USCA1 Opinion
January 31, 1995
[NOT FOR PUBLICATION]
UNITED STATE COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1844
EDWARD J. MULLIGAN,
Appellant,
v.
BOSTON HARBOR MARINA COMPANY,
Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Boudin and Stahl, Circuit Judges.
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Edward J. Mulligan on brief for appellant.
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Robert M. Gargill, Howard J. Levitan, Diana K. Lloyd and Choate,
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Hall & Stewart, on brief for appellee.
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Per Curiam. Appellant Edward Mulligan appeals the
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bankruptcy court's denial of his claim for return of money
deposited with appellee, Boston Harbor Marina Company [BHMC],
and retained as liquidated damages when Mulligan failed to
close on a condominium unit in January 1988. We affirm.
The option of a seller to retain a buyer's deposit as
liquidated damages is the common practice in Massachusetts
conveyancing. Lynch v. Andrew, 20 Mass. App. Ct. 623, 627,
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481 N.E.2d 1383, 1386, review denied, 396 Mass. 1102, 484
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N.E.2d 102 (1985). Massachusetts courts "are disinclined to
tamper with [such] a well established solution to the
problems of expense and uncertainty in litigating the precise
damages in cases of this kind." Id. This is especially so
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when, as here, nothing suggests that the liquidated damage
provision was negotiated other than at arm's length between
sophisticated parties. See id.
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Two points must be considered in assessing the
enforceability of a liquidated damages clause. "Where actual
damages are difficult to ascertain and where the sum agreed
upon by the parties at the time of the execution of the
contract represents a reasonable estimate of the actual
damages, such a contract will be enforced. . . . But where
the actual damages are easily ascertainable and the
stipulated sum is unreasonably and grossly disproportionate
to the real damages from a breach, or is unconsciously
excessive, the court will award the aggrieved party no more
than his actual damages." Shapiro v. Grinspoon, 27 Mass.
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App. Ct. 596, 603, 541 N.E.2d 359, 365 (1989) (quoting A-Z
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Servicenter, Inc. v. Segall, 334 Mass. 672, 675, 138 N.E. 2d
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266, 268 (1956) (citations omitted)).
In the instant case, the bankruptcy court supportably
found that Mulligan defaulted at a time when the local real
estate market was in a state of considerable flux. Moreover,
nothing in the record indicates that BHMC ever had an
opportunity after Mulligan's breach to sell the property
until it was compelled to do so at auction three years later
and at a much lower price. Such circumstances make the
seller's actual damages "difficult to calculate with
precision," Lynch, 20 Mass. App. Ct. at 682, 481 N.E.2d at
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1386 (finding damages difficult to ascertain in part because
"house was not sold within days of the first buyer's default,
at about the same price, and without complicating factors"),
and "[w]hen losses are difficult to quantify, considerable
deference is due to the parties' reasonable agreement as to
liquidated damages," Id (citing cases). Since Mulligan does
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not claim that the liquidated damages clause was an
unreasonable estimate of damages at the time the contract was
executed, we find no error in the bankruptcy court's finding
the liquidated damages clause enforceable in this case.
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In addition, essentially for the reasons given by the
district court in its memorandum and order dated July 19,
1994, we find Mulligan's other claims to be without merit.
Affirmed.
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