy is recited in the authorities cited by the defendants relates to a borrower/debtor’s right to file for bankruptcy, not the rights of a guarantor of that underlying liability. In a " the glass is half-empty/half-full" sense, the defendants are viewing the full recourse consequence of bankruptcy as something in the nature of a penalty for filing for bankruptcy (by the borrower). The arrangement could just as well be framed as an act of leniency, whereby in the absence of a bankruptcy filing (or other identified situations), the debt would become nonrecourse. In other words, the lender could have insisted on no exceptions to recourse, but was willing to identify a range of nonrecourse scenarios.
The defendants are not strangers to the borrower, but rather have some level of ownership interest. They could have negotiated better terms for themselves or for the company, although better terms might have come at a price. The court does not know why these terms were negotiated, and what alternatives were considered, but there could be legitimate reasons for making that kind of exception to a loan agreement. The distinctions made can easily be characterized as rational: As long as the company had a going-business value, there would be a strong incentive not to allow the properties owned by the company to be subject to foreclosure such that the operators of the business would have an incentive to keep current on the debt. However, once bankruptcy proceedings have commenced, there is a potential loss of control of the business, and a non-trivial likelihood of cessation of business, such that any possible inadequacy of the property as security for the debt can become a real concern to the lender.
Note that other provisions in (Y) also address adequacy of security (or a security cushion) and/or the ongoing nature of the business, that would generally fit within the foregoing (hypothetical) rationale. Thus, other events triggering full recourse include changes in the nature of the business (" Borrower fails to maintain its status as a single purpose entity, as required by, and in accordance with the terms and provisions of, the Security Instrument" ); unauthorized financing or voluntary lien; unauthorized assignment, transfer of conveyance of security property; in addition to voluntary filing for bankruptcy, " the soliciting or causing to be solicited, petitioning or potentially petitioning creditors for any involuntary petition against Borrower pursuant to a Bankruptcy Law ... [or] filing an answer consenting to or otherwise acquiescing in or joining in any petition filed against it under a Bankruptcy Law" ; " consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee or examiner for Borrower or any portion of the Property" or " making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due." The defendants have not articulated why a lender should not be free to " pick and choose" which scenarios will or will not have recourse consequences.
The court must emphasize the legal distinction between the borrower and the guarantors who appear to have been at least partial owners of the borrower. The existence of a potential negative consequence to the guarantors should the corporate entity as borrower elect bankruptcy, is not a disincentive or punishment to the entity itself.
The defendants cite Federal National Mortgage Association v. Bridgeport Portfolio, LLC, 150 Conn.App. 610, 620-21, 92 A.3d 966 (2014) (Fannie Mae) for the proposition that courts will not enforce penalties, where a penalty is defined as a contractual provision " the prime purpose of which is to prevent a breach of the contract by holding over the head of a contracting party the threat of punishment for a breach." If there is insolvency, who is the party that the defendants claim is being punished by the bankruptcy filing? The party to the loan agreement who is filing for bankruptcy is not the party being punished, and the parties being " punished" are not parties to the loan agreement. The defendants lack standing to assert harm to the entity, and any implicit " threat of punishment for a breach" is not directed to the defendants (under the loan agreement). There is no threat directed to the defendants, intended to prevent/discourage a breach by them.
Further, the defendants have overlooked earlier language in Fannie Mae. In rejecting an argument that a combination of financial consequences constituted a penalty, the court stated (in language applicable here): " The defendants cite no relevant case law that supports this argument. As found by the trial court, the defendants, as sophisticated parties, agreed to the terms in the promissory note and related loan documents." In other words, the court rejected the somewhat analogous argument that had been advanced in that case.
The defendants also cite Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 931 A.2d 916 (2007), which contains a similar discussion to that in Fannie Mae, in the context of liquidated damages. An analysis of liquidated damages is not directly transposable to this situation, so it does not add to the weight (if any) to be afforded to Fannie Mae.
Most of the defendants’ discussion of bankruptcy-specific cases relates to proposed contractual limitations on the insolvent debtor’s right to file for bankruptcy, but as noted earlier, there is a mismatch of parties- the defendants are not in any way deterred from filing for bankruptcy by any (identified) provision of the guaranty and there was nothing penalizing the borrower other than that it could not rely on a non-recourse characterization of its debt. The debtor, itself, is not complaining about the deterrence of the provision, and a provision relating to recourse or non-recourse or variable-recourse is not claimed to be an inherently punitive or otherwise out-of-the-ordinary provision, beyond the scope that might be negotiated between a sophisticated lender and sophisticated borrower.
The defendants do cite one case focusing on a claim against the principals of an entity, where the principals had caused the entity to file bankruptcy, which is somewhat closer to the situation at hand, and they discuss it extensively in their initial brief and reply brief. National Hockey League v. Moyes, No. CV- 10-01036-PHX-GMS, 2015 WL 7008213 (D.Ariz. Nov. 12, 2015).
The defendants cite what they claim to be the critical language:
" If a contractual term denying the debtor parties the right to file bankruptcy is unenforceable, then a contractual term prohibiting the non-debtor party that controls the debtors from causing the debtors to file bankruptcy is equally unenforceable. Parties cannot accomplish through ‘circuity of arrangement’ that which would otherwise violate the Bankruptcy Code." Id. at *8.
While perhaps closer than the other cases cited, there is no contractual provision in this case " prohibiting the non-debtor [parties] that controls the [debtor] from causing the [debtor] to file bankruptcy." Nor is there anything inherently punitive about guarantor liability being triggered by the insolvency of the borrower, the presumptive situation in the absence of provisions making the debt a non-recourse debt in some or all circumstances. Or. are the defendants contending that in a less-beneficial arrangement (less beneficial to borrower and guarantors) where the debt is fully a recourse obligation, there is a presumptive public policy against enforcement of the guaranty against the guarantors should the debtor file for bankruptcy?
The defendants rely on only one of many areas discussed in Moyes . There are other extensive discussions and passages in Moyes that address issues closer to the one at hand, and directly contradict the position of the defendants. A perhaps somewhat simplistic starting point: in Moyes, the individuals had been sued, in part, because of their managerial role in deciding that the borrower/debtor should file for bankruptcy. The language quoted by the defendants, above, directly related to that claim. That is unambiguous from related language in the decision- two paragraphs below the paragraph containing the language quoted by the defendants, the court summarized that section of its decision, indicating its application of the quoted principle only to the claim of liability arising from putting the debtor into bankruptcy: " The Court therefore grants Defendants’ motion for summary judgment on Count I to the extent that the claim pertains to inducing the debtors to file bankruptcy" (emphasis added). The plaintiff in this case is not asserting liability on the part of the defendants arising from their having participated in the decision of the debtor to file for bankruptcy, so there is at least a question as to how the language quoted by the defendants actually applies to this case.
In Moyes, the court then went on to discuss the numerous contract-based claims being asserted, claims bearing closer relationship to the contractual claims here. The first paragraph of the section of the decision immediately following the section described above makes the point even more clear:
On the other hand, the contractual terms prohibiting the Moyes Parties from attempting to move or transfer the Coyotes or from selling the Coyotes without NHL consent do not restrict bankruptcy rights. (See Consent Agreement at A32, A34-35.) The Moyes Parties could have induced the debtor parties to file bankruptcy without violating these contractual terms. Instead, the Moyes Parties attempted to sell the Coyotes without the NHL’s consent and to relocate them, and in doing so, they breached clauses 4(c) and 6(c) of the Consent Agreement. (Id. ) Although the Asset Purchase Agreement the Moyes Parties entered into with PSE was " expressly conditioned on the filing of a bankruptcy proceeding and Bankruptcy Court approval," (Defendants’ Statement of Facts at A158,) the breached contractual terms did not place impermissible restraints on bankruptcy. Filing bankruptcy does not relieve the Moyes Parties of their liability for breaches of independent, ostensibly enforceable terms in their contract with the NHL. " This is not a case where a separate state action will interfere with the uniformity required in bankruptcy proceedings or with the control of the bankruptcy court over those proceedings. It is a simple matter of enforcing contract law and deciding claims arising out of actions which allegedly breached contracts." Hinduja v. Arco Products Co., 102 F.3d 987, 990 (9th Cir. 1996). Breach of contract claims are not preempted by the Bankruptcy Code where the contractual term itself does not directly or indirectly limit a party’s rights regarding bankruptcy or otherwise infringe on the bankruptcy process. See In re Extended Stay, Inc., 435 B.R. 139, 149 (S.D.N.Y. 2010) (holding that a breach of contract action is not preempted by the Bankruptcy Code where the action " does not seek to invoke common law or other extraneous doctrines to label wrongful, or punish, the exercise of rights under the Bankruptcy Code, nor does it question the legal validity or propriety of the Debtors’ [bankruptcy] filings" ). Id. at 9.
Still further on in the opinion, explicitly addressing indemnification, the court used language especially applicable here:
A contractual provision stating that a debtor cannot file bankruptcy is preempted and unenforceable. In re Cole, 226 B.R. at 651-54. A contractual provision stating that if a debtor chooses to file bankruptcy, that debtor (or some other party) must pay the creditor’s attorneys fees is not preempted and is enforceable. Travelers, 549 U.S. at 449. Although such a contractual provision provides a disincentive to filing for bankruptcy, it does not effectively proscribe or limit bankruptcy protection or otherwise conflict with the Bankruptcy Code, see id. at 452-53, nor does it call into question the good faith of the bankruptcy filing.
The parties do not dispute that the Club filed bankruptcy and initiated an antitrust lawsuit against the NHL. These acts resulted in the NHL’s expenditure of attorneys fees and costs. The Moyes Parties agreed under Section 11(c)(ii) of the Consent Agreement to indemnify the NHL for losses arising out of any act by the Club. The Court therefore grants the NHL’s motion for summary judgment on the issue of the Moyes Parties’ liability for attorneys fees and costs accrued in the course of the bankruptcy proceeding and the antitrust suit. Id. at *12.
Thus, the court recognized that requiring the guarantor/indemnitor to pay for the consequences of a bankruptcy filing might be a disincentive to the debtor filing for bankruptcy, but that it did not impede the granting of summary judgment to the plaintiff with respect to the contractual claim for attorneys fees resulting from the bankruptcy filing- and this was after the court had used the language that the defendants have relied upon (as quoted above).
The court, then, agrees that Moyes is helpful and convincing, but not for the reasons advanced by the defendants.
Conclusion
If there had been no non-recourse provisions in the loan transaction, the defendants would have been liable under their guaranty agreement, once the borrower filed for bankruptcy. The defendants have not explained why a more beneficial transaction, limiting recourse to enumerated situations, becomes violative of public policy or otherwise should not be enforced.
By signing a guaranty, the defendants presumably understood that they were guaranteeing " something" - and in the context of an obligation that is defined as non-recourse subject to certain exceptions, the only two possibilities are that they were guaranteeing the entire debt notwithstanding the non-recourse nature of the debt for the borrower, or they were guaranteeing all of the identified exceptions to non-recourse status for the borrower. The lender inferentially insisted on having a right of recourse against the defendants in certain situations which, as the court noted above, seem to focus on scenarios in which the risk that the business would cease operations was highest (thereby increasing the risk of being forced to rely on the limited recourse to the security). Again, the actual motives are less important than the notion that the parties, presumptively sophisticated business people (a multi-million dollar loan), had weighed the risks and benefits of limited recourse, and had agreed that the defendants would be responsible if the borrower filed for bankruptcy. It may be subtle, but not terribly subtle- the defendants have not been sued because they put the borrower into bankruptcy but rather they have been sued because they guaranteed the debt of the borrower and one of the situations in which their guaranty is fully operational is when the borrower files for bankruptcy.
Note that unless the defendants implicitly claim that an involuntary bankruptcy also should not lead to guaranty liability (thereby further expanding the intrusion on the terms negotiated by the parties), the relationship would be subject to manipulation. If the defendants were to sense or believe that someone was about to put the borrower into bankruptcy involuntarily, there would be an incentive to try to file a voluntary bankruptcy before any involuntary filing, so as to avoid personal liability. Indeed, in any of the (Y) scenarios, there would be an incentive to file for bankruptcy preemptively, in order to avoid guarantor liability, thereby totally frustrating the purpose of the recourse provisions. Would such an incentive to file for bankruptcy for personal reasons not also implicate public policy concerns?
Moyes makes it clear that direct prohibitions and direct penalties for filing for bankruptcy protection are contrary to public policy or otherwise unenforceable, but contractual (collateral) consequences for principals of the borrower resulting from the bankruptcy filing are treated as ordinary contractual provisions without any material public policy implications or other impediment to enforcement.
This distinction between direct and indirect is somewhat analogous to the refusal of Connecticut courts, prior to Sokaitis v. Bakaysa, 293 Conn. 17, 975 A.2d 51 (2009), to enforce gambling contracts/debts (e.g., Casanova Club v. Bisharat, 189 Conn. 591, 458 A.2d 1 (1983) ) as violative of a strong public policy (General Statutes § 52-553), but courts would enforce foreign judgments based on gambling debts, Hilton International Co. v. Arace, 35 Conn.Supp. 522, 394 A.2d 739 (Super.App.Sess. 1977). This was based on the distinction between direct enforcement of a prohibited debt/contract and the indirect consequences of enforcement of a subsequent judgment on such an obligation rendered in a foreign jurisdiction, a context in which different considerations predominate.
At the outset, the court quoted part of the defendants’ argument:
" Although this case is easily reduced to this simple issue, a ruling in favor of the Plaintiff would both conflict with well-established precedent and, more important, inhibit commercial parties from exercising legitimate legal protections that the Bankruptcy Code affords them."
To borrow the structure of this passage: the court believes that a ruling in favor of the defendants would " conflict with well-established precedent and, more important, inhibit commercial parties from" freely negotiating the limits of recourse under a loan transaction. If a voluntary filing for bankruptcy- presumably a non-trivial risk and concern for a lender- is not a permissible exception to a negotiated presumptive but subject-to-exceptions non-recourse obligation, then it seems likely that the ability of parties to negotiate nonrecourse obligations will approach or become an all-or-nothing proposition. Thus, even if there were public policy implications arising from enforcement of a contractual guaranty when the underlying obligor files for bankruptcy (triggering full recourse liability), there would be other countervailing considerations that might need to be taken into account. (Indeed, it is but a modest extension of the defendants’ argument to state that even in a full recourse situation, the fact that the filing for bankruptcy by the borrower triggers guaranty liability of the guarantors, could be characterized as a disincentive or punishment for the bankruptcy filing.)
For all of these reasons, the court finds that the guaranty liability of the defendants has been triggered by the events and documents as submitted as a joint stipulation (# 120.00) and especially the bankruptcy filing of the borrower, and that there is no violation of public policy or other legal impediment that would warrant a refusal to enforce the guaranty liability of the defendants. The stipulation establishes the plaintiff’s right of recovery as transferee of the loan documents and that all of the other preconditions to enforcement have been satisfied. (The defendants have not identified any possible condition that has not been satisfied.)
Judgment enters in favor of the plaintiff and against the defendants in the amount of $1,768,914.54 (consisting of principal of $1,764,654.23 and accrued interest of $4,260.31, together with per diem interest after November 8, 2017 at the rate of $213.02). Calculating the interest from November 9, 2017 through March 5, 2018 yields additional interest in the amount of $24,710.32, plus the stipulated per diem of $213.02 going forward. To the extent that the plaintiff contends that there are further damages issues that need to be decided, the parties are to discuss whether such issues need an evidentiary hearing or can be addressed either by way of written submissions or by way of brief argument. If an evidentiary hearing is required, the parties are directed to contact the caseflow office for purposes of scheduling such a hearing.
The court has adopted these figures from the stipulation of the parties. The court notes that the accrued interest seems to reflect 20 days of interest at the per diem rate (seemingly prior to rounding off the per diem), which does not correspond to any time frame identified in the complaint or stipulation. There is no stated interest rate in the stipulation, and the relationship between the stipulated per diem and the stipulated principal suggests a rate of approximately 4.34% rather than the 5.42% recited in the note that was submitted as an exhibit to the complaint and incorporated via the stipulation. (.0434/360 x $1,764,654.23 = $212.74 and using a rate of 4.35% yields a per diem of $213.23.) A per diem of $213.02 at a 5.42% interest rate implies a principal of $1,414,893. Thus, the court does not know which if any additional (non-interest-accruing) amounts (inferentially totaling approximately $349,761) may have been added to the outstanding debt principal in order to calculate the " principal" recited in the stipulation. (The court notes that the notice of default letter, attached to the stipulation, identifies unpaid interest installments that do reflect the 5.42% rate.)
There are 116 days from November 9, 2017 through March 5, 2018; 116 x $213.02 = $24,710.32.
The stipulation contains the following language: " Said $1,768,914.54 amount excludes attorneys fees, expenses, and default interest and Plaintiff reserves any and all rights to demand/collect payment of attorneys fees, expenses, and default interest as to Borrower."