Berens & Tate v. Iron Mt. Info. Mgmt.

the UFTA and thereby equitably distributed as part of the mari-
tal estate. Christine’s argument is based on the belief that she
is a creditor of Jeffrey for child and spousal support purposes.
We hold, however, that the UFTA requires some nexus between
the claim for which a party is asserting creditor status and the
type of relief sought. We also hold that a former spouse’s right
to an equitable division of the marital estate is not a “right to
payment” under the UFTA, and thus a former spouse does not
qualify as a “creditor” under the UFTA by virtue of his or her
right to an equitable share of the marital estate.
As a result, the UFTA does not apply to Christine’s claims
that the predivorce transfers of Jeffrey’s business interests
should be set aside as fraudulent. We therefore affirm the dis-
trict court’s refusal to include Jeffrey’s interests in C.J. Reed
Enterprises and R.S. Wheel in the marital estate.
affiRmed .
B eRens and tate , p.C., appellee , v . iRon mountain
infoRmation management , inC., appellant .
747 N.W.2d 383
Filed April 11, 2008. 	No. S-07-193.
1. Declaratory Judgments: Appeal and Error. When a declaratory judgment
action presents a question of law, an appellate court has an obligation to reach its
conclusion independently of the conclusion reached by the trial court with regard
to that question.
2. Contracts: Damages: Penalties and Forfeitures. Generally, the question whether
a sum mentioned in a contract is to be considered as liquidated damages or as
a penalty is a question of law, dependent on the construction of the contract by
the court.
3. Contracts: Breach of Contract: Stipulations. Parties to a contract may override
the application of the judicial remedy for breach of a contract by stipulating, in
advance, to the sum to be paid in the event of a breach.
4. Contracts: Breach of Contract: Stipulations: Damages. A stipulated sum
is for liquidated damages only (1) where the damages which the parties might
reasonably anticipate are difficult to ascertain because of their indefiniteness or
uncertainty and (2) where the amount stipulated either is a reasonable estimate
of the damages which would probably be caused by a breach or is reasonably
proportionate to the damages which have actually been caused by the breach.
BERENS & TATE v. IRON MT. INFO. MGMT. 	425
Cite as 275 Neb. 425
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:54 AM CST

5. ____: ____: ____: ____. Contracting parties have a right to privately bargain for
the amount of damages to be paid in the event of a breach of contract, provided
the stipulated sum is reasonable in light of the circumstances.
6. Contracts: Breach of Contract: Damages: Penalties and Forfeitures. The
distinction between liquidated damages and penalty provisions applies only when
the contractual provision at issue is an attempt by the parties to provide for the
measure of recovery in the event of nonperformance or breach of the contract.
7. ____: ____: ____: ____. The focus on liquidated damages versus penalty only
arises when the contractual provision seeks to determine, in advance, the measure
of damages resulting from a parties’ breach or nonperformance of the contract.
8. ____: ____: ____: ____. A provision for payment of a specified sum as compen-
sation for services already contemplated by the contract, as opposed to compen-
sation for injury resulting from a breach of the contract, is neither a liquidated
damages clause nor a penalty provision.
9. Contracts: Appeal and Error. Although a party may in retrospect be dissatisfied
with a bargained-for provision, an appellate court will not rewrite a contract to
provide terms contrary to those which are expressed.
Appeal from the District Court for Douglas County: J oseph s.
tRoia, Judge. Reversed.
David J. Lanphier, of Broom, Johnson, Clarkson & Lanphier,
for appellant.
Nora M. Kane, of Stinson, Morrison & Hecker, L.L.P., for
appellee.
heaviCan , 	C.J., 	WRight , 	C onnolly , 	geRRaRd , 	stephan ,
mCC oRmaCK, and milleR-leRman , JJ.
geRRaRd , J.
Berens and Tate, P.C., has stored its business records and
other 	files 	with 	Iron 	Mountain 	Information 	Management,
Inc. (Iron Mountain), since 1997. Pursuant to the agreement
between these parties, in order for Berens and Tate to perma-
nently remove its records from Iron Mountain, Berens and
Tate must pay a “Permanent Withdrawal” fee in addition to a
retrieval fee. The question presented in this case is whether the
“Permanent Withdrawal” fee is an unenforceable penalty provi-
sion. We conclude that it is not and reverse the judgment of the
district court.
426 	275 NEBRASKA REPORTS

FACTS
In 1989, Berens and Tate, a Nebraska law firm, entered
into a “Storage and Service Agreement” with Bekins Records
Management Center, wherein Bekins Records Management
Center agreed to provide storage services for Berens and Tate’s
files and other business records. In 1997, Iron Mountain pur-
chased Bekins Records Management Center and continued
providing storage services to Berens and Tate.
In 1998, Berens-Tate Consulting Group, Inc., entered into
a “Records Management and Service Agreement” with Iron
Mountain. The parties agree that whatever the relationship
between Berens-Tate Consulting Group and Berens and Tate
law firm, the law firm is bound to the contract, and for purposes
of this appeal, we will refer simply to “Berens and Tate.”
The contract at issue in this case is automatically renewed
each year, unless written notice of nonrenewal is given within
30 days of the contract’s expiration date. Each year, Iron
Mountain has sent Berens and Tate a renewal notice entitled
“Schedule A.” Each “Schedule A” sets forth, among other
things, the effective date of the contract and a schedule of fees
to be charged for Iron Mountain’s services for that year.
As relevant to this appeal, “Schedule A” includes fees for
“Retrievals or Refiles,” “Delivery,” and “Permanent Withdrawal.”
The “Schedule A” provides that the fee for “Retrievals or
Refiles” is for “[t]he temporary retrieval of deposits from, or
return to, storage.” A customer is charged a retrieval fee when
a customer asks to have a record temporarily removed and is
charged a refile fee when the record is returned. The “Permanent
Withdrawal” fee is for “[t]he preparation, documentation, and
permanent withdrawal of deposits.” Pursuant to “Schedule A,”
when a customer permanently removes a record, the customer
is charged the “Permanent Withdrawal” fee and is also charged
the fee for “retrieval.”
“Schedule A” 	also 	contains 	a 	section 	entitled 	“Storage
pricing,” which addresses a minimum monthly storage fee that
must be paid by each customer. If a customer permanently
removes its records prior to the expiration date of its contract
with Iron Mountain, the customer is still obligated to pay the
BERENS & TATE v. IRON MT. INFO. MGMT. 	427
Cite as 275 Neb. 425

minimum monthly storage fee for the months remaining on
the contract.
On August 12, 2004, Berens and Tate notified Iron Mountain
that it wanted to remove all of its records from Iron Mountain
and transfer those records to another storage company. Iron
Mountain informed Berens and Tate that pursuant to the opera-
tive “Schedule A,” Berens and Tate would be obligated to pay
the “Permanent Withdrawal” fee of $3.70 per cubic foot and a
retrieval fee of $2.10 per cubic foot. According to Berens and
Tate, the total charge to permanently remove its records would
have been approximately $10,000.
Berens and Tate filed a complaint seeking a declaratory
judgment that “the permanent removal fee provision in Iron
Mountain’s contract [is] null and void and illegal in the State
of Nebraska.” In its complaint, Berens and Tate alleged that the
permanent removal fee is “an unlawful and unenforceable liq-
uidated damages provision,” that it “constitutes a penalty,” and
that it is “a charge separate and beyond the fee that is assessed
for actual retrieval of the files, and is essentially a fiction . . .
with no service, benefit or other consideration performed for or
bestowed upon the owner of the records.”
At the time of trial, Berens and Tate’s files were still being
stored by Iron Mountain. The record further reflects that other
than payment of the “Permanent Withdrawal” fee, Berens and
Tate has complied with, and is current on, all of the other fees
required under “Schedule A.”
In its case in chief, Berens and Tate called David Harding,
general manager for Iron Mountain, to testify. Harding was
questioned 	at 	length 	regarding 	the 	fees 	charged 	by 	Iron
Mountain—in 	particular, 	Iron 	Mountain’s 	justification 	for
charging a permanent withdrawal fee in addition to a retrieval
fee when records are permanently removed. Harding testified,
summarized, that the permanent withdrawal fee is necessary
in order to compensate for the additional labor and services
that are provided when large amounts of records are perma-
nently removed.
Harding further testified that the permanent withdrawal fee
is needed because when records are permanently removed,
the shelf space that was “reserved” for that customer’s records
428 	275 NEBRASKA REPORTS

remains empty, resulting in a loss of revenue for the remain-
der of the contract. However, Harding later acknowledged
that a customer is obligated to pay the monthly storage fee
for the entire contract, regardless of whether the customer’s
records have been permanently removed prior to the end of the
contractual term.
The district court, citing Growney v. C M H Real Estate
Co.,1 determined that the “Permanent Withdrawal” fee cannot
be considered an enforceable liquidated damages clause. The
court explained that “[p]aying twice for the same service is not
a reasonable estimate of damages and is not reasonably propor-
tionate to the damages which have actually been caused by the
breach . . . .” The court found that the permanent removal fee
provision was unenforceable and entered judgment accordingly.
Iron Mountain appealed.
ASSIGNMENTS OF ERROR
Iron Mountain assigns, restated, consolidated, and renum-
bered, that the district court erred in (1) finding that the
“Permanent Withdrawal” fee in the contract was unenforce-
able and (2) imposing upon Iron Mountain an incorrect burden
of proof.
STANDARD OF REVIEW
[1] When a declaratory judgment action presents a question
of law, an appellate court has an obligation to reach its conclu-
sion independently of the conclusion reached by the trial court
with regard to that question.2
[2] Generally, the question whether a sum mentioned in a
contract is to be considered as liquidated damages or as a pen-
alty is a question of law, dependent on the construction of the
contract by the court.3
1 Growney v. C M H Real Estate Co., 195 Neb. 398, 238 N.W.2d 240
(1976).
2 Peterson v. Ohio Casualty Group, 272 Neb. 700, 724 N.W.2d 765 (2006).
3 Abel Constr. Co. v. School Dist. of Seward, 188 Neb. 166, 195 N.W.2d 744
(1972).
BERENS & TATE v. IRON MT. INFO. MGMT. 	429
Cite as 275 Neb. 425

ANALYSIS
The 	question 	presented 	in 	this 	appeal 	is 	whether 	the
“Permanent Withdrawal” fee in “Schedule A” of the contract
between Iron Mountain and Berens and Tate is an enforceable
contractual provision. Iron Mountain contends that it is, while
Berens and Tate claims it is not. Specifically, Berens and Tate
argues that the “Permanent Withdrawal” fee is not a reason-
able liquidated damages clause, but is rather an unenforce-
able penalty provision. Accordingly, Berens and Tate claims
that the principles governing the distinction between liqui-
dated damages and penalty provisions govern the disposition
of this case.
[3-5] In addressing liquidated damages and penalty pro-
visions, we have explained that “‘parties to a contract may
override the application of the judicial remedy for breach of a
contract by stipulating, in advance, to the sum to be paid in the
event of a breach.’”4 We have held that
“‘[t]he question of whether a stipulated sum is for a
penalty or for liquidated damages is answered by the
application of one or more aspects of the following rule:
a stipulated sum is for liquidated damages only (1) where
the damages which the parties might reasonably anticipate
are difficult to ascertain because of their indefiniteness or
uncertainty and (2) where the amount stipulated is either
a reasonable estimate of the damages which would prob-
ably be caused by a breach or is reasonably proportion-
ate to the damages which have actually been caused by
the breach.’”5
We have “‘consistently upheld the right of contracting parties
to privately bargain for the amount of damages to be paid in
4 Reichert v. Rubloff Hammond, L.L.C., 264 Neb. 16, 24, 645 N.W.2d 519,
527 (2002) (emphasis supplied), quoting Kozlik v. Emelco, Inc., 240 Neb.
525, 483 N.W.2d 114 (1992).
5 Kozlik v. Emelco, Inc., supra note 4, 240 Neb. at 536-37, 483 N.W.2d at 121
(emphasis supplied) (emphasis omitted), quoting Growney v. C M H Real
Estate Co., supra note 1. See, also, Stanford Motor Co. v. Westman, 151
Neb. 850, 39 N.W.2d 841 (1949).
430 	275 NEBRASKA REPORTS

the event of a breach of contract, provided the stipulated sum
is reasonable in light of the circumstances.’”6
[6-8] Given these principles, it is clear that the distinction
between liquidated damages and penalty provisions applies
only when the contractual provision at issue is an attempt by the
parties to provide for the measure of recovery in the event of
nonperformance or breach of the contract. Stated differently, the
focus on liquidated damages versus penalty only arises when
the contractual provision seeks to determine, in advance, the
measure of damages resulting from a parties’ breach or nonper-
formance of the contract. It therefore follows that a provision
for payment of a specified sum as compensation for services
already contemplated by the contract, as opposed to compensa-
tion for injury resulting from a breach of the contract, is neither
a liquidated damages clause nor a penalty provision.
It is well established that a contractual provision that requires
payment based on something other than a breach of the contract
is neither a liquidated damages clause nor a penalty provision.7
For example, the U.S. Supreme Court in Kirby v. United States8
was called upon to determine, among other things, whether a
particular provision in a lease agreement constituted a penalty.
The Court concluded that it was “neither a penalty nor liqui-
dated damages,” because the fee at issue “was not to be paid
for any breach of contract, but as compensation”9 under the
contract. Likewise, the Texas Court of Appeals, in B.F. Saul
Real Estate Inv. Trust v. McGovern,10 explained that “[t]he
6 Reichert v. Rubloff Hammond, L.L.C., supra note 4, 264 Neb. at 24, 645
N.W.2d at 527 (emphasis supplied), quoting Kozlik v. Emelco, Inc., supra
note 4.
7 See, Kirby v. United States, 260 U.S. 423, 43 S. Ct. 144, 67 L. Ed. 329
(1922); Permian Petroleum Co. v. Petroleos Mexicanos, 934 F.2d 635 (5th
Cir. 1991); Varney Business Services, Inc. v. Pottroff, 275 Kan. 20, 59
P.3d 1003 (2002); Preyer v. Parker, 257 N.C. 440, 125 S.E.2d 916 (1962);
B.F. Saul Real Estate Inv. Trust v. McGovern, 683 S.W.2d 531 (Tex. App.
1984).
8 Kirby v. United States, supra note 7.
9 Id., 260 U.S. at 427.
10 B.F. Saul Real Estate Inv. Trust v. McGovern, supra note 7, 683 S.W.2d at
534.
BERENS & TATE v. IRON MT. INFO. MGMT. 	431
Cite as 275 Neb. 425

whole subject of penalty versus liquidated damages only arises
when the parties to a contract have attempted to provide for a
remedial right upon breach of a contract.”
Applying these principles to the present case, it is clear
that the “Permanent Withdrawal” provision in the contract
between Iron Mountain and Berens and Tate is neither a liqui-
dated damages clause nor a penalty provision. The “Permanent
Withdrawal” fee is not a prediction of damages for a possible
future breach of the contract by Berens and Tate. Rather, it
was the parties’ agreed-upon compensation for services to be
performed—specifically, the permanent removal of records.
According to the contract, permanently removing records
does not, in and of itself, result in a breach. Indeed, under the
terms of the contract, Berens and Tate is free to permanently
remove one, or all, of its records, without being in breach of
the contract, so long as Berens and Tate pays the contracted
fee. And the contract expressly provides that in order for the
permanent removal of the records to be performed by Iron
Mountain, payment for such services must be made. In other
words, the “Permanent Withdrawal” fee is charged for services
to be rendered by Iron Mountain and not for damages resulting
from any breach of contract by Berens and Tate. Therefore,
the “Permanent Withdrawal” fee is neither a liquidated dam-
ages clause nor a penalty provision. The question whether the
fee is a reasonable estimate of damages caused by a breach
is irrelevant, and the district court erred in engaging in such
an analysis.
Other than its contention that the “Permanent Withdrawal”
fee is an illegal penalty provision, Berens and Tate provides no
other argument as to why the provision is unenforceable. The
record reflects that both Berens and Tate and Iron Mountain
are experienced in business. And we have been reluctant to
modify contracts between parties with business experience, as
opposed to contracts between consumers and skilled corporate
parties.11 Having found that the “Permanent Withdrawal” fee
11 See, Myers v. Nebraska Invest. Council, 272 Neb. 669, 724 N.W.2d 776
(2006); Reichert v. Rubloff Hammond, L.L.C., supra note 4; Darr v. D.R.S.
Investments, 232 Neb. 507, 441 N.W.2d 197 (1989).
432 	275 NEBRASKA REPORTS

is not a liquidated damages clause nor a penalty provision, we
also find no basis to conclude that the “Permanent Withdrawal”
provision is otherwise unenforceable.
[9] Without question, the “Permanent Withdrawal” fee is a
relatively high price for a comparatively inexpensive service
to be performed by Iron Mountain. Nevertheless, except in
limited circumstances not present here, business operators are
free to establish the prices they want for their services, and
the law will generally enforce an agreement to pay such a
price. While Berens and Tate may, in retrospect, be dissatisfied
with the bargained-for provision it entered into, we will not
rewrite the contract to provide terms contrary to those which
are expressed.12 Nor is it the province of a court to rewrite a
contract to reflect the court’s view of a fair bargain.13 Berens
and Tate must be held to the plain language of the agreement it
entered into, and the district court erred in finding otherwise.
Our conclusion that the “Permanent Withdrawal” fee is an
enforceable contractual provision is dispositive of this appeal.
Therefore, we do not address Iron Mountain’s remaining assign-
ment of error.
CONCLUSION
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. The
judgment of the district court is reversed.
R eveRsed .
12 See, Pennfield Oil Co. v. Winstrom, 272 Neb. 219, 720 N.W.2d 886 (2006);
Husen v. Husen, 241 Neb. 10, 487 N.W.2d 269 (1992).
13 Wurst v. Blue River Bank, 235 Neb. 197, 454 N.W.2d 665 (1990).
BERENS & TATE v. IRON MT. INFO. MGMT. 	433
Cite as 275 Neb. 425