Saturday, April 12, 2008

A records storage management company charged its law firm customer a $10,000 fee to permanently remove all of its records from the storage facility. The Omaha law firm filed a declaratory judgment complaint against the company claiming the removal fee was an illegal penalty provision. the Douglas County District Court agreed finding the removal fee was a penalty and not a legitimate liquidated damages fee. The Nebraska Supreme Court reverses holding the removal fee was neither a liquidated damages provision nor a penalty, rather it was a fee for a service. Berens & Tate v. Iron Mt. Info. Mgmt., S-07-193, 275 Neb. 425 The district court erred in finding that the “Permanent Withdrawal” fee was unenforceable. We conclude that the “Permanent Withdrawal” fee is neither a liquidated damages clause nor an illegal penalty provision. Rather, the provision is an enforceable contractual term that sets forth the payment required for services to be performed under the contract. T he judgment of the district court is reversed."

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