I suggest that you review Cal. Civil Code Title 2.5 "Contracts for Health Studio Services" in particular section 1812.85, subdivision (c) of the Civil Code, which provides for cancellation of the contract if the health studio eliminates or substantially reduces the scope of the facilities that are listed in the contract, advertisements, or the written offer. You have the right to cancel, based on the facts that you described in your posting. I'd suggest sending a notice of cancellation by fax and U.S. Certified Mail and that you keep a copy for your records along with the proof of delivery. Refer to this section and the reason being the termination of child care. I would not offer to pay them a penny, as they should know the rules that govern their facilities.
Robert Stempler (please see DISCLAIMER below)
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I agree with atty Stempler. Basically, this is a breach of contract by the gym because they did not provide the services promised you. This breach excuses you from further performance. If they ding your credit report, you can add your side of the story in the report. If they seek to enforce the contract, get in touch with an experienced attorney and have a letter sent to the gym or its attorney. Most likely, nothing will come of it based on the facts you provide. If you get a Summons or Order to Appear in Small Claims court, don't ignore it. If you do, you will lose by default. It is harder and more expensive to set aside a default judgment. You will definitely need a lawyer to do that.