154 A.3d 1246
N.H.2017Background
- Holloway Automotive Group (dealer) sold a new Mercedes to Giacalone; buyer signed an "Agreement Not to Export" promising not to export the vehicle from North America for one year and agreeing to $15,000 in liquidated damages for export.
- Vehicle was exported within the one-year period; MBUSA did not assess any charges against Holloway.
- Holloway sued Giacalone for breach, seeking the $15,000 liquidated damages plus interest, costs, and attorney’s fees; trial court found the liquidated-damages clause unenforceable and denied fees.
- Trial court concluded actual losses during the one-year term were essentially zero and that the $15,000 was a speculative "guesstimate."
- On appeal, Holloway argued the clause was a reasonable pre-estimate of hard-to-ascertain damages and that actual damages remained speculative; Giacalone argued actual damages were ascertainable (zero) because MBUSA imposed no penalties and statute limits franchisor penalties.
- Supreme Court of New Hampshire reversed: held the clause enforceable because Holloway’s damages were not easily ascertainable; remanded to determine reasonable attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether liquidated-damages clause is enforceable | Clause was a reasonable pre-estimate of hard-to-ascertain damages (service, warranties, resale, financing, reputational harm); damages remained speculative at trial | Damages were easily ascertainable as zero because MBUSA charged nothing and statute bars franchisor penalties | Enforceable: damages were not easily ascertainable; retrospective appraisal did not show actual damages were easily proved |
| Whether Agreement limited Holloway’s recoverable damages to MBUSA charges or to 1-year losses | Agreement covered broader hard-to-calculate losses beyond MBUSA charges and not restricted to losses only within the one-year breach window | Agreement tied damages to MBUSA charges and to losses during the one-year period | Held for Holloway: plain language covers broader, speculative future losses and does not confine damages to one-year period or solely to MBUSA charges |
| Effect of statute limiting franchisor penalties on ascertainability | Statute does not eliminate risk of future claims against dealer for knowing/should-have-known exports; defense costs and exposure remain uncertain | Statute means no franchisor penalties would be imposed here, rendering actual damages zero and easily ascertainable | Held for Holloway: statutory limitation does not remove the risk that MBUSA might assert dealer culpability; potential defense costs are uncertain and support liquidated sum |
| Entitlement to attorney’s fees under the Agreement | Agreement provides prevailing plaintiff recovery of liquidated damages plus costs and reasonable attorneys’ fees | (Defendant contested but court interpreted contract) | Held for Holloway: contractual fee-shifting clause applies; case remanded to quantify reasonable fees and costs |
Key Cases Cited
- Orr v. Goodwin, 157 A.3d 511 (N.H. 2008) (standards for validity of liquidated-damages clauses and appellate review)
- Holloway Automotive Group v. Lucic, 163 A.3d 6 (N.H. 2011) (upholding similar liquidated-damages clause where damages remained speculative)
- Technical Aid Corp. v. Allen, 134 A.3d 1 (N.H. 1991) (liquidated damages unenforceable if clause functions as penalty)
- Shallow Brook Assoc’s v. Dube, 135 A.3d 40 (N.H. 1991) (reasonableness test: amount must not be greatly disproportionate to presumable loss)
- Realco Equities, Inc. v. John Hancock Mut. Life Ins. Co., 130 A.3d 345 (N.H. 1988) (party bound by agreed liquidated-sum when clause valid)