| United Tit. Agency, LLC v Surfside-3 Mar., Inc. |
| 2009 NY Slip Op 06536 [65 AD3d 1134] |
| September 15, 2009 |
| Appellate Division, Second Department |
| United Title Agency, LLC,Appellant-Respondent, v Surfside-3 Marina, Inc., et al.,Respondents-Appellants. |
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In an action to recover a down payment for the purchase of a custom boat in the sum of$160,000, the plaintiff appeals from so much of an order of the Supreme Court, Nassau County(Austin, J.), dated November 26, 2008, as amended December 11, 2008, as deemed thedefendants' answer amended to provide for a counterclaim for actual damages in the maximumamount of $160,000, and the defendants cross-appeal, as limited by their brief, from so much ofthe same order as, in effect, granted that branch of the plaintiff's motion which was for summaryjudgment determining that the liquidated damages provision contained in the parties' contractwas an unenforceable penalty as a matter of law and as, upon consent, set a cap on any award ofactual damages at $160,000.
Ordered that on the Court's own motion, the plaintiff's notice of appeal from so much of theorder, as amended, as deemed the defendants' answer amended to provide for a counterclaim foractual damages in the maximum amount of $160,000, is deemed a motion for leave to appeal,and leave to appeal is granted; and it is further,
Ordered that the cross appeal by the defendants from so much of the order, as amended, aswas entered upon their consent is dismissed, without costs or disbursements, as no appeal liesfrom an order entered upon the consent of the appealing party (see Barry v Barry, 60 AD3d 882[2009]); and it is further,
Ordered that the order, as amended, is affirmed insofar as appealed from, without costs ordisbursements; and it is further,
Ordered that the order, as amended, is reversed insofar as reviewed on the cross appeal, onthe law, without costs or disbursements, and that branch of the plaintiff's motion which was forsummary judgment determining that the liquidated damages provision contained in the parties'contract was an unenforceable penalty as a matter of law is denied.
The plaintiff contracted with the defendants for the purchase of a custom boat at a price of$1,600,000. The plaintiff gave the defendants a down payment of $160,000. The purchase wasnot [*2]completed, and when the defendants retained the downpayment as liquidated damages, the plaintiff commenced this action to recover the downpayment. The liquidated damages paragraph at issue provided, inter alia, for the retention of thedown payment as liquidated damages in the event that the plaintiff failed to complete thepurchase.
Contrary to the determination of the Supreme Court, the plaintiff failed to make a primafacie showing that the liquidated damages provision at issue was an unenforceable penalty.Whether a contractual provision represents an enforceable liquidated damages provision or anunenforceable penalty is a question of law. The party challenging a liquidated damages clausemust establish either that actual damages were readily ascertainable at the time the contract wasentered into or that the liquidated damages were conspicuously disproportionate to foreseeable orprobable losses (see Bates Adv. USA,Inc. v 498 Seventh, LLC, 7 NY3d 115, 120 [2006]; JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 384[2005]; Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 424 [1977]). The recordis devoid of any evidentiary proof as to either of those factors. Accordingly, the Supreme Courtshould not have granted that branch of the plaintiff's motion which was for summary judgmentdetermining that the liquidated damages provision contained in the parties' contract was anunenforceable penalty as a matter of law (see generally Alvarez v Prospect Hosp., 68NY2d 320, 324 [1986]).
The parties' remaining contentions are without merit. Spolzino, J.P., Santucci, Florio andLott, JJ., concur. [See 21 Misc 3d 1127(A), 2008 NY Slip Op 52248(U).]