A determination of unconscionability cannot be made unless the circumstances of the case truly "shock the conscience" of the court. The factual findings upon which the conclusion of unconscionability is based are reviewed on a clearly erroneous basis.
When the buyers failed to close on the purchase of a condominium on the date chosen by the developers, the developers notified the buyers that the contract was cancelled and that the buyers' 15 percent down payment would be retained as liquidated damages. The developers sold the unit to others, and the buyers sued the developers for the return of the deposit, for failing to find another buyer before the closing date, and for breach of fiduciary duty based upon the developers' status as the buyers' real estate agent. The superior court, at the close of the buyers' evidence, found in favor of the developers on the second and third causes of action and awarded the buyers the balance of their deposit after determining the developers' damages in reselling the unit. The superior court found the liquidated damages clause unconscionable. The parties appealed.
Should a deposit on the purchase of a condominium be returned instead of being retained as liquidated damages?
The court affirmed the judgment that was in favor of the developers as to the breach of an alleged contract and breach of fiduciary duty, and vacated the judgment that was in favor of the buyers in seeking the return of their deposit. The court also vacated the judgment as to the liquidated damages issue, finding that under Florida law, the clause was enforceable because the buyers failed to show that it was unconscionable. The clause was reasonable on its face and not a penalty, and the developers were therefore allowed to retain the full amount of the deposit.
The case was remanded to the superior court for entry of judgment in favor of the developers.