Kansas City Live Block 139 Retail, LLC v. Fran's K.C. Ltd.
2016 Mo. App. LEXIS 768
Mo. Ct. App.2016Background
- Fran’s K.C. Ltd. (tenant), Mr. Hak Joon Kim (personal guarantor), and 1482111 Ontario Inc. signed a 10‑year lease with Kansas City Live Block 139 Retail, LLC (KC Live) for space in the Power & Light District; the lease contained a jury‑trial waiver, liquidated‑damages clause for closures, monthly late‑charge and interest provisions, and a contractual attorney‑fee provision.
- Fran’s disputed the rent commencement date and opening date; an amendment addressed those issues but later defaults occurred.
- KC Live sent multiple default notices; after Fran’s closed, the premises sat dark Nov 2012–July 2013 and KC Live relet the space with a tenant finish allowance.
- KC Live sued for breach of lease and guaranty; Fran’s counterclaimed for fraud in the inducement, negligent misrepresentation, breach and conversion.
- After bench trials, the court entered judgment for KC Live for roughly $3.6M and awarded attorney fees (~$863,707). Fran’s appealed, challenging denial of a jury trial, liquidated damages, late charges, and attorney fees.
Issues
| Issue | Plaintiff's Argument (Fran’s) | Defendant's Argument (KC Live) | Held |
|---|---|---|---|
| Whether Fran’s waived jury trial for tort counterclaims | Waiver language in lease applies only to contract disputes; tort claims are independent so jury right remains | Fraud and negligent‑misrepresentation claims arise "in connection with" the lease and therefore are covered by the waiver | Waiver enforced; jury demand denied (claims intertwined with lease terms) |
| Validity of liquidated‑damages clause (treble rent for >3 dark business days) | Treble rent is an unenforceable penalty; KC Live failed to prove actual damages justifying that formula | Clause compensates for hard‑to‑quantify harm from vacancy and is triggered by demonstrated harm | Clause unenforceable as a penalty; liquidated‑damages award vacated/reduced |
| Validity of late‑charge provision (5% monthly or $250, compounded, plus interest) | Provision is penalty; KC Live showed no separate harm beyond interest and other contractual remedies | Late charges compensate for administrative/collection costs and time lost | Provision unenforceable as penalty and award of late charges vacated/reduced |
| Entitlement and allocation of attorney fees | Fees should be reduced/denied if liquidated‑damages and late charges fall | Lease authorizes landlord to recover fees where landlord sues tenant; fees cover defending/counterclaims related to lease | Fees relating to valid contract enforcement upheld; fees attributable to the invalid liquidated‑damages and late‑charge provisions must be recalculated on remand |
Key Cases Cited
- Langdon v. United Restaurants, 105 S.W.3d 882 (Mo. App. W.D. 2003) (lease interpretation is a question of law; apply contract construction rules)
- Stratman v. Wagner, 427 S.W.3d 915 (Mo. App. S.D. 2014) (de novo review of contract language to ascertain intent)
- Malan Realty Inv’rs, Inc. v. Harris, 953 S.W.2d 624 (Mo. banc 1997) (jury‑trial right is personal and waivable)
- City of Richmond Heights v. Waite, 280 S.W.3d 770 (Mo. App. E.D. 2009) (distinguishing liquidated damages from penalties; enforceability depends on reasonable forecast of harm and difficulty of estimating damages)
- Grand Bissell Towers, Inc. v. Joan Gagnon Enters., Inc., 657 S.W.2d 378 (Mo. App. E.D. 1983) (Missouri adopts Restatement test for liquidated damages vs. penalty)
- Star Development Corp. v. Urgent Care Assocs., Inc., 429 S.W.3d 487 (Mo. App. W.D. 2014) (upholding a one‑time late fee as compensatory where lease language and evidence tied fee to administrative harm)
- Phillips v. Missouri TLC, LLC, 468 S.W.3d 398 (Mo. App. S.D. 2015) (late‑fee enforceability requires evidence the fee reasonably forecasts compensatory harm)