Tal Financial Corporation v. Csc Consulting, Inc.

844 N.E.2d 1085 (2006)

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Nature of the Case

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Facts

P and Onward entered into an agreement for the lease of computer hardware, telephone equipment, software, and office furniture. The agreement was a master lease with three schedules with monthly payments for each schedule. Schedule one began on August 1, 1997, and was to end July 31, 2000; schedule two began on October 1, 1997, and was to end September 30, 2000; and schedule three began on February 1, 1998, and was to end on January 31, 2001. P was to receive a total of $179,862.12 over thirty-six months. Onward paid P in advance the first, thirty-fifth, and thirty-sixth payments due. P paid a total of $140,433.62 for all of the items listed in the schedules. There was a liquidated damages provision that wherein P may recover 'an amount equal to the present value of all money to be paid by [Onward] during the remaining Initial Term plus 18% of the Acquisition Cost to P of such Equipment and/or any Other Equipment.' D acquired Onward and assumed the contracts. D continued to make monthly payments set forth in the schedules. Either before or during a move, D discarded most of the equipment and furniture covered by the master lease. D also misplaced the lease documents. With D in default, P sent a demand letter for $73,323.06 D offered to pay $ 9,510.25 'in full and final settlement. At trial, P claimed damages in the amount of $112,156. Contested at trial was whether the liquidated damages provision in the master lease calling for eighteen percent of P's acquisition costs was enforceable as a reasonable estimate of actual damages. The judge determined that the liquidated damages provision represented an amount that was grossly disproportionate to a reasonable estimate of actual damages made at the time of contract formation. It was unenforceable. The judge awarded P the entirety of the amount sought by D's counsel, $17,499 in attorney's fees and $1,000.91 in costs. P appealed.