## Facts

- Five buyer LLCs entered materially identical purchase agreements in 2008 to buy to-be-built resort condominium units from a developer, One Ski Hill Place, LLC (OSHP).
- Each buyer paid earnest money and construction deposits totaling 15% of the unit purchase price.
- Each agreement included a default provision allowing OSHP, upon buyer default, to either (a) retain up to 15% of the purchase price as “Seller’s Liquidated Damages,” or (b) “alternatively and in lieu of” liquidated damages, terminate and pursue actual damages (with a contractual process for notice and retention of deposits as a credit toward an award).
- The buyers failed to obtain financing and did not close by the contractual deadline, resulting in default.
- OSHP elected the liquidated-damages option and retained the full deposits.
- The buyers sued to recover the deposits, asserting the damages provision was unenforceable because it allowed OSHP to choose between liquidated and actual damages.
- After initial summary-judgment proceedings, the buyers stipulated that the liquidated amount satisfied the “difficulty of ascertainment” and “reasonable estimate/not a penalty” requirements; the dispute centered on whether the contracts reflected mutual intent to liquidate damages.
- The trial court entered judgment for OSHP, permitting retention of the deposits; the Colorado Court of Appeals affirmed; the Colorado Supreme Court granted certiorari.

## Issues

1. Whether a liquidated-damages clause is invalid when it gives the non-breaching party the option to choose between liquidated damages and actual damages.
2. Whether the contracts’ election-of-remedies language sufficiently shows mutual intent to liquidate damages, given that the other liquidated-damages elements were stipulated.
3. Whether, if such an option is permitted, the remedies must be exclusive to prevent double recovery.

## Decision

- The Colorado Supreme Court affirmed the judgment for OSHP.
- A contract may validly provide the non-breaching party an option to elect either liquidated damages or actual damages.
- The election must be exclusive; a party may not pursue both remedies.
- The agreements’ language (“alternatively and in lieu of”) established exclusivity, and OSHP’s election to retain deposits as liquidated damages was enforceable.

## Legal Principles

- Liquidated damages are enforceable in Colorado when the parties intended to liquidate damages, actual damages were difficult to ascertain at contracting, and the amount is a reasonable estimate rather than a penalty.
- A liquidated-damages provision is not invalid solely because it permits the non-breaching party to elect between liquidated damages and actual damages.
- Election-of-remedies provisions must be construed to require exclusivity; selecting one remedy forecloses the other and prevents double recovery.
- Contract interpretation in this context reflects Colorado’s policy favoring freedom of contract and party allocation of risk, subject to limits against penalties and duplicative damages.

## Conclusion

Colorado law permits parties to contract for an exclusive election between liquidated damages and actual damages, and a seller who elects liquidated damages under such a clause may retain the specified deposit amount when the traditional enforceability requirements are met.


Ravenstar, LLC v. One Ski Hill Place, LLC, 401 P.3d 552 (Colo. 2017)