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Trial court erred in finding provision was liquidated damages clause

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A forfeiture provision in a purchase agreement between the Dean V. Kruse Foundation and Jerry Gates, the buyer of West Baden property, did not constitute a liquidated damages clause as the trial court ruled, the Indiana Court of Appeals held Tuesday. The judges ruled that the Kruse parties are entitled to more damages as a result of Gates’ breach of contract.

The Kruse Foundation was given a large parcel of property and 300,000 square foot manufacturing facility in West Baden. The foundation is the charitable organization that operates a World War II museum and automobile museum in Auburn. The foundation found that the costs were too much to maintain the property and it continually lost money, so the foundation sought to sell the property. Those attempts were unsuccessful, so Dean Kruse, an auctioneer and licensed real estate broker, auctioned the property. The auction was final and required earnest money. Gates bought the property with a $4 million bid and 5 percent buyer’s premium. He gave $100,000 to Kruse as earnest money. A few weeks later, Gates informed Kruse he was terminating the purchase agreement.

The property was eventually sold for $2.35 million. Gates then sued Kruse and the foundation for breach of contract, fraud and conversion, seeking the earnest money back. The Kruse parties counterclaimed for breach of contract and slander of title. After a ruling for Gates and an appeal that reversed, the trial court entered summary judgment for the Kruse parties and found the $100,000 was the appropriate amount of damages. The trial court believed the purchase agreement contained a liquidated damages provision and the Kruse parties were only entitled to the earnest money. The Kruse parties appealed.

Using caselaw, the Court of Appeals found that the provision at issue in the purchase agreement indicates intent to penalize the purchaser for a breach rather than intent to compensate the seller in the event of a breach. Although there is no mention of forfeiture as a penalty, the provision is also not labeled as liquidated damages, Judge Patricia Riley wrote.

“Further, the Purchase Agreement provides that the remedy of specific performance may be available to the seller in the event of default, suggesting that there is no ability for the purchaser to simply ‘walk away’ in the event of his breach. These features arguably favor interpretation of the provision as a penalty rather than as one providing for liquidated damages,” she wrote.

The appellate judges also disagreed with the trial court that the evidence of the property’s value was uncertain as there was sufficient evidence to determine the fair market value of the property at the time of the breach. They also disagreed that the Kruse parties are precluded from asserting legal damages for Gates’ breach. The judges remanded with instructions for the trial court to calculate the measure of damages as a result of the breach of contract.

 

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  1. California Sex Offender Management Board (CASOMB) End of Year Report 2014. (page 13) Under the current system many local registering agencies are challenged just keeping up with registration paperwork. It takes an hour or more to process each registrant, the majority of whom are low risk offenders. As a result law enforcement cannot monitor higher risk offenders more intensively in the community due to the sheer numbers on the registry. Some of the consequences of lengthy and unnecessary registration requirements actually destabilize the life’s of registrants and those -such as families- whose lives are often substantially impacted. Such consequences are thought to raise levels of known risk factors while providing no discernible benefit in terms of community safety. The full report is available online at. http://www.casomb.org/index.cfm?pid=231 National Institute of Justice (NIJ) US Department of Justice Office of Justice Programs United States of America. The overall conclusion is that Megan’s law has had no demonstrated effect on sexual offenses in New Jersey, calling into question the justification for start-up and operational costs. Megan’s Law has had no effect on time to first rearrest for known sex offenders and has not reduced sexual reoffending. Neither has it had an impact on the type of sexual reoffense or first-time sexual offense. The study also found that the law had not reduced the number of victims of sexual offenses. The full report is available online at. https://www.ncjrs.gov/app/publications/abstract.aspx? ID=247350 The University of Chicago Press for The Booth School of Business of the University of Chicago and The University of Chicago Law School Article DOI: 10.1086/658483 Conclusion. The data in these three data sets do not strongly support the effectiveness of sex offender registries. The national panel data do not show a significant decrease in the rate of rape or the arrest rate for sexual abuse after implementation of a registry via the Internet. The BJS data that tracked individual sex offenders after their release in 1994 did not show that registration had a significantly negative effect on recidivism. And the D.C. crime data do not show that knowing the location of sex offenders by census block can help protect the locations of sexual abuse. This pattern of noneffectiveness across the data sets does not support the conclusion that sex offender registries are successful in meeting their objectives of increasing public safety and lowering recidivism rates. The full report is available online at. http://www.jstor.org/stable/full/10.1086/658483 These are not isolated conclusions but are the same outcomes in the majority of conclusions and reports on this subject from multiple government agencies and throughout the academic community. People, including the media and other organizations should not rely on and reiterate the statements and opinions of the legislators or other people as to the need for these laws because of the high recidivism rates and the high risk offenders pose to the public which simply is not true and is pure hyperbole and fiction. They should rely on facts and data collected and submitted in reports from the leading authorities and credible experts in the fields such as the following. California Sex Offender Management Board (CASOMB) Sex offender recidivism rate for a new sex offense is 0.8% (page 30) The full report is available online at http://www.cdcr.ca.gov/Adult_Research_Branch/Research_Documents/2014_Outcome_Evaluation_Report_7-6-2015.pdf California Sex Offender Management Board (CASOMB) (page 38) Sex offender recidivism rate for a new sex offense is 1.8% The full report is available online at. http://www.google.com/url?sa= t&source=web&cd=1&ved= 0CCEQFjAA&url=http%3A%2F% 2Fwww.cdcr.ca.gov%2FAdult_ Research_Branch%2FResearch_ documents%2FOutcome_ evaluation_Report_2013.pdf&ei= C9dSVePNF8HfoATX-IBo&usg=AFQjCNE9I6ueHz-o2mZUnuxLPTyiRdjDsQ Bureau of Justice Statistics 5 PERCENT OF SEX OFFENDERS REARRESTED FOR ANOTHER SEX CRIME WITHIN 3 YEARS OF PRISON RELEASE WASHINGTON, D.C. Within 3 years following their 1994 state prison release, 5.3 percent of sex offenders (men who had committed rape or sexual assault) were rearrested for another sex crime, the Justice Department’s Bureau of Justice Statistics (BJS) announced today. The full report is available online at. http://www.bjs.gov/content/pub/press/rsorp94pr.cfm Document title; A Model of Static and Dynamic Sex Offender Risk Assessment Author: Robert J. McGrath, Michael P. Lasher, Georgia F. Cumming Document No.: 236217 Date Received: October 2011 Award Number: 2008-DD-BX-0013 Findings: Study of 759 adult male offenders under community supervision Re-arrest rate: 4.6% after 3-year follow-up The sexual re-offense rates for the 746 released in 2005 are much lower than what many in the public have been led to expect or believe. These low re-offense rates appear to contradict a conventional wisdom that sex offenders have very high sexual re-offense rates. The full report is available online at. https://www.ncjrs.gov/pdffiles1/nij/grants/236217.pdf Document Title: SEX OFFENDER SENTENCING IN WASHINGTON STATE: RECIDIVISM RATES BY: Washington State Institute For Public Policy. A study of 4,091 sex offenders either released from prison or community supervision form 1994 to 1998 and examined for 5 years Findings: Sex Crime Recidivism Rate: 2.7% Link to Report: http://www.oncefallen.com/files/Washington_SO_Recid_2005.pdf Document Title: Indiana’s Recidivism Rates Decline for Third Consecutive Year BY: Indiana Department of Correction 2009. The recidivism rate for sex offenders returning on a new sex offense was 1.05%, one of the lowest in the nation. In a time when sex offenders continue to face additional post-release requirements that often result in their return to prison for violating technical rules such as registration and residency restrictions, the instances of sex offenders returning to prison due to the commitment of a new sex crime is extremely low. Findings: sex offenders returning on a new sex offense was 1.05% Link to Report: http://www.in.gov/idoc/files/RecidivismRelease.pdf Once again, These are not isolated conclusions but are the same outcomes in the majority of reports on this subject from multiple government agencies and throughout the academic community. No one can doubt that child sexual abuse is traumatic and devastating. The question is not whether the state has an interest in preventing such harm, but whether current laws are effective in doing so. Megan’s law is a failure and is destroying families and their children’s lives and is costing tax payers millions upon millions of dollars. The following is just one example of the estimated cost just to implement SORNA which many states refused to do. From Justice Policy Institute. Estimated cost to implement SORNA Here are some of the estimates made in 2009 expressed in 2014 current dollars: California, $66M; Florida, $34M; Illinois, $24M; New York, $35M; Pennsylvania, $22M; Texas, $44M. In 2014 dollars, Virginia’s estimate for implementation was $14M, and the annual operating cost after that would be $10M. For the US, the total is $547M. That’s over half a billion dollars – every year – for something that doesn’t work. http://www.justicepolicy.org/images/upload/08-08_FAC_SORNACosts_JJ.pdf. Attempting to use under-reporting to justify the existence of the registry is another myth, or a lie. This is another form of misinformation perpetrated by those who either have a fiduciary interest in continuing the unconstitutional treatment of a disfavored group or are seeking to justify their need for punishment for people who have already paid for their crime by loss of their freedom through incarceration and are now attempting to reenter society as honest citizens. When this information is placed into the public’s attention by naive media then you have to wonder if the media also falls into one of these two groups that are not truly interested in reporting the truth. Both of these groups of people that have that type of mentality can be classified as vigilantes, bullies, or sociopaths, and are responsible for the destruction of our constitutional values and the erosion of personal freedoms in this country. I think the media or other organizations need to do a in depth investigation into the false assumptions and false data that has been used to further these laws and to research all the collateral damages being caused by these laws and the unconstitutional injustices that are occurring across the country. They should include these injustices in their report so the public can be better informed on what is truly happening in this country on this subject. Thank you for your time.

  2. Freedom as granted in the Constitution cannot be summarily disallowed without Due Process. Unable to to to the gym, church, bowling alley? What is this 1984 level nonsense? Congrats to Brian for having the courage to say that this was enough! and Congrats to the ACLU on the win!

  3. America's hyper-phobia about convicted sex offenders must end! Politicians must stop pandering to knee-jerk public hysteria. And the public needs to learn the facts. Research by the California Sex Offender Management Board as shown a recidivism rate for convicted sex offenders of less than 1%. Less than 1%! Furthermore, research shows that by year 17 after their conviction, a convicted sex offender is no more likely to commit a new sex offense than any other member of the public. Put away your torches and pitchforks. Get the facts. Stop hysteria.

  4. He was convicted 23 years ago. How old was he then? He probably was a juvenile. People do stupid things, especially before their brain is fully developed. Why are we continuing to punish him in 2016? If he hasn't re-offended by now, it's very, very unlikely he ever will. He paid for his mistake sufficiently. Let him live his life in peace.

  5. This year, Notre Dame actually enrolled an equal amount of male and female students.

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