Question of Fact Preclude Award of Summary Judgment Enforcing Liquidated Damages Clause

On September 28, 2021, the First Department issued a decision in ALQ, LLC v. Kane, 2021 NY Slip Op. 05071, holding that questions of fact regarding whether a liquidated damages clause was grossly disproportionate to the plaintiff’s actual damages precluded an award of summary judgment enforcing the clause, explaining:

[D]efendant raised issues of fact as to whether the liquidated damages claimed by plaintiff, representing accelerated rent over the remainder of the lease, were grossly disproportionate to its actual damages and as to whether certain items were improperly calculated. Plaintiff failed to submit evidence rebutting defendant’s calculation, which is especially significant given that it is undisputed that plaintiff has re-let the premises. Therefore, we remand for a hearing to determine the portion, if any, of plaintiff’s claimed post-eviction damages that constitutes a penalty over and above the actual amounts to which plaintiff is entitled under the lease, as well whether, as defendant contends, plaintiff is not entitled to the damages it claims because it elected to proceed under paragraph 26.02 of the lease, rather than paragraph 26.01, thereby waiving its remedy under the latter.

(Internal citations omitted).

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