Court Opinion

ID: 67370
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:20:50+00
Date Added: 2024-06-11T09:03:18.761058
License: Public Domain

[DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                      ________________________                  FILED
                                                       U.S. COURT OF APPEALS
                             No. 08-16850                ELEVENTH CIRCUIT
                                                             MAY 12, 2009
                         Non-Argument Calendar
                                                          THOMAS K. KAHN
                       ________________________
                                                               CLERK

                D.C. Docket No. 07-00104-CV-ORL-28DAB

COUNTRY INNS & SUITES BY CARLSON, INC.,
a Minnesota corporation,

                                                     Plaintiff-Appellee,

                                  versus

INTERSTATE PROPERTIES, LLC,
a Florida limited liability company,
WILLIAM ABRUZZINO, an individual,

                                                     Defendants-Appellants.

                       ________________________

                Appeal from the United States District Court
                    for the Middle District of Florida
                      ________________________
                              (May 12, 2009)

Before CARNES, WILSON and COX, Circuit Judges.

PER CURIAM:
      Interstate Properties, LLC (“Interstate”) owned a hotel in Orange City, Florida.

In February 2004, Interstate entered into a License Agreement with Country Inn &

Suites by Carlson (“Country”), pursuant to which Interstate promised to operate that

hotel as a Country franchise for fifteen years. William Abruzzino, Interstate’s sole

owner, personally guaranteed payment of all amounts due Country under the License

Agreement. In October 2006, Interstate breached the License Agreement by selling

its Orange City hotel to a purchaser who did not continue to operate the hotel as a

Country hotel. Country declared Interstate in default and, when Interstate did not pay

Country all of the monies Country claimed it was owed, Country sued Interstate and

Abruzzino (collectively, “The Interstate Defendants”) for those monies and the new

owner of the property for trademark infringement.

      The complaint contained seven counts. Each count, with the exception of

Count II– Country’s claim against the Interstate Defendants for liquidated damages–

was resolved by the parties. Most of the claims were voluntarily dismissed. The

district court entered judgment for Country on Count I, pursuant to an agreement

between the parties, and Count II, pursuant to the court’s ruling that Country was

entitled to summary judgment on that count. The Interstate Defendants now appeal

the judgment, arguing only that the district court erred in granting summary judgment

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to Country on Count II because the liquidated damages clause in the License

Agreement is unenforceable.

       This court reviews a district court’s grant of summary judgment de novo,

applying the same legal standards used by the district court. See, e.g., Hilburn v.

Murata Elecs. N. Am., Inc., 181 F.3d 1220, 1225 (11th Cir. 1999). Summary

judgment is appropriate where “‘there is no genuine issue as to any material fact and

the moving party is entitled to a judgment as a matter of law.’” Wooden v. Bd. of

Regents of the Univ. Sys. of Ga., 247 F.3d 1262, 1271 (11th Cir. 2001) (quoting Fed.

R. Civ. P. 56(c)).

       The district court correctly identified the test under Florida law as to when a

liquidated damages provision will be upheld. “First, the damages consequent upon

a breach must not be readily ascertainable. Second, the sum stipulated to be forfeited

must not be so grossly disproportionate to any damages that might reasonably be

expected to follow from a breach as to show that the parties could have intended only

to induce full performance, rather than to liquidate their damages.” Lefemine v.

Baron, 573 So. 2d 326, 328 (Fla. 1991). The Interstate Defendants have not argued,

here or in the district court, that the first part of this test is not met. Rather, they argue

that the liquidated damages provision in the License Agreement fails the second part

of the test because it: (1) does not take into account the time during the contract term

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at which the breach occurs and, therefore, could operate so as to award Country more

in liquidated damages than it might recover in actual damages; (2) does not reduce

the liquidated damages award to present value; and (3) calculates the liquidated

damages due based on gross revenues, not profits. The Interstate Defendants also

argue that the liquidated damages provision is an unreasonable restraint on their right

to alienate the property and is, for that reason, invalid.

      Like the district court, we find the Interstate Defendants’ arguments

unpersuasive. The case citations they provide do not support their conclusion that the

liquidated damages provision is invalid as a matter of law. And, the Interstate

Defendants have not demonstrated that the clause operates as a pure penalty by virtue

of being an unreasonable estimate of the actual damages Country may have suffered.

The liquidated damages the Interstate Defendants agreed to pay Country in the event

of a breach simply are not “so grossly disproportionate to any damages that might

reasonably be expected to follow from a breach as to show that the parties could have

intended only to induce full performance, rather than to liquidate their damages.”

Lefemine, 573 So. 2d at 328. And, the liquidated damages clause does not operate as

an impermissible bar on the Interstate Defendants’ right to transfer the property. It

simply makes transfer of that property to a purchaser who does not continue to

operate the hotel as a Country franchise more costly.

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      Therefore, we find no error in the district court’s grant of summary judgment

to Country on Count II of the complaint and affirm the judgment.

      AFFIRMED.

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