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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. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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