Aurora Bus. Park Assocs. v. Michael Albert, Inc.
Iowa Supreme Court
548 N.W.2d 153 (Iowa 1996)
Michael Albert, Inc. and Michael Albert (defendants) broke a five-year commercial lease with Aurora Business Park Associates (Aurora) (plaintiff) roughly two years early, and Aurora was unable to relet the premises. The lease's acceleration clause let Aurora collect the full remaining rent, plus reletting and collection costs, offset by any rent Aurora later collected from a new tenant. The trial court awarded Aurora the accelerated rent, reduced to present value; Albert appealed, arguing the clause was an unenforceable penalty because it put Aurora in a better position than if the lease had never been breached.
Whether an accelerated damages clause in a lease is enforceable if it is reasonable in light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.