35 A.3d 577
N.H.2011Background
- Holloway, an authorized Mercedes-Benz dealer, entered into no-export agreements with Sedo, Inc. and Lucic promising not to export the vehicles outside North America for one year.
- The agreements impose $7,500 in liquidated damages per vehicle for any export within one year, plus Holloway’s reasonable attorney’s fees for enforcement.
- Lucic, on behalf of Sedo, paid $99,000 for two Holloway vehicles and assured Holloway he would not export them; Holloway delivered the vehicles.
- Less than two weeks later, the vehicles were exported; Holloway sued Sedo and Lucic individually, alleging breach and seeking liquidated damages and fees.
- The district court (1) enforced the liquidated damages provisions, (2) pierced the corporate veil to impose personal liability on Lucic, and (3) awarded Holloway attorney’s fees.
- On appeal, the NH Supreme Court affirms the liquidated damages but vacates the veil-piercing and fee awards, remanding for fee-reduction or calculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of liquidated damages | Holloway argues damages were hard to ascertain and the liquidated amount was reasonable. | Sedo/Lucic contend the $7,500 per vehicle is a penalty and grossly disproportionate to actual damages. | Liquidated damages affirmed against the corporation. |
| Piercing the corporate veil jurisdiction | District court properly pierced the veil to hold Lucic liable for the corporation’s breach. | District court lacked equitable power to pierce the veil and render Lucic personally liable. | Veil piercing is an equitable remedy; district court lacked jurisdiction; vacate Lucic’s personal liability. |
| Attorney’s fees award | Holloway is entitled to fees for enforcing the breach against the corporation and piercing the veil. | Fees should not be awarded to Holloway for unsuccessful veil-piercing claims against Lucic. | Vacate fee award and remand to determine analytically severable fees; only the corporation liable for fees. |
Key Cases Cited
- Orr v. Goodwin, 157 N.H. 511 (NH 2008) (two-part test for reasonableness of liquidated damages)
- Shallow Brook Assoc’s v. Dube, 135 N.H. 40 (NH 1991) (reasonableness of damages in liquidated clauses)
- Ladco Properties XVII v. Jefferson-Pilot Life Ins., 531 F.3d 718 (8th Cir. 2008) (damages must be easily ascertainable for retroactive appraisal)
- Witte v. Desmarais, 136 N.H. 178 (NH 1992) (burden on party challenging liquidated damages)
- Route 12 Books & Video v. Town of Troy, 149 N.H. 569 (NH 2004) (subject-matter jurisdiction may be raised any time)
- State v. Martina, 135 N.H. 111 (NH 1991) (piercing the corporate veil as an equitable remedy)
- LaMontagne Builders v. Bowman Brook Purchase Group, 150 N.H. 270 (NH 2004) (equitable remedies and piercing the veil; limits on courts)
- Matte v. Shippee, 152 N.H. 216 (NH 2004) (equitable power of courts in civil actions)
- In the Matter of O’Neil & O’Neil, 159 N.H. 615 (NH 2010) (de novo review of trial court's equitable jurisdiction)