Berland v Gino Fashion Tuxedos, Inc.

[*1] Berland v Gino Fashion Tuxedos, Inc. 2005 NY Slip Op 52203(U) [10 Misc 3d 139(A)] Decided on December 30, 2005 Appellate Term, Second Department 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 30, 2005
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS
PRESENT: : RUDOLPH, P.J., ANGIOLILLO and McCABE, JJ
2005-125 S C.

AMY BERLAND, Appellant,

against

GINO FASHION TUXEDOS, INC., Respondent.

Appeal from a judgment of the District Court of Suffolk County, First District (James P. Flanagan, J.), entered on October 25, 2004. The judgment, after a nonjury trial, dismissed the action.

Judgment unanimously reversed without costs, complaint reinstated and judgment directed to be entered in favor of plaintiff in the principal sum of $804.69.

In this small claims action seeking to recover the amount defendant charged to plaintiff's credit card, substantial justice was not done in accordance with the rules and principles of substantive law (UDCA 1084, 1807). The evidence presented at trial by plaintiff, and not disputed by defendant's representatives, supports the conclusion that to the extent that any agreement for tuxedo rentals for plaintiff's upcoming wedding was made (a question this court need not reach for the reasons stated below), it was for an October wedding date and was cancelled in March, at least six months prior to the wedding date. The form on which the purported agreement was made (which is not denominated as an agreement or contract, and which gives no indication of its contractual nature until one reaches the fine print at the bottom) states that the "deposit" will be forfeited upon cancellation, but no amount is designated on the form as the deposit. In addition, it provides for "liquidated damages" of a specified percentage of the total rental price in the event of cancellation. Defendant charged plaintiff's credit card a total of $804.69 following her cancellation of the contract. [*2]

Whether a liquidated damages clause constitutes an unenforceable penalty is a question of law, and the burden to show that the clause at issue is a penalty is on the party seeking to avoid it (see JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 379-380 [2005]). Based upon the evidence presented below, we find that the form's liquidated damages provision is an unenforceable penalty clause. No reasonable relationship exists between the amount charged to plaintiff and any loss defendant could have suffered (see Truck Rent-a-Center v Puritan Farms 2nd, 41 NY2d 420, 424 [1977]; Evangelista v Ward, 308 AD2d 504 [2003]; see also UCC 2-A-504 [1]). We note that the liquidated damages clause on the agreement form applies to cancellations at any time [*3]
after the agreement is executed, whether or not defendant has tendered any performance.

Defendant attributed a $20 portion of the credit card charge to a handkerchief allegedly borrowed by plaintiff and not returned. However, based upon the evidence in the record, defendant neither submitted evidence of the actual value of the handkerchief nor its actual loss of profit upon plaintiff's cancellation of the contract. Accordingly, plaintiff is entitled to judgment in the sum of $804.69.
Decision Date: December 30, 2005