Commercial Real Estate Investment, L.C. v. Comcast Of Utah Ii, Inc.

285 P.3d 1193 (Utah 2012)

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Nature of the Case

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Facts

In 1995, TCI Cablevision of Utah (TCI) approached P about 'developing a large commercial building where TCI could operate its northern Utah cable television business.' TCI proposed to locate a suitable site and design a building to meet its specific needs. P would purchase the site and construct the building to TCI's specifications. TCI further proposed to enter into a long-term lease for the building. The lease contained provisions to operate all of the Building continuously during the entire term of this Lease. It also had a liquidated damages clause for the failure of Tenant to comply with the terms to collect not only the minimum and additional rent herein provided, but added rent at the rate of one-thirtieth (1/30th) of the minimum monthly rent set forth in Article 4 for each and every day that Tenant shall fail to conduct its business as required herein. The lease further specified that P had a duty to 'exercise its reasonable best faith efforts to mitigate its damages, if any, arising from' a violation of the above provisions. The parties signed the lease agreement in July 1995. On July 17, 2001, TCI ceased operations at the building and vacated the premises. In 2002, D acquired TCI and succeeded to TCI's interest in the property and to its obligations under the terms of the lease. D listed the building with a realtor in an effort to locate a replacement tenant. P made no efforts to find a substitute tenant. A substitute tenant took possession of the property on February 22, 2006. TCI (and subsequently D) paid all rent due under the lease since July 1995, but have refused to pay any liquidated damages. Not counting interest, liquidated damages from July 17, 2001, to February 22, 2006, total $1,711,990.66. P sued D for breach of contract and attorney fees. Both parties filed motions for partial summary judgment as to the enforceability of the liquidated damages provision. P argued that enforceability depended only on whether the clause is unconscionable. D argued that enforceability should be determined under section 339 of the first Restatement of Contracts. Because the lease 'specified damages proportional to the length of the breach,' the district court reasoned, it could not 'find that D has met its burden of establishing that the liquidated damages were not a reasonable forecast of actual damages.' The court found none of the hallmarks of unconscionability to be present and it declined to 'reallocate the assumption of the risk that was bargained for between the parties.' D appealed.