Coastal Leasing Corp. v. T. Bar S Corp.

Coastal Leasing Corp. (Coastal) (plaintiff) leased a cash register to T. Bar S Corp. (T-Bar) (defendant). The 48-month lease obligated T-Bar to make monthly rental payments of $289.13. The officers of T- Bar personally guaranteed payment. The lease contained a liquidated-damages provision, permitting Coastal to demand full payment of the outstanding amount after a default. The liquidated-damages provision also allowed Coastal to take possession of the cash register after default and sell it at a commercial sale. After 18 months of regular payments, T-Bar defaulted on the lease in December 1993. In February 1994 Coastal sent a letter to T-Bar explaining that it was exercising its right under the lease to demand full payment of the outstanding balance on the lease, which amounted to $8,841.06, and threatened to take possession of the cash register if payment was not made within one week. On March 10, 1994, Coastal mailed a certified letter advising T-Bar that it had taken possession of the cash register and would conduct a public sale on March 23. Coastal conducted a public sale and, because there were no bids for the cash register, was able to buy it for a price of $2,000. Coastal filed suit against T-Bar, seeking to recover the full amount due on the lease, plus attorney’s fees, minus the $2,000 it received from the sale. T-Bar filed an answer and counterclaim. Coastal filed a motion for summary judgment, which went unanswered by T-Bar. Default judgment was awarded to Coastal. After a hearing, the trial court entered summary judgment in favor of Coastal in the amount of $7,223.56 plus attorney’s fees. T-Bar appealed, arguing that the liquidated-damages clause in the lease was unreasonable under state law and that Coastal conducted the sale of the cash register in an unreasonable manner.