liquidated damages clause in Minnesota

2024A liquidated-damages clause is unenforceable if the amount of liquidated damages is “not a reasonable forecast of just compensation.” Id.

2024And “the proponent of a liquidated-damages clause bears the burden of introducing evidence to justify the liquidated-damages clause.” Id. at 124 . 3 Recognizing that the district court did not have the benefit of Lagoon, we only address the homeowners’ first argument that the district court erred by construing Gorco to put the evidentiary burden on the homeowners. 1 The district court determined the homeowners did not introduce any affirmative evidence that the amount sought by Capital under the liquidated-damages clause was either punitive or an unreasonable forecast of just compensation.

2024See Lagoon, 999 N.W.2d at 119 (noting that liquidated-damages clauses are prima facie valid); Dean Van Horn Consulting Assocs., Inc. v. Wold, 395 N.W.2d 405, 407-08 (Minn. App. 1986) (although a liquidated damages clause is prima facie valid, the trial court may hear evidence regarding the reasonableness of the liquidated damages clause).

2024This is consistent with Dean Van Horn, which held that the trial court may hear evidence regarding the reasonableness of a liquidated-damages clause. 395 N.W.2d at 408 .

2023In general, if a tenant has breached a lease and the landlord has terminated the lease, the landlord’s customary remedy is “damages resulting from the breach with the attendant obligation upon the lessor to use reasonable efforts to mitigate such damages subsequent to the breach.” Gruman v. Investors Diversified Services, 78 N.W.2d 377, 381 (Minn. 1956); see also Newberg, 252 N.W. at 222 (affirming trial court’s damages award consisting of tenant’s unpaid rent less rent payments received from new tenant); Galbraith v. Wood, 144 N.W. 945, 948 (Minn. 1914) (stating that liability for unpaid rent

2023In general, if a tenant has breached a lease and the landlord has terminated the lease, the landlord’s customary remedy is “damages resulting from the breach with the attendant obligation upon the lessor to use reasonable efforts to mitigate such damages subsequent to the breach.” Gruman v. Investors Diversified Services, 78 N.W.2d 377, 381 (Minn. 1956); see also Newberg, 252 N.W. at 222 (affirming trial court’s damages award consisting of tenant’s unpaid rent less rent payments received from new tenant); Galbraith v. Wood, 144 N.W. 945, 948 (Minn. 1914) (stating that liability for unpaid rent

2023Similarly, in Palace Theatre, which concerned a commercial lease, the supreme court determined that the liquidated-damages clause was unenforceable because some components of the landlord’s claim for damages “would necessarily be inconsiderable in amount as compared with” the amount of liquidated damages. 243 N.W. at 851. 17 In Meuwissen, on the other hand, the supreme court determined that the liquidated- damages clause was enforceable because the amount of liquidated damages had a “reasonable relation to the contemplated damages.” 16 N.W.2d at 551.

2023Similarly, in Palace Theatre, which concerned a commercial lease, the supreme court determined that the liquidated-damages clause was unenforceable because some components of the landlord’s claim for damages “would necessarily be inconsiderable in amount as compared with” the amount of liquidated damages. 243 N.W. at 851 . 17 In Meuwissen, on the other hand, the supreme court determined that the liquidated- damages clause was enforceable because the amount of liquidated damages had a “reasonable relation to the contemplated damages.” 16 N.W.2d at 551 .

2023In general, if a tenant has breached a lease and the landlord has terminated the lease, the landlord’s customary remedy is “damages resulting from the breach with the attendant obligation upon the lessor to use reasonable efforts to mitigate such damages subsequent to the breach.” Gruman v. Investors Diversified Services, 78 N.W.2d 377, 381 (Minn. 1956); see also Newberg, 252 N.W. at 222 (affirming trial court’s damages award consisting of tenant’s unpaid rent less rent payments received from new tenant); Galbraith v. Wood, 144 N.W. 945, 948 (Minn. 1914) (stating that liability for unpaid rent

2023In general, if a tenant has breached a lease and the landlord has terminated the lease, the landlord’s customary remedy is “damages resulting from the breach with the attendant obligation upon the lessor to use reasonable efforts to mitigate such damages subsequent to the breach.” Gruman v. Investors Diversified Services, 78 N.W.2d 377, 381 (Minn. 1956); see also Newberg, 252 N.W. at 222 (affirming trial court’s damages award consisting of tenant’s unpaid rent less rent payments received from new tenant); Galbraith v. Wood, 144 N.W. 945, 948 (Minn. 1914) (stating that liability for unpaid rent

2023Similarly, in Palace Theatre, which concerned a commercial lease, the supreme court determined that the liquidated-damages clause was unenforceable because some components of the landlord’s claim for damages “would necessarily be inconsiderable in amount as compared with” the amount of liquidated damages. 243 N.W. at 851. 17 In Meuwissen, on the other hand, the supreme court determined that the liquidated- damages clause was enforceable because the amount of liquidated damages had a “reasonable relation to the contemplated damages.” 16 N.W.2d at 551.

2023Similarly, in Palace Theatre, which concerned a commercial lease, the supreme court determined that the liquidated-damages clause was unenforceable because some components of the landlord’s claim for damages “would necessarily be inconsiderable in amount as compared with” the amount of liquidated damages. 243 N.W. at 851 . 17 In Meuwissen, on the other hand, the supreme court determined that the liquidated- damages clause was enforceable because the amount of liquidated damages had a “reasonable relation to the contemplated damages.” 16 N.W.2d at 551 .

2023See Maslowski v. Prospect Funding Partners LLC, 978 N.W.2d 447, 455 (Minn. App. 2022), rev’d on other grounds, 994 N.W.2d 293 (Minn. 2023); Bellboy Seafood Corp. v. Nathanson, 410 N.W.2d 349, 352 (Minn. App. 1987); Dean Van Horn Consulting Associates, Inc. v. Wold, 395 N.W.2d 405, 407 (Minn. App. 1986). 9 A liquidated-damages clause in a contract is “prima facie valid on the assumption that the parties in naming a liquidated sum intended it to be a fair compensation for an injury caused by a breach of contract and not a penalty for nonperformance.” Gorco, 99 N.W.2d at 74.

2023See Maslowski v. Prospect Funding Partners LLC, 978 N.W.2d 447 , 455 (Minn. App. 2022), rev’d on other grounds, 994 N.W.2d 293 (Minn. 2023); Bellboy Seafood Corp. v. Nathanson, 410 N.W.2d 349, 352 (Minn. App. 1987); Dean Van Horn Consulting Associates, Inc. v. Wold, 395 N.W.2d 405, 407 (Minn. App. 1986). 9 A liquidated-damages clause in a contract is “prima facie valid on the assumption that the parties in naming a liquidated sum intended it to be a fair compensation for an injury caused by a breach of contract and not a penalty for nonperformance.” Gorco, 99 N.W.2d at 74 .

2023See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). 7 court concluded that the liquidated-damages clause in the lease is enforceable and that, as a consequence, Lagoon is not required to mitigate its damages.

2023See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). 7 court concluded that the liquidated-damages clause in the lease is enforceable and that, as a consequence, Lagoon is not required to mitigate its damages.

2023Park v. Albert, Inc., 548 N.W.2d 153, 157 (Iowa 1996) (concluding that liquidated-damages clause was reasonable because it considered landlord’s duty to mitigate). 22 issues raised in the pending motion.” That ruling was predicated on the district court’s decision that the liquidated-damages clause is enforceable as a matter of law.

2023Park v. Albert, Inc., 548 N.W.2d 153, 157 (Iowa 1996) (concluding that liquidated-damages clause was reasonable because it considered landlord’s duty to mitigate). 22 issues raised in the pending motion.” That ruling was predicated on the district court’s decision that the liquidated-damages clause is enforceable as a matter of law.

2023In general, if a tenant has breached a lease and the landlord has terminated the lease, the landlord’s customary remedy is “damages resulting from the breach with the attendant obligation upon the lessor to use reasonable efforts to mitigate such damages subsequent to the breach.” Gruman v. Investors Diversified Services, 78 N.W.2d 377, 381 (Minn. 1956); see also Newberg, 252 N.W. at 222 (affirming trial court’s damages award consisting of tenant’s unpaid rent less rent payments received from new tenant); Galbraith v. Wood, 144 N.W. 945, 948 (Minn. 1914) (stating that liability for unpaid rent

2023In general, if a tenant has breached a lease and the landlord has terminated the lease, the landlord’s customary remedy is “damages resulting from the breach with the attendant obligation upon the lessor to use reasonable efforts to mitigate such damages subsequent to the breach.” Gruman v. Investors Diversified Services, 78 N.W.2d 377, 381 (Minn. 1956); see also Newberg, 252 N.W. at 222 (affirming trial court’s damages award consisting of tenant’s unpaid rent less rent payments received from new tenant); Galbraith v. Wood, 144 N.W. 945, 948 (Minn. 1914) (stating that liability for unpaid rent

2000Id. at 911.

1987See Hilltop Construction, 324 N.W.2d at 239 (“A mere ambiguity in the opinion accompanying an award which permits an inference that the arbitrators may have exceeded their authority is no reason for refusing to enforce the award”).