Facts

Aetna Life Insurance is the owner of the Montebello Town Center. GameStop is an international retailer of computer games.

Aetna entered into a Lease with GameStop's predecessor in interest, which was subsequently assumed by GameStop. The Lease contained a "Radius Provision" stating that GameStop will not open or operate any additional location within a five mile radius of the shopping center. The Lease further provided that for each additional location operated by GameStop within the proscribed radius, GameStop would be liable to pay a charge of 25 percent of the minimum annual rent to Aetna that would be considered additional rent. Subsequent to the effective date of the Lease, GameStop did open five additional locations within the five mile radius (this issue was not contested at trial.)

Aetna filed a lawsuit and sought damages against GameStop for breach of the Lease and the covenant of good faith and fair dealing. GameStop cross-complained, claiming that the radius provision and liquidation provision were unenforceable.

PLAINTIFF'S CONTENTIONS:
The plaintiff defended its provision in the lease, claiming such provisions relating to radius are enforceable and commonly used by entities that own and operate malls and shopping centers.

DEFENDANT'S CONTENTIONS:
The defendant claimed that the provision was a restraint on trade in violation of Section 16600 of the California Business and Professions Code. It also challenged the liquidation clause in the contract that was used to calculate damages.

Settlement Discussions

Attempts to reach a settlement at mediation failed.

Damages

The plaintiff sought damages under the challenged liquidation clause for the defendant's breach of the lease. The plaintiff also sought fees and costs.

Result

$46,247. The lease provision was determined to be enforceable, and rent increases applied.

Other Information

On June 12, 2006, attorney's fees were also awarded in favor of plaintiff in the amount of $180,838.33, and costs were awarded in the amount of $11,126.70. GameStop filed notice of appeal. The parties reached settlement on the judgment and award of attorney's fees and costs in exchange for dismissal of the appeal.

Length

three days