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The Leasing Hotline
Liquidated Damages
An appellate court affirmed a liquidated damages clause in the parties' commercial lease agreement and awarded contract damages to plaintiff landlord pursuant to that clause. El Centro Mall, LLC v. Payless ShoeSource, Inc., 174 Cal. App. 4th 58, 94 Cal. Rptr. 3d 43, 2009 Cal. App. LEXIS 806 (Cal. App. 4th Dist. 2009).
The tenant ceased operations. The liquidated damages clause specified an amount per square foot to be paid for each day the tenant did not operate. The lease also contained a provision for calculating the amount of percentage rental to be paid as damages upon termination of the lease based on the tenant's default. The court held that substantial evidence supported the conclusion that the tenant had not met its burden under Civ. Code, ' 1671, subd. (b), of showing that the liquidated damages provision was not a reasonable estimate of damages. Although the provision for calculating the amount of percentage rental gave a readily ascertainable basis for determining percentage rental damages, the landlord provided expert evidence to show that the liquidated damages clause compensated it for other damages from the loss of the synergy, goodwill, and patronage that the tenant's continuing operations in the retail center had provided. The tenant failed to present expert testimony to the contrary. Evidence that another tenant had been allowed to leave without paying any damages for loss of synergy, goodwill, or patronage did not establish that the liquidated damages clause was arbitrary. The appellate court affirmed the trial court's judgment.
Liquidated Damages
An appellate court affirmed a liquidated damages clause in the parties' commercial lease agreement and awarded contract damages to plaintiff landlord pursuant to that clause.
The tenant ceased operations. The liquidated damages clause specified an amount per square foot to be paid for each day the tenant did not operate. The lease also contained a provision for calculating the amount of percentage rental to be paid as damages upon termination of the lease based on the tenant's default. The court held that substantial evidence supported the conclusion that the tenant had not met its burden under Civ. Code, ' 1671, subd. (b), of showing that the liquidated damages provision was not a reasonable estimate of damages. Although the provision for calculating the amount of percentage rental gave a readily ascertainable basis for determining percentage rental damages, the landlord provided expert evidence to show that the liquidated damages clause compensated it for other damages from the loss of the synergy, goodwill, and patronage that the tenant's continuing operations in the retail center had provided. The tenant failed to present expert testimony to the contrary. Evidence that another tenant had been allowed to leave without paying any damages for loss of synergy, goodwill, or patronage did not establish that the liquidated damages clause was arbitrary. The appellate court affirmed the trial court's judgment.
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