Defendant alarm company appealed from a judgment of the Superior Court of Alameda County (California), which awarded plaintiff business owners $ 97,437 in their action for breach of a lease agreement whereby the alarm company agreed to install and maintain a fire detection system on the business owners’ premises.

Overview

The lease term was 10 years, with a monthly rental of $ 15. The lease provided that, in case of the alarm company’s failure to perform the agreed services, its liability was limited to the sum of $ 25 as liquidated damages, and not as a penalty. The fire detection system failed to operate and the business owners’ business was destroyed. The court held the lease’s provision for liquidated damages was valid and enforceable. Cal. Civ. Code § 1671 provided that the parties to a contract could agree upon liquidated damages when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damages. In this case, the uncertain extent to which losses might occur viewed from the time of entering into the contract made the task of fixing damages an extremely difficult one. It was important for the alarm company to know the extent of its liability. From the small compensation received it could not afford to assume the responsibilities of an insurer. On the other hand, the business owners were entitled to some compensation for the alarm company’s breach. Further, the parties stated that they agreed upon an amount as liquidated damages, and not as a penalty.

Outcome

The court modified the trial court’s judgment by reducing the same to the sum of $ 25. As so modified, it affirmed the judgment.

Procedural Posture

A critical issue was undetermined because one party’s employment attorney San Diego was not present during evidentiary hearing. Plaintiff lessee appealed a judgment from the Superior Court of Los Angeles County (California), which ordered that plaintiff take nothing on his complaint for breach of contract and bad faith breach of contract and that defendant lessor recover his costs.

Overview

Plaintiff lessee and defendant lessor signed a written lease for the rental of a building. Plaintiff requested defendant to consent to the assignment of the lease on several occasions. Defendant refused to consent. Plaintiff filed an action for breach of contract bad faith breach of contract against defendant. Defendant filed a motion for judgment on the pleadings. The trial court granted defendant’s motion and recovery of costs and ordered that plaintiff take nothing on his complaint ruling that defendant had an unqualified right to refuse to consent to plaintiff’s attempted assignment. The court ruled that plaintiff sufficiently pleaded causes of action for breach of contract and bad faith breach of contract based upon defendant’s unreasonable refusal to consent to plaintiff’s attempted assignment. The court reversed and remanded the case for further proceedings.

Outcome

The court reversed and remanded the case for further proceedings, ruling that plaintiff lessee sufficiently pleaded causes of action for breach and bad faith breach of contract based upon defendant lessor’s refusal to consent to plaintiff’s assignment of lease.