Wassenaar v. Panos

331 N.W.2d 357 (1983)

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Wassenaar v. Panos

Wisconsin Supreme Court
331 N.W.2d 357 (1983)

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Facts

Donald Wassenaar (plaintiff) became manager of the Towne Hotel under an employment agreement with Theanne Panos (defendant). The agreement was for a three-year term and included a stipulated-damages clause. The clause provided that Towne would fulfill the financial obligations of the agreement should Towne terminate the agreement prior to its expiration. Wassenaar was let go 21 months before the expiration of the contract, but he found work again within just a couple of months. Wassenaar sued for damages. Towne answered alleging that Wassenaar had failed to mitigate damages. The circuit court held that Wassenaar was not required to mitigate. The jury awarded $24,640, which represented what Wassenaar had calculated as his damages based upon the stipulated-damages clause. The court of appeals reversed the trial court decision and remanded the case for a new trial. The appeals court held the stipulated-damages clause void because it was a penalty. The court reasoned that the employee’s salary would be easy to calculate in the event of breach and that the formula, which provided an award of full salary without considering mitigation, was unreasonable. Wassenaar petitioned the Wisconsin Supreme Court for review on the issue of whether the stipulated-damages clause was enforceable.

Rule of Law

Issue

Holding and Reasoning (Abrahamson, J.)

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