Atel Financial Corp. v. Quaker Coal Co.

• Decision Date: 05 March 2003
• Docket Number: No. 01-15687.,01-15687.
• Citation: 321 F.3d 924
• Parties: ATEL FINANCIAL CORP., a California corporation, Plaintiff-Appellant, v. QUAKER COAL COMPANY, a Kentucky corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

321 F.3d 924

ATEL FINANCIAL CORP., a California corporation, Plaintiff-Appellant, v. QUAKER COAL COMPANY, a Kentucky corporation, Defendant-Appellee.

No. 01-15687.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 16, 2003.

Filed March 5, 2003.

David M. Wiseblood, Berg & Parker, San Francisco, CA, for the plaintiff-appellant.

Gillard B. Johnson, III, Bowling & Johnson, Lexington, KY, for the defendant-appellee.

Appeal from the United States District Court for the Northern District of California; Thelton E. Henderson, District Judge, Presiding. D.C. No. CV-98-02971-TEH.

Before SCHROEDER, Chief Judge, GOODWIN and CLIFTON, Circuit Judges.

OPINION

PER CURIAM.

Atel Financial Corp. ("Atel") appeals from the district court's judgment that the liquidated damages provision in its $12 million equipment lease contract (the "Lease") with Quaker Coal Company ("Quaker") is unenforceable as a penalty under California law.

The facts of this case are set forth in detail in the district court's opinion, reported at 132 F.Supp.2d 1233 (N.D.Cal. 2001). In essence, the parties entered into a lease for heavy mining equipment and Quaker, the lessee, became delinquent on its lease payments for a period of several months. Atel declared default and demanded liquidated damages. Shortly thereafter, Quaker made the outstanding lease payments, and also paid late fees which were calculated at 1-1/2 % per month of the past due amount pursuant to the Lease. The following day, Atel brought suit alleging breach of contract and seeking enforcement of the liquidated damages provision of the Lease. The district court conducted a bench trial and found that by the time of trial, all amounts invoiced by Atel had been paid by Quaker, and Quaker continued to perform under the Lease. Moreover, the Lease was renewed by the parties and made effective for an extended period of time, with regard to most of the leased equipment. Based on these facts, the district court concluded that the liquidated damages provision of the Lease was unenforceable under California law because the parties did not contemplate the continuation of the Lease after a default and, therefore, the provision did not represent a reasonable endeavor to ascertain damages upon the occurrence of a default. We affirm the judgment of the district court, but upon a different ground.

Under California law, the interpretation of contract language is a question of law. In re Bennett, 298 F.3d 1059,...