COURT OF APPEALS:

COURT OF APPEALS REAFFIRMS HORNBOOK LAW THAT A CONTRACTUAL LIQUIDATED DAMAGE PROVISION WILL BE DEEMED AN UNENFORCEABLE PENALTY IF IT VIOLATES PUBLIC POLICY

Having succeeded on both the trial and appellate level, DL Partners again successfully challenged Columbia University’s appeal to the Court of Appeals in its quest to enforce a liquidated damage provision in a surrender agreement resulting in an award 7 ½ times the amount that would have been due under the surrender agreement.

The Court of Appeals’ decision, at a time when the COVID-19 crisis was causing an unprecedented number of lease defaults, reaffirms long established hornbook law that a contractual liquidated damage provision will be deemed an unenforceable penalty which violates public policy when it requires damages grossly disproportionate to the actual damages.

The Trustees of Columbia University v D’Agostino Supermarkets, Inc., 2020 NY Slip Op 06937, 2020 WL 6875988 (2020).