Court Opinion

ID: 6767247
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:38:50.202085+00
Date Added: 2024-06-11T16:02:41.919706
License: Public Domain

Pfeifer, J.,
dissenting. I respectfully dissent from the majority’s opinion. The facts in this case require this court to make a close call of whether the $6,240 claimed by Lake Ridge Academy (“Lake Ridge”) is liquidated damages or a penalty.
Because Lake Ridge was in a position to accurately determine that the damages it would suffer as a result of Carney’s withdrawal were an amount less than a year’s tuition, and because the damages in the contract were not less than this tuition amount, the forfeiture clause is a penalty. The damages incurred by Lake Ridge totalled some amount less than the annual tuition rate. For example, the contract itself clearly states that $140 of the $6,240 is devoted to the variable cost of “books and supplies” that the student uses throughout the school year. Even the school’s headmaster concedes that Lake Ridge incurs savings as a result of the Carney child’s withdrawal. Thus, while the precise amount of damages owed to Lake Ridge may have been uncertain at the time the parties entered into a contract, it is unquestionable that the parties knew that these damages would total an amount less than the full annual tuition.
For the forfeiture clause in the contract to be an enforceable liquidated damages clause, it must reflect this certainty by charging some amount less than the annual tuition rate. Because the damages clause in the contract between Lake Ridge and Carney is not less than the annual tuition, it is an unenforceable penalty provision.
*387Finally, some might construe the majority’s opinion as an endorsement for schools that educate children in less affluent families to unjustifiably enforce similar contractual provisions. Under these circumstances, however, I am confident that this court would find the provisions to be unconscionable.
The judgment of the court of appeals should be reversed.
Resnick, J., concurs in the foregoing dissenting opinion.