Summary
The Appellate Division, First Department affirmed in part and dismissed in part a Supreme Court order regarding a dispute between spouses over a confidentiality agreement. The court upheld the denial of the husband's claim for liquidated damages, ruling that the provision functioned as an unenforceable penalty because he failed to prove actual, nonspecifiable losses. The wife's cross-appeal was dismissed for failure to perfect, and the trial court's refusal to award counsel fees was affirmed as a proper exercise of discretion.
Topics
Practice areas
Questions Presented
- Whether the husband is entitled to liquidated damages under the confidentiality agreement.
- Whether leave to amend the complaint should be granted.
- Whether the husband is entitled to attorney‑fee awards.
Holdings
- The husband is not entitled to liquidated damages because he failed to show any nonspeculative actual damages; the liquidated‑damages provision is an unenforceable penalty.
- Leave to amend the complaint was properly denied because the proposed second amended complaint was devoid of merit.
- The husband is not entitled to attorney‑fee awards because he was not the prevailing party on the motion.
Key quotations
“Under these circumstances, the liquidated damages provision calls for "an unenforceable penalty" (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 379-380 [2005]; see also Truck Rent‑A‑Ctr. v Puritan Farms, 41 NY2d 420, 425 [1977]).” (N/A)
Factual background
Eric Rosenfeld and Rosanna Galvano Rosenfeld were parties to a confidentiality agreement. The wife’s former counsel disclosed confidential information to a non‑party, allegedly breaching the agreement. The husband sought liquidated damages, amendment of his complaint to add a breach‑of‑contract claim, and attorney‑fee awards.
Procedural history
The Supreme Court, New York County denied the husband’s motion for damages, denied his motion to amend the complaint, and denied his request for counsel fees. The husband appealed those denials; the Appellate Division affirmed the lower court’s order.