Leeber v. Deltona

• Leeber = plaintiff in Portland, Maine
• In the Spring of 1980, Leeber & 2 others decided to buy a condo in Marco Island, Florida
• Deltona Corp. = "Deltona" = defendant = seller of condos in Florida
• Leeber paid a 15% deposit of roughly $23,000 for the condo in Marco Island. The contract stipulated that the 15% deposit would be forfeited by Leeber in the event of contract breach.
• Leeber agreed to pay the balance within 4 years
• Leeber reneged on the promise to buy. In the midst of this, Deltona sold the same real estate to another party who paid about $25,000 as deposit in another contract with the same liquidated damages provision for this new buyer.

The buyers sued Deltona in state court in Maine as their forum seeking the return of their deposit.

The Maine trial court decided that the liquidated damages provision was un-conscionable. Nevertheless, the trial court gave roughly $6,000 in damages to Deltona while returning the balance of the deposits.

May a liquidated-damages clause that isn't a penalty nevertheless be un-enforceable for shocking the court's conscience?

Deltona argued that the forfeiture of the 15% deposit was clearly in the contract as liquidated damages.

Additionally, Deltona argued to the Maine Supreme Court that the liquidated damages clause was enforceable under Florida law.

Yes. A liquidated-damages clause (that isn't a penalty) may nevertheless be un-enforceable for shocking the court's conscience.

Applying Florida law, the Maine Supreme Court found the 15% liquidated damages provision to be reasonable. In the court's opinion, Leeber's loss didn't shock the conscience of the court.

Reversed

Liquidated Damages aren't always enforceable.