Vanderbeek v. Barefoot

testimony sup- not is testimony when the deter- final claim is that the ALJ’s Cop’s Schau- by evidence. See past ported medical Cop engage could mination 181 F.3d Security, Soc. improper sup- and not deck Comrn’r work was relevant Cir.1999) (3d (internal citations making In by evidence. ported substantial work, omitted). Additionally, Cop did offer past relevant a determination testimony regarding and mental “physical ALJ or any determines evidence jobs performed requires claimant has position demands of of taxi driver whether the Burnett, past.” 220 F.3d level. exertional more than medium Cf. (internal citation quotation Burnett, marks and 220 F.3d at 123. Because omitted). primary “The is the Dictionary Occupa- claimant on the ALJ relied documentation, source vocational Titles and the medical evidence tional past regarding record, the claimant statements is evidence there substantial generally are sufficient for determin- can Cop work his determination support level, demands and ing the skill exertional past his relevant work. return to work.” Id. nonexertional demands of such

(internal IV. marks and citation quotation omitted). claimant can still Whether the reasons, will af- foregoing we For the perform such work determined based on judgment firm the District Court’s testimony past the claimant’s about the ALJ’s supports substantial evidence longer requirements he she can no work or eligible for Cop was not determination perform, regarding medical evidence during peri- time or DIB the relevant SSI impairments, sometimes claimant’s od. supplementary including information Dictionary Occupational Titles. Id. past relevant determination work be based on evidence drawn from

“must (internal categories.” ... three

the[se] omitted).

citation Cop testified he jobs longer no his of a perform past could VANDERBEEK; Jeffrey A. Ronald courier he had trou taxi driver or Mauro, Appellants J. Del carrying things walking long dis ble tances. He that a taxi driver carry luggage

often has to customer’s or BAREFOOT; Brian groceries special and couriers often use Bank, Sports; N Trust Co Fork f/k/a parking is located far from the which NJ; Bridge Loan; Official Porter building. The ALJ consulted the Dictio Creditors. Committee of Unsecured nary Occupational Titles which de No. 06-1493. position of a taxi driver as a scribes the lev position requiring medium exertional Appeals, United States Court found in his discussion els. As the ALJ Third Circuit.

regarding capacity, residual functional Feb. Argued impair his Cop’s testimony regarding April Filed: by objective medi supported ments is not required An is not cal evidence. ALJ subjective weight to a claimant’s

give great (Argued), Cole,

Stuart Komrower Schotz, Meisel, Leonard, Forman & Hack- ensack, NJ, Attorney for Appellants. Orloff, (Argued), Samuel Feldman Low- enbach, Roseland, NJ, Siegel, Stifelman & Attorney Appellee, Brian Barefoot. Palumbo, Lafond, Michael J. Carol A. LeBoeuf, Lamb, MacRae, Greene & York, NY, Attorneys for N Fork Appellee, Bank. FISHER,

Before: SMITH and Circuit DOWD,* Judges, and Judge. District OPINION THE OF COURT FISHER, Judge. Circuit Jeffrey A. Vanderbeek and Ronald J. Mauro, individually Del behalf Partners, (“Arena”) Equity L.L.C. (collectively “Appellants”), appeal the Dis- trict liqui- Court’s determination that the dated damages clause included in the As- (“APA”) Agreement set Purchase Arena entered into with Bridgewater Sports L.P. (“Bridgewater”) was enforceable. The claim that clause was unen- forceable under New law because it was unreasonable at the time of contract formation and at the time of breach. For reasons, affirm following we will District Court’s order.

* Dowd, Jr., Ohio, sitting by designation. The Honorable David D. United Judge States District for the Northern District re- negotiations extensive There were

I. damages clause. garding who are parties, As write we and sent a prepared counsel Bridgewater’s context and with the factual familiar required Arena. The draft APA to draft set history of the we will procedural did not include a $250,000 deposit, but our necessary to only those facts forth Under damages clause. liquidated analysis. terms, could seek Bridgewater proposed contract case This is breach of months Two if Arena breached. bankruptcy pro- in the context of arises a redlined later, responded with Arena Debtor, filed Bridgewater, ceedings. The proposed Bridgewater’s draft that deleted Chap- voluntary petition for relief replaced with a and damages clause August in Bankruptcy Code ter Bridgewater damages clause. operated Bridgewater owned and 2003. want did not family Bridgewa- in entertainment center clause, but Arena ter, of which was Jersey, the value agreement in for the necessary order was $8,575 Bridgewater’s on million listed as conceded, but Bridgewater go forward. Chapter 11 Petition. any liquidated proposed that 2004, gen Bridgewater and its an amount between April should be for Sabo) (John $750,000. Arena, into a according C. entered partner $250,000 eral and Agreement Proponent Plan believed that the attorney, Consensual to its Plan”) (“Consensual Arena. The Under was more than fair. deposit amount Plan, parties agreed APA, the Consensual on November which was executed APA, 11, 2004, an Arena would governed by enter into where and was Bridgewater’s reorganization plan law, dam- ultimately fund included purchase Arena to provide which would for that Arena’s ages provided clause which Bridgewater’s Bridgewater’s most of assets.1 sole deposit was if remedy Arena breached. plan filed reorganization internal con- Court, delays due to seeking After some Bankruptcy approval in the members, confir- among ap The flict Arena’s Bankruptcy of the APA.2 Bank- hearing was held and the August in mation proved reorganization plan confirming 2004, the order hearing ruptcy Court entered and scheduled a confirmation 23, 30, reorganization plan on November purchase September for 2004. designated December Bridgewater’s The APA under the APA for 2004. price closing and December as the date and assets was not to exceed property $7 (subject to date, date as the termination closing as indicated million.3 The date), APA, closing and any adjournments to plan and the reorganization be terminated days that the APA could thirty stated to occur between three closing if not occur on by any party did order was finalized after the confirmation However, the termination date. or before by Bankruptcy Court. Mauro, reorga- Vanderbeek, participated preparation Stephen Gruhin Del 1. ("Berlant”) ("Gruhin"), plan, this information. Are- and Mitchell Berlant it knew nization executed the knowledge. all members of deny were na such does not of Arena. Consensual Plan behalf part price on the fact that 3. was based reorganization plan indicated that manager Bridgewater’s were to re- Sabo Bridgewater’s highest assets was next bid equity in Arena. ceive an interest Arena Apparently, $5.75 million. by the termination date could be extended Bridgewa derbeek and Berlant contacted purchaser the seller and in writing. request ter’s counsel to an extension until 7, 2005, January January 2005.5 On requested Arena extension telephone held a closing January date until conference which it indicated if “that Bridgewater refused to consent to the ex- 18, 2005, by January Arena did not close tension. as allowed under the competitive [e]ourt would entertain APA, adjourned unilaterally bidding a purchaser to become the closing until A December few Plan Funder.” Arena did not close days 30, 2004j before December Arena re- 18, 2005, but Bridgewater’s coun quested adjournment. another requested adjournment sel one-day a at Additionally, some of Arena’s members Arena, request the which the court (Gruhin Berlant) Bridgewa and informed granted, adjourning hearing the to date 28, 2004, ter on December that DJD 24, January January 2005. At the hear (“DJD”) Amusements L.L.C. was interest ing, Bankruptcy the Court explained that ed in purchasing Bridgewater’s assets. (1) there were now three options: approve Bridgewater’s began counsel discussions (2) Arena, closing with authorize auction with DJD regarding possibility the of DJD (3) property, or convert the case to becoming “back-up funder.” DJD made Chapter 7. Vanderbeek and Del Mauro’s 30, a formal offer on The December 2004. counsel indicated their clients were offer as terms the were the same those ready Arena, to close on behalf of but APA stated the with Arena. DJD also until the in resolution some additional paid Bridgewater deposit a million on $1 Bankruptcy ternal issues. The Court then 31, 5, 2005, January December 2004.4 On closed, held that because Arena had not Bridgewater approval filed a motion rights Arena’s under APA were termi replacement plan DJD as a funder. nated. informed Bridgewater the court that DJD decision, Immediately after this close, prepared was pre and had been auction, Bankruptcy at Court held 31, pared to since close December 2004. which DJD was the bidder. The Additionally, Bridgewater indicated that plan court awarded to DJD funder status exerting its pressure creditors were it made opening after its bid of mil- $8.1 contemplated make distributions day, lion. The sale was reorganization immediately. closed plan The Bridgewater partial made distribution to Bankruptcy Court entered the order on 2005, 18, January 6, its creditors. court January also indicated that and set return the status of Arena’s deposit date. would be addressed at another time. Bridgewater also amended the APA (“Barefoot”), with Arena to extend the termination date Brian Barefoot one of January January Bridgewater’s Appellee 2005. On Van creditors and an expire January Additionally, proof 4. DJD’s offer was set on der status. his inten- himself, tion to close as Arena or Vanderbeek deposited purchase price the balance of the 5. Vanderbeek and Berlant if Bridgewater requested into trust account. January on failed close adjournment during telephone confer- request Bankruptcy would that the 7, 2005, January depos- ence on based on the go on forward the auction iting Bankruptcy of the funds. The Vanderbeek and Berlant stated their granted adjournment. compete plan intention to with DJD for fun- that the claim February appeal, On a motion on made Bankruptcy Court and the District Court Bankruptcy 2005, requesting that dam- by finding erred Bridgewater to disburse Court direct They claim enforceable. ages clause was accor to its creditors in deposit be- not enforceable the clause Van reorganization plan.6 dance with the the time of it was not reasonable cause objection Del Mauro filed an derbeek and the breach. at the time of formation nor cross-motion, individually law, Jersey according to Under New directing seeking an order behalf of damages clause Appellants, a Bare deposit. to return in time. points at both must be reasonable credi Bridgewater’s foot and another of to the cross- opposition filed motions tors general rule in motions. presump- are clauses transac- reasonable in commercial tively considering the circumstances sur After sophisticated parties tions are where APA rounding formation of the and the bargaining power. Was- equal and have inclusion serman’s, opponent 645 A.2d at APA, Court deter proving burden of unreasonable- bears the that the clause was reasonable at mined challenging stipu- a party ness. “[T]he the time of formation of the contract and that damages clause ‘must establish lated Therefore, at the time of breach. ” Id. to a application penalty.’ its amounts mo granted Court Barefoot’s omitted). (citation tion the distribution of the and ordered Township Inc. In Wasserman’s of $250,000 Bridgewater’s creditors.7 The Middletown, Jersey Supreme the New Court, appealed to the District is explained that reasonableness dam which concluded that liq- whether a used determine standard ages clause was reasonable enforce damages is enforceable. uidated Jersey Appel under able New law. The uncertainty at or diffi- 645 A.2d appeal. then filed this lants not culty assessing in is test, is element separate but rather an II. making in determination be considered Id. at regarding reasonableness. jurisdiction pur- have this case We over of the intent courts consider 158(d). § Our review suant 28 U.S.C. determining the reason- when parties enforceability of a dam- of the clause, of regardless but ableness of such ages question de as it is a of clause is novo intend, the clause will parties what Krystal re law. See In Cadillac Oldsmo- really if it is Id. penalty. be enforceable Truck, Inc., 631, 142 F.3d 635 bile GMC Wasserman’s, (3d adopted the Cir.1998); Twp. In the court Inc. v. Wasserman’s of in time Middletown, point as to what 137 N.J. 645 A.2d “modern trend” (1994). findings needs to be reasonable. 110 of fact We review is determine the rea- clearly “modern trend” erroneous standard. of either “the time contract at 635. sonableness at Krystal, re 142 F.3d Barefoot, argument, counsel informed 7. At oral Appellees in this case are Bridgewater, deposit being The Trust escrow Fork Bank held in North f/k/a Jersey, Bridge Loan Company Porter of by Appellees’ counsel. Inc., Company, and the Official Committee Creditors. Unsecured 214 may interpreted

formation or at the time of the breach.” Wasserman’s be (citation omitted). Id. “Actual establishing ... reflect on the reasonableness it clause is enforceable if is reasonable at parties’ prediction damages. ‘If the either the time of formation or at the time in damages provided for the contract are See, Wasserman’s, e.g., breach. 645 grossly disproportionate to the actual 107; Naporano A.2d at v. B & P Assocs. sustained, usually harm courts conclude Builders, NJ.Super. 706 A.2d parties’ original expectations were (1998). we need not (quoting unreasonable.’” Wassenaar today decide that issue because the clause Panos, 111 Wis.2d 331 N.W.2d in case points this was reasonable at both (1983)). adopted The court also time. Based the facts (Second) approach of the Restatement the clause reasonable at the time of provides Contracts which that: parties contract formation. The are both [d]amages by party for breach either sophisticated organizations, business may be but agreement They received the advice of counsel. amount that is reasonable bargaining power, had similar although light anticipated or actual loss bargaining position Arena was a better caused the breach and the difficulties highest knew the next bid of proof fixing of loss. A term unrea- had received was $1.25 sonably un- large liquidated damages is million less than Arena’s offer. Addition grounds public policy. enforceable on ally, the actual were hard to de Id. at (quoting 331 N.W.2d 357 Re termine at the time the contract was (Second) 356(1)).8 § statement of Contracts Although formed. been other bids had made, it was not Capital clear what actual dam Corp. Financial MetLife L.P., ages Bridgewater if Arena Washington Avenue Associates 159 would suffer (1999), N.J. 732 A.2d 493 the New breached the APA. It could have been bid, Jersey Supreme explained Court if accept highest further forced to the next analysis proper determining the the those bids remained fact open. even The enforceability liquidated damages liquidated damages only of a that the were $250,000, counsel, “Treating clause. the reasonableness ‘as as Arena’s touchstone,’ [in noted Wasser- was “more than fair.” As the lower courts [the court] difficulty assessing the in approximately

man’s] indicated this was 3.5% damages, parties, Further, purchase price. intention of the the actu- the it was clear damages sustained, ly bargaining al the intent the parties the to make the power validity deposit the all the forfeiture of a parties liquidated affect the dam stipulated damages ages trying of a did clause. Arena was to limit its [It] clause. not, however, any go through it potential consider of those factors loss if could not deal, dispositive, Bridgewater trying and remanded the case....” with the was Wasserman’s, (quoting protect Id. at A.2d in breached. 499 645 to itself case Arena 106-11). Therefore, analy- totality court on the of the at The classified the based totality as of the at the time the contract was sis a circumstances test— circumstances formed, liquidated damages a is the clause was whether reasonable under totality circumstances. reasonable. damages provides The to the as unenforcea- comment Restatement substantial sum is "if, (Second) of to take an extreme it is clear that no ble.” Restatement Contracts occurred, provision fixing § all cmt. loss at has b. also 499. We believe clause was Supreme at the time of breach.9 would find

reasonable reasonable, the factors remain the same Some of this case at the time contract paid did the fact that DJD over spite $1 parties intention of the price formed —the un purchase than the million more bargaining power. Arena seems Arena, on the APA with based der the longer equal that it no had bar suggest all, First of totality of the circumstances. power Bridgewater gaining of the comment section language However, picture. DJD had entered the (Second) provides the Restatement 356 of Bridgewater, by the like was bound losses, no actual there are when APA, not simply and could terms of “fixing a sub liquidated damages clause get agreement out of the without recourse. damages is unenforceable.” stantial sum as no it expired, DJD’s offer had and was (Second) § of Contracts Restatement no longer required buy or Because bid. deposit, cmt. b. The amount of buy price, at a one was bound bid or set light $250,000, is not a substantial sum at potential remained unclear purchase price fact that the was $7 the time of the breach. million; pur is about 3.5% Additionally, Bridgewater in price. chase Jersey Supreme

The New legal fees as a result the breach. curred has ruled on whether a dam Therefore, contrary Appellants’ to the ar is ages clause in commercial contract actu gument, Bridgewater did suffer some non-breaching party reasonable when the $250,000 Bridgewater will al losses. damages.10 no suffers actual is if is enforced thus not receive the clause factor court indicated that no one MetLife mitigated by as it is totality a total windfall of the circum dispositive MetLife, attorney’s at fees incurred.11 analysis. stances 732 A.2d (1997). parties dispute A.2d Nohe dealt with con- 9. The when the breach actual- property. of a residential ly Appellees it was tract the sale occurred: claim Jersey Superior Court held 14 when Arena failed close deal, clause was not it was and the claim that the no because sellers suffered January Bankruptcy enforceable 24 when the Court termi- damages stipulated the amount actual and actuality, In mat- nated the APA. it does not a substantial sum. at 385. expired ter which is used. offer date DJD’s 12, 2005, January no on and therefore it was are not bound lower state court We longer obligated buy property the either on persuasive. and we not find Nohe decisions do Additionally, already date. Vanderbeek had See Co. v. Fireman's Fund Gen. Refractories remaining pur- the amount of the transferred Co., (3d n. Cir. Ins. 337 F.3d 303-04 1 price into on chase escrow 2003). Jersey Supreme Court has The New the evidenced to close which his intention regarding it law made clear that its of the deal. based the terms sophisticated applies business appears it Consensual Plan that Vanderbeek holding parties, specifically limited its and may prohibited bidding. The have been from Wasserman's, to that context. Wasserman’s provided Plan if Arena Consensual Therefore, ap- A.2d at 108. it does not 645 agreement, mem- breached the its applies pear that Wasserman’s consumer property in not bid on the an bers could cases, as the contract in Nohe. contract such Therefore, time, at either no third- auction. purchase party was on or the bound bid explained, the 11. As the Court property. disadvantaged by also the de- creditors were lays Arena The record demonstrated caused. Roblyn the Appellants rely v. De- the creditors lost time value on Nohe monetary N.J.Super. were to receive. velopment Corporation, 296 distributions 216 circumstances, totality damages.

Under the of able In process, though Bridgewater Middletown, even it high- received cited Wasserman’s Inc. v. assets, 238, 249-54, purchase price (1994), er its 137 we hold N.J. 645 A.2d 100 which the proper clause was reasonable at the time addressed method for clauses, evaluating stipulated damages of the breach of rest the fac- enforceability. tors still then stated: favor

Applying principle that “[t]he III. test single validity overall of is whether [stipulated damage] clause is reason- reasons, For the foregoing we will af- totality able under the of circum- firm the District Court’s order enforcing stances,” of validity we address clause. percent five late fee included Panos, contract. Wassenaar DOWD, Judge, District dissenting. (1983). Wis.2d 331 N.W.2d view, I respectfully my dissent. In We find that under that “reasonable- subsequent immediate gener- windfall sale test, five percent ness” late fee is a ating an additional 1.1 million dollars for liquidated damages. valid measure of bankrupt, increase of 15.7% over MetLife, 732 A.2d at 499. transaction, would, the failed pre- under vailing Jersey case precedent, law Clearly, prevailing Jersey under require judicial contrary result to the law, the issue is the reasonableness majority opinion. stipulated enforcement of the under totality of the circum- Capital Corp. Financial MetLife stances. Those circumstances include the Associates, L.P., Washington Ave. million bankrupt windfall to the of 1.1 dol- (1999), N.J. 732 A.2d 493 the New subsequent against lars in the a stipu- sale Jersey Supreme succinctly summa- calling pay- lated for the rized state the law New ment event a breach. respect the enforcement of stipu- Applying the test reasonableness provisions lated damages as it stated in circumstances, totality my it is part as follows: Jersey Supreme view that the New Historically, closely courts have scru- would, law, as a matter of declare that the tinized contract provisions provided forfeiture of the constituted a the payment specific damages penalty and was unenforceable. upon breach. The need for close scruti- I

ny arises from the would reverse direct possibility stipu- final judgment lated be may appellant clauses constitute an entered for the Jef Vanderbeek, frey A. oppressive penalty. requiring Enforceable the return stipu- payment.12 lated clauses are referred “liquidated damages,” while unenforcea- provisions “penalties.”

ble are labeled (citations omitted).

Id. at 498 court was considering MetLife percent

whether a five for pay- late fee mortgage represented

ments on a reason- appellee legal defending fact incurred costs the forfeiture of the Roberts, Appellant.

Edward W. 06-4158. No. Appeals, States Court of

United Third Circuit. AND to Third Circuit

UNITED STATES SECURITIES Pursuant Submitted 34.1(a) 6, 2007. LAR March EXCHANGE COMMISSION April Filed: COMPANY; The INFINITY GROUP Benson; Geoffrey

Geoffrey P. J.

O’Connor; Compa Holding Futures Trust;

ny; L. SLB Charitable Susan

Benson; Trust; Lindsay Spring JGS

er; Bondage Breaker Ministries

Lindsay Bondage Springer; Breaker

Ministries, Third-Party

Plaintiffs Constitution,

The Union States also, See 2004 WL 1126275. i.e., Alaska; Alabama; Arkansas; Ari zona; California; Colorado; Connect

icut; Delaware; Florida; Georgia;

Hawaii; Iowa; Illinois; Indiana;

Kansas; Kentucky; Louisiana; Mas

sachusetts; Maryland; Maine; Michi Minnesota; Missouri;

gan; Mississip

pi; Montana; Carolina; North North

Dakota; Nebraska; Hampshire; New Jersey; Mexico; Nevada;

New York; Ohio; Oklahoma; Oregon;

Pennsylvania; Island; Rhode South Dakota;

Carolina; Tennessee; South

Texas; Utah; Virginia; Vermont;

Wisconsin; Virginia; Wyoming; West

Washington; Federal State District of

Columbia, Third-Party Defendants view, agreed repay- my is not relevant. coun- same conclusion appellant. sel for Brian Barefoot should have reached ment

Case Details

Case Name: Vanderbeek v. Barefoot

Court Name: Court of Appeals for the Third Circuit

Date Published: Apr 5, 2007

Citation: 226 F. App'x 209

Docket Number: 06-1493

Court Abbreviation: 3rd Cir.