Ravenstar, LLC v. One Ski Hill Place, LLC, 2017 CO 83

In 2008 five buyers (Petitioners) signed contracts to purchase to-be-built condominium units from One Ski Hill Place, LLC (OSHP) and paid 15% deposits (earnest money + construction deposits).
Buyers failed to close by the financing deadline in 2010 and thus breached the agreements.
Each contract contained an identical Damages Provision: on buyer default, seller could either retain all or part of the deposits as liquidated damages or alternatively elect to seek actual damages and apply the deposits toward any award; an election for actual damages required written notice within 30 days after the cure period.
OSHP elected to retain the full deposits as liquidated damages; buyers sued for return of the deposits arguing the optional clause negated mutual intent to liquidate damages and therefore was an unenforceable penalty.
Trial court found parties intended to liquidate damages but reserved factual questions about reasonableness and difficulty of ascertainment; buyers later stipulated those elements, trial court entered judgment for OSHP, and the court of appeals affirmed; Colorado Supreme Court granted certiorari to resolve whether an option between liquidated and actual damages invalidates the clause.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a liquidated damages clause is invalid as a matter of law when the contract gives the non‑breaching party an option to choose between liquidated damages and actual damages	Optional clause negates mutual intent to liquidate; therefore clause operates as an unenforceable penalty	Freedom of contract allows parties to make liquidated damages one of multiple mutually agreed remedies; clause is enforceable so long as election is exclusive	The option does not invalidate the clause; parties may contract for either remedy but the election must be exclusive (one remedy only once elected)

Klinger v. Adams Cty. Sch. Dist. No. 50, 130 P.3d 1027 (Colo. 2006) (sets three‑part test for enforceable liquidated damages: intent, reasonable estimate, difficulty of ascertainment)
Rohauer v. Little, 736 P.2d 403 (Colo. 1987) (quoted for liquidated damages framework)
Union Ins. Co. v. Houtz, 883 P.2d 1057 (Colo. 1994) (contract interpretation and de novo review principles)
Noble v. Ogborn, 717 P.2d 285 (Wash. Ct. App. 1986) (upholding option to choose liquidated or actual damages where rights were reserved in contract)
Lefemine v. Baron, 573 So. 2d 326 (Fla. 1991) (contrary authority invalidating optional clause as indicating penal intent)
McEnroe v. Morgan, 678 P.2d 595 (Idaho Ct. App. 1984) (holding election of liquidated damages bars pursuit of other damages)
O’Hara Group Denver, Ltd. v. Marcor Hous. Sys., Inc., 595 P.2d 679 (Colo. 1979) (treating contract terms as evidence of intent to liquidate)