Atrium Medical Center, LP v. Houston Red C LLC (Opinion)Annotate this Case
The Supreme Court affirmed the decision of the court of appeals affirming the judgment of the trial court enforcing a liquidated damages provision in a contract, holding that the breaching party in this case did not prove that an unbridgeable discrepancy existed between actual and liquidated damages or otherwise demonstrate that the provision operated as a penalty.
After Defendant breached the contract Plaintiff brought this action. The trial court enforced the liquidated damages provision in the contract, concluding that it was not a penalty because it reasonably forecasted the harm that would result from a breach and actual damages were difficult to estimate when the contract was made. The court of appeals affirmed the award of liquidated damages. The Supreme Court affirmed, holding (1) at the time the parties' agreement was made, the harm that would result from a breach was difficult to predict, and the liquidated damages provision reasonably forecast just compensation; and (2) Defendant failed to demonstrate an unbridgeable discrepancy between liquidated and actual damages, measured at the time of the breach, to invalidate the liquidated damages provision.