Court Opinion

ID: 9733747
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:16:27.712448+00
Date Added: 2024-06-11T18:26:43.987530
License: Public Domain

VAIDIK, Judge,
Dissenting.
I respectfully dissent. I agree that the Reams materially breached the terms of their lease and are not entitled to damages or equitable relief, but I disagree with the majority that forfeiture is the appropriate remedy in this case.
The majority notes that the lease's forfeiture provision is akin to a liquidated damages clause. Liquidated damages clauses are generally enforceable where the nature of the agreement is such that when a breach occurs the resulting damages would be uncertain and difficult to ascertain. Olcott Int'l & Co., Inc. v. Micro Data Base Systems, Inc., 798 N.E.2d 1063, 1077 (Ind.Ct.App.2003), trans. denied. In determining whether a stipulated sum payable on a breach of contract constitutes liquidated damages or an unenforceable penalty, the facts, the intention of the parties, and the reasonableness of the stipulation under the circumstances of the case are all to be considered. Id. If the sum sought by a liquidated damages clause is grossly disproportionate to the loss that may result from a breach of contract, we should treat the sum as a penalty rather than liquidated damages. Id.
In June 2004 the Reams first moved their trailer without notice in violation of the Park Rules and Regulations. The trailer subsequently blocked an access road to the lake and a lane servicing the park's front lots. The Reams moved the trailer again the following October. Although this second relocation was sanctioned in a letter from Yankee Park's attorney, counsel was obviously mistaken *548and the Reams were still in breach. The trailer continued to block the frontage lane, interfere with emergency vehicle access, and obstruct views of the lake. But in November the Reams returned their trailer to a spot evidently within three feet of its original and proper location. In my view, the damages incurred by the park and its residents are therefore as follows: (1) five months' worth of blocked road access and/or obstructed lake views, (2) any purported impact from the trailer now being three feet from its correct location, and (38) any additional inconvenience to park residents from not receiving notice of the relocations.
On the opposite side of the scale is what the Reams stand to lose through the forfeiture provision. To be sure, the Reams paid only $6255 for their interest in each of the two lots at issue. But the Reams paid in full and acquired 99-year proprietary leaseholds in the subject property. Individual lakefront lots at Yankee Park now cost $20,000 to $30,000. Weighing the loss of two prepaid century-long leases against five months of obstructed road access and lake views along with any other inconvenience noted above, I conclude that the Reams' forfeiture is grossly disproportionate to the totality of the park's damages.4 I would hold that the lease's forfeiture provision constitutes an unenforceable penalty as opposed to an enforceable liquidated damages clause. I would reverse and remand to award only the above mentioned compensatory damages to the park and its residents, and I would order the lease to be terminated by sale rather than forfeiture, said sale to be directed by the trial court so as to ensure the Reams rights are adequately protected. Cf. Cunningham v. Georgetown Homes, Inc., 708 N.E.2d 623, 627 (Ind.Ct.App.1999) (holding that cooperative member had "a vested interest in relation to the unit, and she cannot be forced to simply forfeit that interest in the event that the court concludes in its final judgment that [she] did indeed breach the provisions of the Oceu-paney Agreement"); Skendzel v. Marshall, 261 Ind. 226, 234, 301 N.E.2d 641, 646 (1973) ("'The vendee has acquired a substantial interest in the property, which, if forfeited, would result in substantial injustice.").

. When assessing each party's losses, the majority takes into account that "Yankee Park incurred the costs of enforcing the leases." Op. at 544. But the costs of enforcing the leases are essentially attorneys' fees. Under the well-settled American rule, attorneys' fees are not recoverable and should not be factored into damages. See Willie's Const. Co., Inc. v. Baker, 596 N.E.2d 958, 963 (Ind.Ct.App.1992) ("Attorney's fees are not allowable in the absence of a statute, or in the absence of an agreement or stipulation between the parties.").