Curious Computation of Damages–Lane v. Newberry

Fifty grand for being locked-out of a small restaurant?  I don’t understand.  A business with curious profitability is at issue in Lane v. Newberry, 2014 WL 284536 (Mo. Ct. App. W.D.).

We’ve identified some facts in the landlord/appellant’s brief. We will proceed discussing this framing of the facts, understanding that there may be a difference between appellant’s position and the respondent’s views.

A commercial landlord changed the locks, claiming tenant being in breach (the claim of breach entitling the landlord to change the locks evidently being rejected by the trial court).  Evidently possession was restored a few days later.

According to landlord’s brief, the tenant received a judgment in $50,100 in connection with claims that the landlord had improperly interfered with possession.  Landlord claims, it appears, access was prevented for a few days, and that the interruption occasioned a few hundred dollars in damage to the premises (such as locks and an alarm).

It would seem it would be a very profitable business that would account for such large damages.  What is it?  Evidently a 670 square foot establishment, known as The Dam Bar-N-Grill.  Must be “dam” profitable.

More after the break ….

A commercial lease as a contract of adhesion???

The trial court, in enjoining the landlord’s preventing the tenant’s possession:

“To the extent the breaches alleged by Defendant cause a forfeiture of the $60,000.00 improvements made by Plaintiff to the premises, the lease is a contract of adhesion which will not be enforced by this court. Most breaches alleged were either not conditions of the lease or were waived by the previous owners, in any event.”

We cannot see the full details of the contract.  It would seem atypical for a court to conclude a commercial lease to be a contract of adhesion.  Be that as it may, let’s turn to the computation of damages.

How can a defendant end-up here?

One may wonder how the landlord could end-up in this position.  The landlord’s counsel evidently withdrew, and the landlord appeared pro se. Ah–the benefit of a lawyer may be evidenced by the absence.

Illustrative of what the tenant apparently claimed in addition to lost profits for the time period access was denied are:

  • lost income as a result of the litigation;
  • lost profits of $40,000 per year for future years in the lease term;
  • $60,000 representing the cost of improvements made to the premises; and
  • punitive damages.

This author each year has to teach computation of damages to Contracts students.  This kind of case illustrates how that endeavor is more difficult than might be apparent.  How can one possibly come-up with fifty grand for this?  Is the court really giving the tenant some estimate of the cost of improvements, when the landlord’s acts did not permanently deprive the tenant of their use?

Promisor compliance with contractual obligations is a good thing.  It is often the case that the ordinary measure of damages ends up being under-compensatory, with consequential disruption, inconvenience, etc., not adequately compensated.  I look forward to the respondent’s brief, to see whether there is some plausible theory that can be manufactured to justify the dollar figure.  Some creativity would evidently be required.