Yale 41 Associates Ltd. Partnership v. Five Shopping Center Co. , 16 F. App'x 921 ( 2001 )

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This order and judgment is not binding precedent, except under the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
-2-
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
-3-
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
-4-
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
-5-