Graylee v. Castro, No. G057901 (D4d3 Aug. 4, 2020)
To settle an unlawful detainer case, Landlord and Tenants stipulated on the record that Landlord was entitled to a $28,970 judgment, but it could only be entered if tenant failed to vacate by 3:00 p.m. on October 31. Tenants surrendered their key at 1:15 p.m., but told Landlord they weren’t going to hit the 3 p.m. deadline. Tenants asked for an extension, which was denied. Tenants ultimately vacated at some point between 3:15 p.m. and 10:30 a.m the following day.
Landlord moved to enter the judgment, which the trial court ultimately did. But the Court of Appeal reverses, holding that the judgment was an unenforceable penalty under Civil Code § 1671(b). Liquidated damages are permissible, but only if they are a reasonable estimate of the harm caused by a breach. In measuring the reasonableness, the court looks to the stipulation, not the underlying lease. Here, Tenants missed the deadline by somewhere between an hour and a day. $28,970 was not a reasonable estimate of the harm caused by that delay.
Reversed.
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