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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. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

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