Peter Schmidt v. Steven Wolhandler

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2019-0470, Peter Schmidt v. Steven
Wolhandler, the court on April 1, 2020, issued the following
order:

To the extent that the defendant, Steven Wolhandler (the buyer),
requests an “immediate Stay of Enforcement of the trial court’s decision and
judgment” in his notice of appeal, the request is denied. Having considered the
parties’ briefs and the record submitted on appeal, we conclude that oral
argument is unnecessary in this case. See Sup. Ct. R. 18(1).

The buyer appeals an order of the Circuit Court (Gleason, J.), entering
judgment for the plaintiff, Peter Schmidt (the seller), on the seller’s small claim
action seeking to recover the $5,000 deposit that the buyer had agreed to pay
when the parties entered into a real estate purchase and sale agreement. We
vacate and remand.

In reviewing a trial court’s decision rendered after a trial on the merits,
we uphold its factual findings and rulings unless they lack evidentiary support
or are legally erroneous. O’Malley v. Little, 170 N.H. 272, 275 (2017). We do
not decide whether we would have ruled differently than the trial court, but
rather, whether a reasonable person could have reached the same decision as
the trial court based upon the same evidence. Id. Thus, we defer to the trial
court’s judgment on such issues as resolving conflicts in the evidence and
determining the weight to be given evidence. Id. Nevertheless, we review the
trial court’s application of the law to the facts de novo. Id.

On appeal, the buyer argues that the trial court erred by concluding that
the liquidated damages provision in the parties’ agreement was enforceable.
We review the trial court’s interpretation of the agreement de novo. Orr v.
Goodwin, 157 N.H. 511, 514 (2008). When interpreting a written agreement,
we give the language used by the parties its reasonable meaning, considering
the circumstances and the context in which the agreement was negotiated and
reading the document as a whole. Id.

“Before a liquidated damages clause will be enforced, three conditions
must be met: (1) the damages anticipated as a result of the breach are
uncertain in amount or difficult to prove; (2) the parties intended to liquidate
damages in advance; and (3) the amount agreed upon must be reasonable and
not greatly disproportionate to the presumable loss or injury.” Id.; see Shallow
Brook Assoc’s v. Dube, 135 N.H. 40, 46 (1991); see also Langlois v. Maloney, 95 N.H. 408, 412-13 (1949). Only the third condition is at issue in this case.

The third condition “requires that the amount stipulated was a
reasonable one, that is to say, not greatly disproportionate to the presumable
loss or injury.” Orr, 157 N.H. at 515 (quotation omitted). “[W]e have adopted a
two-part test for assessing the reasonableness of the amount stipulated
whereby we first judge whether the provision was a reasonable estimate of
difficult-to-ascertain damage at the time the parties agreed to it.” Id. (quotation
omitted). “If it is a reasonable estimate, we must then conduct a retrospective
appraisal of the liquidated damages provision, and if the actual damages turn
out to be easily ascertainable, we must then consider whether the stipulated
sum is unreasonable and grossly disproportionate to the actual damages from
a breach.” Id. “If so, the liquidated damages provision will be deemed
unenforceable as a penalty, and the aggrieved party will be awarded no more
than the actual damages.” Id. “Thus, even if the liquidated sum is reasonable
in light of the anticipated or presumable loss, the provision will not be enforced
if the actual loss to the party is minimal and easy to prove.” Id. (quotation
omitted). As the party alleging that the liquidated damages amount is
unreasonable, the defendant bears the burden of proof. See id. In a land sale
contract, the proper measure of damages is the seller’s loss of bargain; that is,
the difference between the contract price and the actual value of the real estate
at the time of breach, id. at 516, “plus other special damages as may have
resulted from the . . . breach,” Randall v. Riel, 123 N.H. 757, 760 (1983).

In the instant case, the buyer does not argue that the liquidated
damages provision was an unreasonable estimate of difficult-to-ascertain
damages at the time the parties agreed to it. See Orr, 157 N.H. at 516; see also
Dube, 135 N.H. at 49. Thus, we assume without deciding that the first
consideration is satisfied.

As to the second consideration, the retrospective appraisal of the
liquidated damages provision, here, the trial court found only that “it is more
likely that [the seller] sustained damages.” The trial court made no
determinations as to whether those damages are easily ascertainable or
whether the stipulated sum is unreasonable and grossly disproportionate to
them. See Orr, 157 N.H. at 516; see also Randall, 123 N.H. at 760. Because
the trial court failed to apply the applicable law and make the requisite factual
findings, we vacate its decision and remand for further proceedings consistent

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with this order. See Randall, 123 N.H. at 760. In light of our decision, we
decline to address the buyer’s remaining arguments.

Vacated and remanded.

Hicks, Bassett, Hantz Marconi, and Donovan, JJ., concurred.

Timothy A. Gudas,
Clerk

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