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THE DEFAULTING DEFENDANT WAS DEEMED TO HAVE ADMITTED ALL THE ALLEGATIONS IN THE BREACH-OF-CONTRACT COMPLAINT; THERFORE WHETHER DEFENDANT CAUSED THE DAMAGES SUSTAINED BY PLAINTIFF SHOULD NOT HAVE BEEN CONSIDERED IN THE INQUEST; THE FACT THAT THE AMOUNT OF DAMAGES IS UNCERTAIN DOES NOT JUSTIFY THE FAILURE TO AWARD DAMAGES (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the defendant’s default admitted all the allegations in the complaint. Therefore damages should have been awarded for breach of contract:

A defaulting defendant is “deemed to have admitted all factual allegations contained in the complaint and all reasonable inferences that flow from them” … . “The sole issue to be determined at an inquest is the extent of damages sustained by the plaintiff” … . Here, the inquest court erred in considering the question of whether the defendants caused the damages sustained by the plaintiff … .

… [W]hile there is some uncertainty with respect to the plaintiff’s claim of lost profits, “when it is certain that damages have been caused by a breach of contract, and the only uncertainty is as to their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach. A [party] violating [a] contract should not be permitted entirely to escape liability because the amount of the damages which [the party] has caused is uncertain” … . LD Acquisition Co. 9, LLC v TSH Trade Group, LLC, 2022 NY Slip Op 07227, Second Dept 12-21-22

Practice Point: A defaulting defendant is deemed to have admitted all the allegations in the complaint. Therefore whether the defendant caused the damages alleged in the complaint should not be considered in the inquest. Here the failure to award any damages for breach of contract was not appropriate.

 

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