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Morrocco v. Limetree Enterprises

March 24, 2008


On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Essex County, Docket No. DC-29816-06.

Per curiam.


Submitted February 25, 2008

Before Judges S. L. Reisner and Gilroy.

Plaintiff appeals from the March 13, 2007, order of the Special Civil Part, which dismissed his complaint on motion for judgment at the conclusion of a bench trial. We affirm.

Defendant is engaged in the business of providing musical entertainment, including bands for wedding parties. On June 6, 2003, plaintiff entered into a one-page written contract with defendant to provide a band known as "Cashmere" for plaintiff's daughter's wedding scheduled for August 14, 2004. The contract required plaintiff to pay a total price of $10,000: $3,300 on signing of the contract; a like sum ninety days prior to the wedding; and the balance fourteen days prior to the event.

The contract contained several sections that were set off from each other by large block print, specifying the contents of each section. The first section was captioned: "NON-REFUNDABLE DEPOSIT: BALANCE DUE." Under that caption, the contract provided in pertinent part: "Once you sign the contract the deposits are not refundable for any reason." Under another heading entitled "CANCELLATION OF CONTRACT: LIQUIDATED DAMAGES," the contract provided in pertinent part:

In addition, You understand that the service provided by the Orchestra/Performers is unique and that the Orchestra/Performers makes arrangements to provide music a substantial time before the Date of the Engagement. You understand that the Orchestra/Performers will engage musicians to appear on the Date of Engagement. If you cancel this contract, the Orchestra/Performers will suffer damages because of its obligation to those musicians. These damages are difficult to measure. Therefore, if You cancel this contract at any time up to thirty-one (31) days before the Date of Engagement, the Orchestra/Performers has the right to keep the deposits as liquidated damages to compensate the Orchestra/Performers for expenses and losses which result from cancellation of Contract by You.

On July 24, 2003, plaintiff notified defendant in writing that his daughter's wedding was cancelled and requested a refund of his $3,300 deposit. Defendant did not return the deposit.

On October 28, 2004, although plaintiff never received a refund of his deposit on the original contract, plaintiff entered into a second contract with defendant to provide the same band for his daughter's wedding, then scheduled for October 22, 2005. The second contract was identical in form and content with the first contract, except for the amount to be paid by plaintiff and the scheduled date of the wedding. The second contract required plaintiff to pay defendant $12,000, with $4,000 paid as a deposit. On February 10, 2005, plaintiff sent defendant a letter canceling the second contract and requesting a return of the $4,000 deposit.

On September 19, 2006, after defendant refused to return both deposits, plaintiff filed a complaint in the Special Civil Part, seeking a return of the two deposits.*fn2 At conclusion of the trial, Judge John Kennedy rendered an oral opinion, granting defendant's motion for judgment, determining that the non-refundable deposit provision of the two contracts was valid and enforceable. In making his decision, the judge stated in relevant part:

The plaintiff says that keeping a nonrefundable deposit, even though he signed the contract, even though he read the contract, even though he understood the contract, he claims that it is nonetheless an invalid penalty.

There is a difference between liquidated damages and an invalid penalty, and the case of Westmont Country Club v[]. Ka[m]eny, . . . 82 N.J. Super. 200[] [(App. Div. 1964)], really spells out the difference. And in that case in an opinion by Judge Collester the [c]court noted that liquidated damages is a sum a party to a contract agrees to pay. If he breaks some promise in which having been arrived at, at a good faith effort to estimate in advance the actual damages that will probably ensue from the breach is legally recoverable as agreed damages if a breach occurs. Penalty, however, is a punishment, has no relation whatsoever to the amount of damages somebody suffers and the threat is designed to prevent a breach.

The [c]court went on to say that an agreement made in advance of breach fixing the damages therefore is not enforceable as a contract and does not affect the damages recoverable for a breach unless, A.) the amount so fixed a reasonable forecast of just compensation for the harm that is caused by the breach, and B.) the harm [that ...

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