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Westhaven Associates, Ltd. v. C.C. of Madison, Inc.

Wisconsin Court of Appeals
652 N.W.2d 819 (2002)


Facts

C.C. of Madison, Inc. (Cost Cutters) (defendant) leased space from Westhaven Associates, Ltd. (Westhaven) (plaintiff) at the Westhaven Village Shopping Center for 10 years. The lease provided a provision allowing Westhaven to recover attorney’s fees for any expenses incurred in reletting the space if Cost Cutters broke the lease. The lease also provided two provisions that served as liquidated damages clauses. These provisions provided that, in the event of Cost Cutters’s breach, Westhaven could recoup “any deficiency…between the amount for which the premises were relet, less expense of reletting, including all necessary repairs and alterations and reasonable attorney’s fees and the rent provided hereunder.” The lease also provided a mitigation clause that applied to the provisions, as well as other clauses in the contract, though it was not contained within the provisions themselves. After about one and a half years of occupancy, Cost Cutters closed its store without Westhaven’s approval. Just before Cost Cutters departed, Westhaven’s occupancy rate was 53 percent. Shortly after its departure, Westhaven’s occupancy rate rose to 72 percent. About a year and a half after Cost Cutters’s departure, Westhaven was able to relet the space. Westhaven filed suit against Cost Cutters. Westhaven sought to recover its attorney’s fees incurred in its suit against Cost Cutters. Westhaven also sought to recover stipulated damages, as provided by the provisions in the contract. Westhaven presented testimony from one of its representatives showing that a shopping center, when a business leaves, loses more than the rent paid by that business. This evidence showed that the shopping center loses the customers of that business, which then do not become the foot traffic for other businesses in the shopping center, placing those other businesses in danger of going out of business or breaking leases themselves. Westhaven additionally provided testimony from other tenants of the shopping center that Cost Cutters’s departure harmed their own businesses. Both parties filed motions for summary judgment. The trial court ruled that Westhaven was entitled to recover attorney’s fees, as provided in the contract. However, the trial court ruled that the liquidated damages provisions were unreasonable and therefore unenforceable. Both parties appealed to the Wisconsin Court of Appeals.

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