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RENOVATION WORK ON DEFENDANTS’ TOWNHOUSE RENDERED PLAINTIFFS’ TOWNHOUSE, WHICH WAS NEXT DOOR, UNINHABITABLE; A LICENSE AGREEMENT WHICH GRANTED DEFENDANTS ACCESS TO PLAINTIFFS’ TOWNHOUSE INCLUDED A LIQUIDATED DAMAGES PROVISION WHICH WAS VALID AND ENFORCEABLE; PLAINTIFFS’ ACTION SOUGHT SOME EQUITABLE RELIEF BUT PRIMARILY SOUGHT MONEY DAMAGES; THEREFORE PLANTIFFS’ DEMAND FOR A JURY TRIAL SHOULD NOT HAVE BEEN STRUCK (FIRST DEPT).

The First Department determined, among many other issues not summarized here, the liquidated damages provision in the license agreement was enforceable and plaintiffs’ demand for a jury trial should not have been struck. Defendants purchased an historic townhouse next to plaintiffs’ townhouse. In the course of the defendants’ major renovations, plaintiffs’ townhouse was damaged. High levels of lead dust infiltrated plaintiffs’ townhouse forcing plaintiffs to move out. They never returned. The plaintiffs and defendants entered a license agreement giving defendants access to plaintiffs’ townhouse for 18 months. The liquidated damages provision entitled plaintiffs to $1000 a day for every day a temporary certificate of occupancy (TCO) was not obtained after the expiration of the license. The TCO was not obtained for 318 days entitling plaintiffs to $318,000. Although some equitable relief was requested, the suit primarily sought money damages. Therefore plaintiffs’ demand for a jury trial should not have been struck:

“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 their contract” … . These provisions “have value in those situations where it would be difficult, if not actually impossible, to calculate the amount of actual damage” … . Liquidated damages will be sustained if, at the time of the contract, “the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation” … . * * *

The court erred in granting [defendants’] motion to strike plaintiffs’ jury demand. The equitable relief sought by plaintiffs was incidental to their demand for money damages … ; to the extent plaintiffs seek to compel [defendants] to perform certain remediation work, monetary damages will afford full and complete relief … . Further, the claim for “abatement of and damages for a nuisance” is triable by a jury (CPLR 4101[2]). Seymour v Hovnanian, 2022 NY Slip Op 04705, First Dept 7-26-22

Practice Point: This decision includes a good discussion of how the validity of a liquidated-damages provision should be analyzed. The court noted that, although plaintiffs’ action sought some equitable relief, it primarily sought money damages. Therefore plaintiffs’ demand for a jury trial should not have been struck.

 

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