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Aurora Bus. Park Assocs. v. Michael Albert, Inc.

Iowa Supreme Court
548 N.W.2d 153 (Iowa 1996)


Michael Albert, Inc. and Michael Albert (defendants) leased business premises from Aurora Business Park Associates (Aurora). The lease was for five years beginning March 1, 1991, but Albert vacated the premises in June or July of 1993. Aurora was unsuccessful in reletting the property. The lease included an acceleration clause stating that if Albert terminated the lease in violation of its terms, Aurora could collect the remaining rent from Albert, plus all its expenses in collecting the money and in finding a new tenant. The clause provided that this obligation would be reduced by the amount of any rent that Aurora received from reletting the premises. Aurora brought suit against Albert demanding payment of the rent for the remainder of the lease term. Albert moved to dismiss, arguing that Aurora had not been reasonably diligent in attempting to relet the property and that the acceleration clause was unenforceable, or alternatively that the court should reduce the award by the fair market value of the property that was back in the hands of Aurora. The trial court denied the motion to dismiss and awarded Aurora the remaining rent due, $221,692.28 with interest, plus attorney’s fees and costs. On Albert’s motion, the trial court reduced the award to the present value of the future accelerated rent payments: $215,251.90 with interest. Albert appealed, arguing that the acceleration clause placed Aurora in a better position than it would have been in had the lease not been breached, and that the clause was an unenforceable penalty.

Rule of Law


Holding and Reasoning (Andreasen, J.)

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