Court Opinion

ID: 5073998
Source: CourtListenerOpinion
Date Created: 2021-10-01 11:07:20.994798+00
Date Added: 2024-06-11T08:19:56.525951
License: Public Domain

GAITAN, Judge
dissenting
I must respectfully dissent from the majority opinion for the reason that I believe the language in the home improvement contract requiring payment of thirty per cent (30%) upon cancellation or breach is a penalty clause. In support of my position I cite Goldberg v. Charlie’s Chevrolet, Inc., 672 S.W.2d 177, 179 (Mo.App.1984) which stands for the proposition that an amount used as liquidated damages must bear some relationship to a reasonable forecast of probable damages or to an amount which damages are likely to result from such a breach. Here, the $7,200 amount is merely a mathematical derivation of 30% of $24,000 (contract amount). This figure was not arrived at by subtracting the estimated cost of the work from the contract price as is suggested by the concurring opinion citing Statler Manufacturing, Inc. v. Brown, 691 S.W.2d 445, 451 (Mo.App.1985). This amounts to merely a penalty that Standard Improvement extracts from its clients who later decide against the con*194tracted work. Additionally, this amount was not bargained for between the parties. Instead, Standard Improvement unilaterally inserted this amount into the contract, and it bears no relationship to likely damages and therefore, it is unreasonable. See Germany v. Nelson, 677 S.W.2d 386, 388 (Mo.App.1984). The concurring opinion seems to imply that once Standard Improvement can prove it has suffered a loss or harm (no matter how small) it may extract whatever penalty it desires. With that I must respectfully disagree. In adopting the Restatement of Contracts relative to liquidated damages this clause must be found to be a penalty clause. In Grand Bissell Towers, Inc. v. Joan Gagnon Enterprises, Inc., 657 S.W.2d 378 (Mo.App.1983) this court (Eastern District) stated:
In Missouri, we have adopted the rules of the Restatement of Contracts for determining whether a liquidated damages clause is in fact a penalty. See, e.g., Corrigan Company Mechanical Contractors v. Fleischer, 423 S.W.2d 209, 213-214 (Mo.App.1967). These rules are:
“(1) An agreement, made in advance of breach, fixing the damages therefor, is not enforceable as a contract and does not affect the damages recoverable for the breach, unless
(a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and
(b) the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.”
Restatement of Contracts § 339 (1932). (footnote omitted) Id. at 379.
I respectfully submit that Standard Improvement failed to prove that either the amount fixed was a reasonable forecast of just damages or that the harm caused would be incapable or very difficult to estimate. It is for the aforesaid reasons that I must dissent.