Liquidated Damages Clause Enforceable on “National Tenant”

Liquidated Damages Clause Enforceable on “National Tenant”



Facts: Payless ShoeSource, Inc. ceased operations at a shopping center owned by El Centro Mall, LLC (ECM) before the end of its lease term. ECM charged Payless liquidated damages of 10 cents per square foot of its leased space for each day Payless did not operate, totaling $98,010. Payless refused to pay, alleging that the liquidated damages provision in its lease was an unenforceable penalty under California law. The trial court ruled in ECM's favor, determining that the provision did not constitute an unlawful penalty.

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