JOSE OROZCO, Plaintiff and Respondent, v. OLIVO CASIMIRO, Defendant and Appellant. , 121 Cal. App. 4th Supp. 7

Summary

The lessee contended that the late fee was punitive in nature and not a good faith estimate of the damages likely to be suffered by the lessor in the case of a late payment. The lessor countered that the late fee was presumptively valid under Cal. Civ. Code § 1671. The trial court found for the lessor. On appeal, the court reversed. The court stated that for liquidated damages to be valid under § 1671(d), it had to be impracticable or extremely difficult to fix the actual damage. Additionally, the amount of liquidated damages had to represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained. Absent either of these elements, a liquidated damages provision was void, although breaching parties remained liable for the actual damages resulting from the breach. Here, the lessor neither pleaded nor proved that damages were impracticable or extremely difficult to fix, and thus he was not entitled to the presumption ...