GK Development, Inc. v. Iowa Malls Financing Corporation

Contract provision for sale of four shopping centers, which required that $4.3 million of purchase price be held in escrow from seller’s proceeds then be paid to seller only if certain conditions are timely met, is unenforceable as a penalty. Provision fails to distinguish between a minor delay in permit approval and a complete failure of construction project, and thus it sought to award entire value of contract for a temporary delay, which is an unenforceable penalty to coerce performance, and a windfall to the buyer, rather than a valid liquidated damages provision. (FITZGERALD SMITH and LAVIN, concurring.)