Argued: November 17, 2016
Circuit Court-Manchester District Division
Coughlin, Rainboth, Murphy & Lown, P.A., of Portsmouth
(Bradley M. Lown on the brief and orally), for the plaintiff.
Gallagher, Callahan & Gartrell, Professional Corporation,
of Concord (R. Matthew Cairns and Lisa M. Lee on the brief,
and Mr. Cairns orally), for the defendant.
plaintiff, Holloway Automotive Group (Holloway), appeals the
order of the Circuit Court (Michael, J.) ruling that
the liquidated damages clause contained in the parties'
contract is unenforceable. We reverse and remand.
relevant facts follow. Holloway is an authorized franchise
dealer of Mercedes-Benz North America, Inc. (MBUSA), with a
principal place of business in Manchester. On November 15,
2014, the defendant, Steven Giacalone, purchased a new
Mercedes-Benz automobile from Holloway for $71, 630.
time of the purchase, the defendant signed an "AGREEMENT
NOT TO EXPORT" (the Agreement). (Bolding and underlining
omitted.) The Agreement stated that "MBUSA prohibits its
authorized dealers from exporting new Mercedes-Benz vehicles
outside of the exclusive sales territory of North America and
will assess charges against [Holloway] for each new
Mercedes-Benz vehicle it sells . . . which is exported from
North America within one (1) year." Therefore, the
defendant promised "not [to] export the Vehicle outside
North America . . . for a period of one (1) year" from
the date of the Agreement and, if he did so, to pay Holloway
$15, 000 as liquidated damages.
vehicle was subsequently exported within the one-year period.
Holloway sued the defendant, claiming breach of contract and
misrepresentation and seeking liquidated damages in the
amount of $15, 000, plus interest, costs, and attorney's
trial court held a hearing on the merits at which Holloway
acknowledged that MBUSA had not assessed any charges against
it due to the vehicle's export. Nonetheless, Holloway
made an offer of proof, itemizing the damages it may suffer
due to the export of the vehicle by a customer. These damages
include loss of income from maintaining and servicing the
vehicle, future sales of additional vehicles, warranty work,
resale income, financing income, and detriment to the rating
and ranking of the dealership.
the trial court's permission, Holloway submitted a
post-trial supplemental memorandum of law to which it
attached its responses to the defendant's interrogatories
itemizing its potential losses over three years as: $4, 800
in lost income from servicing the vehicle; lost
"referral business, service income, aftersales of
vehicles or products or warranty extensions, [and] potential
resale income"; $1, 969 in lost finance income; $3, 060
in lost lease income; $300 in payment by Mercedes-Benz
"as compensation for reduced risk due to automatic
withdrawal"; and $5, 955 in lost profit "on various
products and services."
trial court found that the Agreement was entered into
"between the parties to protect [Holloway] from a claim
by [MBUSA], " but that MBUSA did not, in fact, charge
Holloway any fees despite the vehicle having been exported.
In addition, the court found that
the amount of $15, 000.00 was a 'guesstimate' of
difficult-to-ascertain damage at the time the parties agreed
to it. . . . In this instance, [Holloway] suggests that the
vehicle might return for maintenance, that there
may be further customer sales, that the plaintiff
may need warranty work on a vehicle (this is
speculative, especially since the liquidated damage agreement
is only in force for one year and this is a new vehicle), and
the potential resale income if the car is traded. .
. . It is difficult to see how maintenance on a new vehicle,
perhaps a couple of oil changes, further sales and warranty
work on a new vehicle, as well as potential resale income,
would be anywhere near $15, 000.00, because of the one year
contract time frame.
court reasoned that "the one year contract period"
had passed, "[i]n retrospect there were no fees charged
by [MBUSA], " and "[o]ther than wild guesses there
[was] certainly no indication of any of the damages
associated with the breach." Thus, because the
"actual losses to [Holloway] during the one-year period
were essentially zero, " the trial court declined to
enforce the liquidated damages clause in the ...