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Keywords

contractdamagessummary judgmentliquidated damagesspecific performance
contractbreach of contractdamagessummary judgmentliquidated damagesspecific performance

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San Francisco Distribution Center, LLC v. Stonemason Partners, LP, 183 So.3d 391, 39 Fla. L. Weekly D790

Facts

In January 2012, San Francisco Distribution entered into a contract to purchase a commercial property from Stonemason for $5,250,000, with a required deposit of $400,000. When San Francisco Distribution failed to close the transaction, Stonemason sought to retain the deposit as liquidated damages. San Francisco Distribution argued that Stonemason was not entitled to the deposit because it later sold the property for a higher price and claimed the liquidated damages clause was unconscionable.

In January 2012, San Francisco Distribution entered into a contract with Stonemason to buy a commercial property in Miami Beach for $5,250,000.00.

Issue

Whether the liquidated damages provision in the contract was enforceable or constituted an unenforceable penalty.

San Francisco Distribution does not dispute that it failed to close the transaction as required by the contract. Neither does it dispute the existence of the liquidated damages clause and its failure to make the required deposit in a total amount of $400,000.

Rule

A liquidated damages clause is enforceable if the damages are not readily ascertainable at the time of the contract and the stipulated sum is not grossly disproportionate to the expected damages from a breach.

A liquidated damages clause is enforceable if the damages consequent upon a breach must not be readily ascertainable.

Analysis

The court analyzed the liquidated damages clause under the principles established in prior Florida cases, determining that the clause was valid because it provided Stonemason with the option of retaining the deposit or seeking specific performance. The court found that the amount of the deposit was reasonable, as it was less than ten percent of the purchase price, and that the subsequent sale price did not negate the enforceability of the clause.

We hold that the liquidated damages clause at issue in this case is not a 'penalty clause' but rather, an enforceable liquidated damages clause which gave the seller an option, upon buyer's breach, between enforcing the contract by specific performance or by forfeiture of the deposit as liquidated damages.

Conclusion

The court affirmed the summary judgment in favor of Stonemason, ruling that the liquidated damages clause was enforceable and that San Francisco Distribution was required to forfeit the $400,000 deposit.

We affirm on this issue as well.

Who won?

Stonemason Partners, LP prevailed in the case because the court found the liquidated damages clause enforceable and determined that the amount was not unconscionable.

Stonemason moved for summary judgment against San Francisco Distribution on the breach of contract claim.

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