Court Opinion

ID: 161449
Source: CourtListenerOpinion
Date Created: 2010-08-14 07:08:34+00
Date Added: 2024-06-11T17:24:37.143428
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                         AUG 10 2001
                            FOR THE TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

    YALE 41 ASSOCIATES LIMITED
    PARTNERSHIP, an Oklahoma limited
    partnership; YALE 41, INC., an
    Oklahoma corporation; JAMES W.
    DILL, individually and as president of             No. 00-5226
    Yale 41, Inc.,                               (D.C. No. 99-CV-1059-H)
                                                       (N.D. Okla.)
                Plaintiffs - Appellants,

    v.

    FIVE SHOPPING CENTER
    COMPANY, a Kansas general
    partnership; MD MANAGEMENT,
    INC., a Missouri corporation; THE
    RICHARD J. DREISESZUN
    GRANTOR TRUST; SHERMAN
    DREISESZUN, individually and as
    trustee of the Richard J. Dreiseszun
    Grantor Trust; IRENE DREISESZUN
    and ROBERT J. O'HALLORAN,
    trustees of the Richard J. Dreiseszun
    Grantor Trust,

                Defendants - Appellees.

                             ORDER AND JUDGMENT         *

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Before EBEL , PORFILIO, and KELLY , Circuit Judges.

       After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal.   See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

       Plaintiffs appeal the district court’s grant of summary judgment in favor of

defendants on their complaint alleging breach of settlement agreement and

seeking enforcement of a liquidated damages’ provision therein. We review a

grant of summary judgment de novo, applying the same legal standard as that used

by the district court.   Anderson v. Coors Brewing Co.   , 181 F.3d 1171, 1175 (10th

Cir. 1999).

       The parties are familiar with the facts and we only very briefly summarize

those necessary to resolve this appeal. The parties’ June 3, 1998 settlement

agreement provided, in part, that the defendants in this action would use their best

efforts to secure the release of plaintiff James W. Dill as a guarantor on a

construction loan and on a performance and payment bond. The agreement

further provided that the defendants would pay liquidated damages totaling $500

for each day after June 15, 1998 that Mr. Dill was not released. Plaintiffs’

complaint alleged that defendants breached their obligation to timely obtain these

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releases, an allegation denied by defendants, and sought to enforce the liquidated

damages provision. Both parties filed motions for summary judgment. Sitting in

diversity and applying Oklahoma law, the district court granted defendants’

motion, ruling that the liquidated damages provision constituted an unenforceable

penalty under Oklahoma law.

       By statute in Oklahoma, a contractual provision in which damages for

breach are determined in anticipation of that breach is void unless, from the

nature of the case, it would be impracticable or extremely difficult to fix the

actual damages.   See Okla. Stat. Ann. tit. 15, §§ 214 and 215(A). If the liquidated

damages provision constitutes a penalty, the provision will be deemed void even

if the damage resulting from a breach would be difficult to ascertain.     Sun Ridge

Investors, Ltd. v. Parker , 956 P.2d 876, 877 (Okla. 1998);     Waggoner v. Johnston ,

408 P.2d 761, 769 (Okla. 1965). Oklahoma courts

       identify three criteria by which a valid liquidated damages clause
       may be distinguished from a penalty: 1) the injury caused by the
       breach must be difficult or impossible to estimate accurately; 2) the
       parties must intend to provide for damages rather than for a penalty;
       3) the sum stipulated must be a reasonable pre-breach estimate of the
       probable loss.

Sun Ridge , 956 P.2d at 878. “It is well settled that in determining whether a

particular clause calls for liquidated damages or for a penalty, the name given to

the clause by the parties is but of slight weight, and the controlling elements are

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the intention of the parties and the special circumstances of the case.”     Fretwell v.

Protection Alarm Co. , 764 P.2d 149, 152 (Okla. 1988) (quotation omitted).

       The burden of demonstrating that damages would be difficult to ascertain

and that the liquidated damages provision does not impose a penalty rests on the

party seeking to enforce the stipulated damage provision.        Waggoner , 408 P.2d at

768. In Sun Ridge , the Oklahoma Supreme Court held that a $5 per diem late

charge in a residential lease agreement constituted an unenforceable penalty

because the landlord failed to satisfy this evidentiary burden. 956 P.2d at 878-79.

The landlord presented “general assertions” from its property manager about the

difficulties encountered when a renter fails to pay rent on time, but “offered no

evidence of their actual costs of collection,” and no evidence indicating how any

such actual costs compared to the stipulated late fee.      Id. at 878-79.

       Here, as in Sun Ridge , the plaintiffs simply failed to meet their evidentiary

burden of proof. A party opposing summary judgment “must bring forward

specific facts showing a genuine issue for trial as to those dispositive matters for

which it carries the burden of proof.”     Jenkins v. Wood , 81 F.3d 988, 990 (10th

Cir. 1996). As stated by the district court, plaintiffs presented “no evidence that

the parties undertook to estimate the anticipated amount of potential damages, or

that the amounts reflected in the agreement represent[ed] any such estimate.”

Aplt. App., Vol III at 778. We agree with the district court’s conclusion that

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plaintiff failed to present any evidence that the parties intended to provide for

damages rather than for a penalty or that the liquidated damages amount in the

settlement agreement was a reasonable pre-breach estimate of Mr. Dill’s loss.       See

Sun Ridge , 956 P.2d at 878. Moreover, plaintiffs did not allege actual damages in

their complaint or present evidence that Mr. Dill actually suffered any loss as a

result of the alleged breach.

      The district court correctly articulated and applied Oklahoma law and the

record supports its findings. Thus, we AFFIRM the district court’s judgment for

substantially the reasons set forth in its order dated November 6, 2000.

                                                       Entered for the Court

                                                       John C. Porfilio
                                                       Circuit Judge

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