Court Opinion

ID: 9538812
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:42:07.623975+00
Date Added: 2024-06-11T14:58:10.525599
License: Public Domain

ORME, Presiding Judge
(dissenting):
I dissent. In this case, the landlord received, as part of its judgment, the amount of rent that was owed but not paid by the tenant right up to the time the apartment was relet. In addition, the trial court stood ready to award additional actual damages to compensate for property damage caused by the tenant, but found no such damage was proven by the landlord. Also, the lease provides that a portion of the money paid by the tenant in advance is not refundable, but rather is earmarked for redecoration.
If the tenant remains contractually liable for actual rent unpaid up to the time of reletting, for the costs necessary to repair any property damage, and for at least some redecoration, what kind of damage is sought to be covered by over $500 in additional liquidated damages? The trial court theorized that a landlord incurs other expenses, like running ads and posting signs to advertise the vacancy, and that time must be spent in showing the unit to prospective tenants and processing applications. However, the landlord’s employee testified the real purpose for the provision was to induce the tenant to honor the lease obligations and the landlord’s attorney freely referred to it as a provision to “penalize the tenant for not keeping the lease.” Significantly, the landlord suffered no demonstrated additional damage in this case.
*275There are a number of bases upon which courts can invalidate liquidated damages provisions which work such unjust results. One way is if the “party who would avoid a liquidated damages provision” proves “no damages were suffered or that there is no reasonable relationship between compensatory and liquidated damages.” Young Elec. Sign Co. v. United Standard West, Inc., 755 P.2d 162, 164 (Utah 1988). See also Allen v. Kingdon, 723 P.2d 394, 397 (Utah 1986) (holding $10,800 “excessive and disproportionate” when compared to actual loss of $3746 and refusing to enforce liquidated damages provision); Young Elec. Sign Co. v. Vetas, 564 P.2d 758, 760 (Utah 1977) (stating liquidated damages are considered a penalty, and therefore unenforceable, “if the damages thus stipulated are so excessive that they bear no reasonable relationship to the actual damages”).
In the instant case, I must concede that the tenant’s effort to meet her burden in this respect was somewhat unfocused. Nonetheless, the import of the landlord’s testimony, on cross-examination, was that this was a termination fee designed to induce compliance (or in counsel’s words, to penalize noncompliance) that was not really designed to correspond to any particular range of probable relet expenditure. Although the landlord’s testimony was that it took an average of six days to re-rent an apartment (three days if it was left clean), it was conceded that there was no significant gap in occupancy here and no appreciable effort was expended to find a new tenant. More importantly, there was no gap in the rents received by the landlord, i.e., the landlord’s judgment included the amount of all unpaid rents owing but unpaid by the tenant right up to the time of occupancy by the new tenant.
I am not prepared to say that no liquidated damages clause in a residential lease could ever be upheld. The provision in this case, however, simply cannot be enforced where the landlord sustained no demonstrable damage above and beyond the unpaid rent, property damage, and redecoration expense it already is entitled to recover. The sum of $531 is “excessive and disproportionate”1 when compared to no expense actually incurred, or even if compared to some modest imputed expense attributable to administrative efforts to show a vacant unit, process an application, and fill in a few blanks on a lease form.
At least on the facts of this case, the $531 “fee” is exactly what the landlord’s counsel called it — a penalty. Accordingly, I would amend the judgment appealed from to delete the penalty and leave the landlord to recover only its actual damages.

. Allen v. Kingdon, 723 P.2d 394, 397 (Utah 1986).