Gunderson v Park W. Montessori, Inc.

[*1] Gunderson v Park W. Montessori, Inc. 2009 NY Slip Op 51852(U) [24 Misc 3d 1242(A)] Decided on August 24, 2009 Supreme Court, New York County Tolub, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 24, 2009
Supreme Court, New York County

Erik Gunderson and Sarah Brooks, Plaintiff,

against

Park West Montessori, Inc., d/b/a Twin Parks Montessori Schools, Defendant.



602195/08



Attorney for the Plaintiff :

Russell E. Brooks, Esq. - Pro Se

8 Soundview Drive North

Lloyd Harbor, NY 11743-9797

Attorney for the Defendant :

Wenig Saltiel & Greene LLP

26 Court Street - Ste. 502

Brooklyn, New York 11242

Walter B. Tolub, J.

This is Plaintiff's motion to compel discovery. Defendants cross-move for summary judgment and an order to strike certain errata sheets and to re-depose Plaintiff Sarah Brooks.

Facts

Plaintiffs are married and live on the Upper west Side of New York. Defendant (or "School") operates two preschools on the Upper West Side of Manhattan that serve children between the ages of three months to five years.

Plaintiffs' three year old son was a student at the School in September of 2007, and was due to complete the spring term in June, 2008.

On December 14, 2007, the School sent the Plaintiffs a re-enrollment form for the 2008/09 school year and an enrollment form for the School's 2008 Summer camp program. The cover letter stated that the re-enrollment form was due January 11, 2008 with a $500 registration fee. The Summer Camp enrollment form was due February 11, 2008.

Plaintiffs wanted to enroll their son in a preschool for the 2008/09 school year. Plaintiffs completed and signed the re-enrollment form of December 20, 2007, and returned it to the School with the required $500 registration fee. Plaintiffs registered their son for the "Extended [*2]Day" in the "Early Childhood" five day a week program. The program's tuition was $19,300 for the school year. Plaintiffs opted for the payment plan which provided for quarterly payments on the first day of May, August, November and February.

Additionally, Plaintiffs enrolled their son in the "Early Childhood" camp program for the summer, for a tuition fee of $3,600.

On January 11, 2008, Plaintiffs received another letter from the School, requiring that all forms be returned within ten days of the letter in order for the child to be considered enrolled. Along with the letter were two copies of a Parent Agreement, the Rules and Regulations, a Bank Authorization Form and a request for a security deposit payment.

Plaintiffs signed and returned the documents in a timely manner.

The Parent Agreement restated the terms of the re-enrollment form signed by Plaintiffs on December 20, 2007 and provided that:

1a. TUITION: I/We understand and agree that the full Tuition of $19,300, and all administrative fees, are due and payable IN FULL immediately upon my/our execution of this Agreement. The School is, however, permitting me/us to pay the Tuition and applicable administrative fees, in installments according to the payment schedule set forth in this paragraph providing same is paid electronically in the manner more specifically set forth below and further provided that I/We do not default under any term or provision of this Agreement with the School. ALL PAYMENTS ARE NON-REFUNDABLE.

1b. I/We further understand that the School has made commitments and incurred financial obligations based upon the number of children enrolled in the program and is this dependant upon my/our meeting our financial obligations to the School. Should I/We default under any term or provision of the Agreement, or any other Agreement with the School, or remove my/our child from the program, the balance of Tuition not yet paid by me/us shall be due and payable within ten (10) days . . . In the event that I/We are in default, I/We hereby grant the right to the School to contact credit investigatory services in an effort to secure payment and/or execute a judgment.

4. DISHONORED DEBT: If my/our financial institution dishonors two(2) electronic payments during the school year, the payment schedule permitted me/us under paragraph 1(a) of this Agreement shall terminate and the balance of the full Tuition, and administrative fees shall be due in full

. . . upon five (5) days notice to me/us from the School. An additional fee of $35.00 will be required to help disfray the additional handling charges and bank fees associated with any dishonored payment. In addition a $25.00 processing fee will be added to any payment the School required . . .

(Complaint Ex. B).

After paying $4,700 in tuition payments for the 2008/09 school year, Plaintiff Sarah Brooks, who was employed as an Adjunct Lecturer in Art at the University of the State of New York at Stony Brook, received an offer for a tenure track position as Assistant Professor of Medieval Art at James Madison University in Virginia. To accommodate his wife, Plaintiff Erik Gunderson sought and obtained a job at the University of Virginia Medical Center. [*3]

On April 10, 2008, five months before the next academic school year began, Plaintiffs advised the School by email that at the end of August, 2008, the family would be moving to Virginia to begin their new jobs. The letter further stated that their child would remain at the School's camp through the summer but would have to be withdrawn from the School's 2008/09 academic year.

Defendant's response was that once the Payment Agreement is turned in, the full tuition is owed for the school year, even if the family decides to move.

Plaintiff then commenced this action seeking (1) a declaration that the penalty damage clause is void and unenforceable; (2) a declaration that the Parent Agreement form was an unconscionable adhesion contract; (3) a preliminary and permanent injunction enjoining Defendant from contacting credit investigatory services or securing payments or a judgment; (4) a return of the $4,700 in tuition payments already paid to the School. Defendant counterclaims for the full balance owed under the Agreement.

By this motion, Plaintiffs seek discovery from the Defendant. Specifically, Plaintiffs seek information regarding what damages the Defendant suffered, if any by Plaintiffs' not sending their son to the School for the 2008/09 academic year [Defendant's budget, class population, calculation of actual damages, class list, waiting list, correspondence with applicants who were turned away because the class was full] . Defendant argues that such information is irrelevant as this is a straight forward contract dispute.

Defendant cross-moves for summary judgment and for an order striking Mrs. Brooks errata sheets and requiring her to appear for a second deposition.

Discussion

Defendant's Motion for Summary Judgment and Plaintiffs' Motion to Compel Discovery

As with any motion for summary judgment, success is wholly dependent on whether the proponent of either of the respective motions has made a "prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact" (Wolff v New York City Trans. Auth., 21 AD3d 956 [2d Dept 2005], quoting Winegrad v New York University Med. Ctr., 64 NY2d 851, 853 [1985] [internal quotes omitted]. A party is entitled to summary judgment if the sum total of the undisputed facts establish the elements of a claim or a defense as a matter of law. This means that none of the material elements of the claim or defense are in dispute (Barr, Atlman, Lipshie, Gerstman, New York Civil Practice Before Trial, [James Publishing 2006] §37:180).

On defendant's motion for summary judgment, defendant may demonstrate the lack of several prima facie elements of plaintiff's case, however, to prevail, defendant only needs to demonstrate the absence of a single element (Barr, Atlman, Lipshie, Gerstman, New York Civil Practice Before Trial, [James Publishing 2006] §37:182). Once defendant presents evidence showing the absence of facts necessary to establish a prima facie case, the burden shifts to the plaintiff (Barr, Atlman, Lipshie, Gerstman, New York Civil Practice Before Trial, [James Publishing] §37:190).

On this motion for summary judgment, the question is whether the provisions in the Agreement, regarding its breach, constitute an enforceable liquidated damage clauses or, instead, unenforceable penalties.

"Parties to a contract may provide for anticipatory damages in the event of failure to [*4]complete performance within the time specified, as long as such agreement is neither unconscionable or contrary to public policy." (Lease Corp. Of America, Inc v. Resnick, 288 AD2d 533, 534 [1st Dept 2001] citing X.L.O, Concrete Corp v. Brady & Co., 104 AD2d 181, 183 aff'd 66 NY2d 970). Such anticipatory or liquidated damages "constitute the compensation which, the parties have agreed should be paid in order to satisfy any loss or injury flowing from a breach of contract (Lease Corp. Of America, Inc v. Resnick, 288 AD2d 533, 534 [1st Dept 2001] citing LeRoy v. Sayers, 217 AD2d 63, 69 quoting Wirth & Hamid Fair Booking v. Wirth, 265 NY2d 214, 223). Liquidated damage clauses are enforceable when they are reasonable and proportionate to the probable loss when the actual amount will be difficult to compute precisely and the estimated amount does not work a forfeiture or penalty (Truck Rent A Center v. Puritan Farms 2nd Inc., 41 NY2d 420, 424 [1977] emphasis added).

On the other hand, in the event of contractual breach, if the payment of a sum of money is grossly disproportionate to the amount of actual damages, then the provision for such damages provides for a penalty and is unenforceable. "A liquidated damage provision has its basis in the principle of just compensation for loss. A clause which provides for an amount plainly disproportionate to real damage is not intended to provide for fair compensation but to secure performance by the compulsion of the very disproportion. A promisor would be compelled, out of fear of economic devastation, to continue performance and his promise, in the event of a default, would reap a windfall well above the actual harm sustained" (Truck Rent A Center v. Puritan Farms 2nd Inc., 41 NY2d 420, 424 [1977]).

Turning to the Agreement in this case, the Parental Agreement states that if there is any default under the Agreement, that the full tuition becomes due. Stated another way, once the Plaintiffs decided that their son would not be attending the School, the School would be entitled to, not only all the money already paid by Plaintiffs, but for the full tuition fee for the entire academic year, even if the School were to take another student in Plaintiffs' son's place.

The defendant School received five months advance notice that Plaintiffs' son would not be attending the next academic year. The School may have suffered damages equal to the loss of the entire tuition payment or none at all (Parente v. Drozd, 171 AD2d 847 [1st Det 1991]). Without further discovery the Court is unable to ascertain what the actual damages of the School were and whether requiring the Plaintiffs to pay the balance of the tuition payment is grossly disproportionate to the School's loss.

As such, Plaintiffs' motion to compel discovery related to the School's loss is granted and Defendant's motion for summary judgment is denied.

Plaintiffs' arguments for the return of payments already made is denied as the contract is clear and unambiguous that all payments are non-refundable (Agreement ¶ 1a).

Defendant's Motion to Strike Portions of Mrs. Brooks' Deposition and for an Order requiring Mrs. Brooks to appear for an Additional Deposition

CPLR §3116(a) provides in relevant that "[t]he deposition shall be submitted to the witness for examination and shall be read to or by him or her, and any changes in form or substance which the witness desires to make shall be entered at the end of the deposition with a statement of the reasons given the witness for making them." (CPLR §3116[a]).

When the examined party reads over his examination, he has the right to correct incorrect [*5]reporting on the part of whoever took down or transcribed the examination, and also the right to correct something which he has inadvertently uttered and of his own volition desires to correct (Gottfried v. Gottfried,197 Misc. 562 [NY Sup 1950]).

Here, some of the changes Plaintiffs seek to make to their deposition transcripts are more than merely correcting typographical errors, however, the changes Plaintiffs seek to make are not geared towards critical portions of their testimony. Defendant makes no showing of why or how the corrections on the errata sheets critically alter the testimony or how they impact the outcome of the case (Cf. Marzan v. Persaud, 29 AD3d 652 [2d Dept 2006] [Slip and fall action where Plaintiff stated that Defendant's sidewalk was uneven. Plaintiff later sought to change the deposition testimony to state that it was Defendant's uneven sidewalk which caused him to fall]).

Here, Plaintiffs submitted the errata sheets in a timely fashion and gave some explanation for their changes and did not change critical portions of the deposition testimony. As such, Defendant's motion is denied.

Accordingly, it is

ORDERED that Defendant's cross motions are denied; and it is further

ORDERED that Plaintiffs' motion to compel discovery is granted; and it is further

ORDERED that Defendant is to provide said discovery within 30 days of service of a copy of this order with notice of entry.

Counsel for the parties are directed to appear for a conference on October 9, 2009 at 11:00 AM in room 335 at 60 Centre Street.

This memorandum opinion constitutes the decision and order of the Court.

Dated:

HON. WALTER B. TOLUB, J.S.C.