Court: Court of Appeals of Oregon; May 10, 1989; Oregon; State Appellate Court
Defendant appeals a judgment granting plaintiff, a real estate broker, liquidated damages based on an exclusive listing agreement that mandates payment of a broker's fee if the defendant sells the property. The court affirms the enforceability of the liquidated damages provision. The original listing agreement, executed in 1982 and renewed twice, was replaced in August 1985 with a new agreement stipulating a fee of ten percent of the selling price if a buyer was found. The property was listed at $450,000, with the agreement set to expire in July 1986. In late 1985, the ownership structure changed, and by February 1986, the property was sold for $398,449, but defendant refused to pay the commission.
The trial court, which treated the fee provision as a valid liquidated damages clause, awarded plaintiff $39,844.90. The court found that the provision was reasonable, as it represented the commission the plaintiff would have earned had the agreement been honored and acknowledged the difficulty in proving actual damages. Defendant argues that the trial court erred in deeming the fee reasonable and claims it is voidable as a penalty, citing that liquidated damages were never discussed and that plaintiff did not produce a buyer during the listing period. However, the court ruled that defendant was bound by the agreement regardless of Moak's lack of familiarity with its terms.
The case centers on whether the fee constitutes a legitimate liquidated damages clause, which it does according to legal precedents. The Supreme Court's guidance in ORS 72.7180(1) indicates that the clause must be reasonable based on anticipated harm, proof difficulties, and the feasibility of obtaining a remedy. A provision with excessively high liquidated damages is void as a penalty.
The trial court's findings are upheld, as they are supported by evidence, despite any contradictory evidence presented. The court determined the fee was reasonable, reflecting the commission the plaintiff would have earned if the agreement had been honored, addressing the forecast of harm from the defendant's breach. This conclusion indicates that the stipulated damages are not excessively large and are valid under ORS 72.7180(1). The court also recognized the difficulty in proving actual damages, justifying the use of a liquidated damage provision. The plaintiff highlighted operational expenses of $12,000 to $20,000 monthly, complicating the breakdown of costs for each listing. Additionally, the loss of opportunity to sell the property further supports the rationale for a stipulated fee. The court affirmed that the fee agreement constitutes a valid liquidated damages provision. ORS 72.7180(1) allows for liquidated damages provided they are reasonable relative to the anticipated harm and the difficulty in proving losses, with unreasonably large amounts deemed penalties. The defendant's other claims of error were found to lack merit.
