United States District Court, E.D. New York
December 2, 2004.
KOYLUM, INC. Plaintiff,
PEKSEN REALTY CORP., f/k/a Route 25 Calverton Realty Corp., Successor by merger to Ridge Petroleum Realty Corp., and 1677 RIDGE ROAD REALTY CORP., Defendants, and ADNAN KIRISCIOGLU and EROL BAYRAKTAR, Additional Party Defendants.
The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
Presently before the Court is a motion for summary judgment by
the defendant 1677 Ridge Road Realty Corp. ("1677 Ridge" or the
"Defendant") to enforce a liquidated-damages clause against the
plaintiff Koylum, Inc. ("Koylum" or the "Plaintiff") and the
additional party defendants Adnan Kiriscioglu ("Kiriscioglu") and
Erol Bayraktar ("Bayraktar"). The plaintiff and the additional
party defendants cross move for summary judgment.
It is assumed that the parties are familiar with the factual
background of this case, as set forth in the Court's two prior
decisions, dated September 30, 2002 ("September 30, 2002 Order")
and March 17, 2004 ("March 17, 2004 Order"). For the purpose of
clarity, the factual background will be repeated in relevant
part. This case involves a gas station located at 1677 Route 25A,
Ridge, New York ("Premises") and a series of transactions with
its landlords and gasoline supply company. The defendant 1677
Ridge is the current owner of the Premises. It is also the
assignee of all the landlord rights pursuant to a lease dated
January 1, 1994 ("Lease") for the Premises originally between
Ridge Petroleum Realty Corp., as landlord, and R.B.P.
Enterprises, Inc., as tenant. The termination of that Lease by
the landlord was a subject of this lawsuit.
Koylum operated a gas station on the Premises between June 21,
1996 and October 31, 2002 as a result of an assignment of the
Lease. The station, which was a Coastal Refining and Marketing,
Inc. ("Coastal") branded station, was previously operated by
Koylum's assignor, R.B.P. Enterprises, pursuant to two
agreements: (1) the Lease under which Koylum's assignor leased
the Premises from the predecessor in interest of the defendant
Peksen Realty Corp. ("Peksen"); and (2) a Supply Agreement that
fixed the terms under which the operator would purchase its
gasoline supplies from Ocean Petroleum, Inc., which distributed
The Lease includes provisions that are material to the issues
in this case. Initially, the Court notes that the Lease expressly
refers to the Supply Agreement, as follows: "Section 2.10.
Purchase Agreement: means the Agreement dated January 1, 1994
between Ocean Petroleum Inc., as Seller, and Tenant, as
Purchaser, under which Tenant has contracted to purchase all of
its requirements of Gasoline to be sold at the Demised Premises."
(Dft. Ex. B).
Also relevant is Section 7.03, entitled "Purchase of Petroleum
Products" and reads as follows:
Section 7.03. Purchase of Petroleum Products:
(a) In order to induce Landlord to enter into this
Lease, Tenant covenants and agrees that during the
term of this Lease, Tenant shall not nor permit
others to store, handle, sell, offer for sale,
advertise for sale, use or permit to be used upon the
Demised Premises or any part thereof or any premises
adjacent thereto over which Tenant has control any
Gasoline, oil or other petroleum product not supplied
by Seller under the Purchase Agreement.
(b) In furtherance of Tenant's covenants contained in
subsection (a), Tenant agrees to enter into the
Purchase Agreement simultaneously with the execution
of this Lease.
(Dft. Ex. B).
In addition to the Supply Agreement, a Rider was executed on
December 1, 1995 that further delineated the relationship of the
parties. In particular, the rider provided that the tenant could
exercise an option to purchase petroleum from suppliers other
than Ocean, but only under certain circumstances and conditions.
Specifically, the Rider provided that if petroleum was to be
purchased from other suppliers, the product should be transported
It is further agreed that the transport of any and
all petroleum products sold by any supplier from all
terminals in the Long Island and Metropolitan area to
450 Neighborhood Rd., Mastic Beach, County of
Suffolk, State of New York and 1677 Route 25, Ridge,
County of Suffolk, State of New York, shall be made
by National Petroleum Transporters, Inc. at a
transportation rate of .0125 cents per gallon.
(Dft. Ex. B)
The relationship between the landlord and the supplier is
relevant in this case. Peksen and Ocean were affiliated with one
another, in that both are closely held corporations owned by
Refik Peksen and Mine Peksen, who are husband and wife. Mine
Peksen was the Vice President of Ocean, which distributed Coastal
petroleum. Mine Peksen and her husband Refik, who were separated
at the time of the trial, operated a family business which
included Ocean, Peksen, and National Petroleum Transporters, Inc.
Ocean supplied gasoline to the Ridge Station. Mine Peksen was
also an officer of Ridge Petroleum Realty Corp., the prior owner
and landlord of the Ridge Station premises. Ocean was an
authorized distributor for Coastal and sold that brand of product
to Koylum for resale at the Premises, pursuant to the Supply
Agreement. The defendant Peksen is the successor to Ridge
Petroleum Realty Corp., as owner of the Ridge Station property
and as the landlord of Koylum.
Sometime in 1998, Koylum began purchasing non-Coastal gasoline
without complying with the Rider or the Supply Agreement.
Specifically, Koylum did not provide documentation to Ocean on
the prices that were paid for the non-Coastal petroleum and the
products were not transported via National Petroleum
Transporters. By letter dated October 2, 1998, Peksen informed
Koylum that it would terminate the Lease as of midnight October
6, 1998. The termination letter accused Koylum of purchasing
unbranded gasoline and selling it under the Coastal trademark in
violation of the Supply Agreement. The next day, Peksen initiated
dispossess proceedings in the Suffolk County District Court to
evict Koylum from the Premises as a holdover tenant. This
proceedings was stayed by a stipulation between the parties.
Koylum continued to operate the gas station on the Premises
without complying with the agreements. On January 29, 1999, Mine
Peksen wrote to Koylum (Plf. Ex. 40) calling to its attention
certain lease provisions, namely, Sections 5.04(b)(i),
5.04(b)(ii) and 7.03(a). The letter also notified Koylum of
alleged violations of the Supply Agreement, as follows:
By reason of you having stored, handled, sold,
marketed and dispensed gasoline that has been
supplied by someone other than Ocean Petroleum, Inc.
under the Purchase Agreement it had with you; to wit:
as recently as January 26, 1999 when a gasoline
delivery truck of Ark Transportation, tractor number
TX6834, trailer number 731891 was observed delivering
gasoline to your station at about 5:30 p.m. This
delivery is not the first. Moreover, on at least
another occasion and on October 7, 1998, you had
8,500 gallons of gasoline delivered by Mystic Bulk
Carriers, Inc. which was purchased from Benit Fuel
Sales and Services which you sold from the premises.
Accordingly, notice is hereby given that on two days
from the date of this letter your lease shall
terminate. You are thereby expected to vacate the
premises and remove all of your personal property.
In the interim, you should be further advised that
the underground storage tanks and related piping, the
gasoline dispensing pumps and signs are not owned by
you and you have no right to use that equipment for
any purpose whatsoever, including the storage,
supply, sale or offering for sale gasoline you
purchase form any source other than Ocean Petroleum,
Moreover, the sign is owned by Ocean Petroleum, Inc. and by
selling gasoline provided by another source as Coastal gasoline
you may be violating Coastal's trademark rights.
Therefore you are required to immediately cease and desist from
any use of the equipment at the premises.
At no time did Koylum request permission from Ocean to sell
gasoline other than Coastal gas. Notwithstanding this failure to
obtain consent, Koylum purchased gas from other distributors,
such as Benit, T. Hutchinson Trading Corp., Ercat Corp. and
Nassau and Suffolk Fuel Oil Corp.; it stored the non-Coastal
gasoline at the Ridge Station when it had Coastal markings; and
then unilaterally removed the Coastal markings. The record is
replete with documents showing Koylum's purchase of gasoline from
distributors other than Ocean. With regard to non-Coastal
purchases, no documents of any kind, as to price or otherwise,
were ever sent by Koylum to Peksen or Ocean, in violation of the
Rider provisions. Further, none of these deliveries were made by
National Petroleum Transporter Inc. Failure to use National
Petroleum Transporters to deliver the non-Coastal gasoline was
also a violation of the Rider provisions.
On May 6, 1999, Peksen Realty Corp. sold the premises to 1677
Ridge, which is the present owner of the premises and the
landlord of Koylum. Frank Mascolo ("Mascolo") is the principal
owner and President of 1677 Ridge. He also operates three other
gasoline stations and is a Coastal brand wholesale petroleum
distributor. At the time of the purchase, Mascolo knew that the
Supply Agreement was in existence and that it constituted a
franchise agreement between Koylum and Ocean.
After purchasing the property, Mascolo filed a petition in
Suffolk County District Court to oust Koylum as a holdover tenant
and also entered into negotiations with Koylum. Mascolo offered
Koylum the opportunity to stay at the Premises with a new
agreement if he would brand the station as a Coastal station.
However, the negotiations failed; Koylum insisted on keeping the
terms in the existing Supply Agreement and Rider and refused to
enter into a new franchise agreement. That holdover petition was
dismissed by the court in July of 1999.
On July 7, 1999, Koylum filed this suit, seeking, among other
things, the right of first refusal to purchase the Premises.
After a bench trial, the Court found in its September 30, 2002
Order that Koylum materially breached the Supply Agreement and
the Lease by selling non-Coastal gasoline under Coastal signage,
among other reasons. Therefore, the Court ruled that Koylum had
no right of first refusal to purchase the Premise and Peksen had
the right to terminate the lease. On October 31, 2002, Koylum
vacated the Premises.
Thereafter, 1677 Ridge moved for summary judgment seeking
liquidated damages under the Lease. 1677 Ridge sought to enforce
Article III, Section 3.02 of the Lease, which provides for rent
during any holdover period. Under the terms of Section 3.02, if a
tenant remains in possession after the expiration date, "the
annual rate of Minimum Rent and Additional Rent shall be two (2)
times the annual rates of Minimum Rent and Additional Rent which
are in effect during the month proceeding the Expiration Date
which Landlord and Tenant acknowledge is the fair value of the
use and occupancy of the Demised Premises during such period."
Under the Lease, the minimum rent is the sum of $4,000 per
month for the period October 1998 through May 31, 1999 and the
sum of $4,500 per month for the period June 1, 1999 through
October 31, 2002. In addition, Article IV, Section 4.02(b) of the
Lease defines additional rent as "a sum equal to 1/12 of the
amount, as estimated from time to time by the landlord, of all
real estate taxes. . . ."
On March 17, 2004, the Court found that Koylum was a holdover
tenant from October 6, 1998 to October 31, 2002, the date that
Koylum vacated the Premises. However, the Court deferred decision
on the issue of whether the liquidated-damages clause in Section
3.02 was enforceable or was an unenforceable penalty, and
directed the parties to file supplemental briefs on the issue by
April 21, 2004.
A. Standard of Review
A motion for summary judgment should be granted only when
"there is no genuine issue as to any material fact and . . . the
moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); Miller v. Wolpoff & Abramson, L.L.P.,
321 F.3d 292, 300 (2d Cir.), cert. denied, 124 S.Ct. 153,
157 L.Ed.2d 44 (2003). The moving party bears the burden of
establishing the absence of a genuine issue of material fact.
See United States v. Collado, 348 F.3d 323, 327 (2d Cir.
2003). Once the moving party has met this burden, the non-moving
party "must set forth specific facts showing that there is a
genuine issue for trial." Fed.R.Civ.P. 56(e). When deciding a
motion for summary judgment, the court must view the evidence in
the light most favorable to the non-moving party and must draw
all permissible inferences from the submitted affidavits,
exhibits, interrogatory answers, and depositions in favor of that
party. See Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).
However, a party's "bald assertion," completely unsupported by
evidence, is not sufficient to overcome a motion for summary
judgment. Carey v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991).
Summary judgment is appropriate in cases involving unambiguous
contracts because contract interpretation is a matter of law, not
fact. Harris Trust and Sav. Bank v. John Hancock Mut. Life Ins.
Co., 970 F.2d 1138, 1147-48 (2d Cir. 1992) aff'd, 510 U.S. 86,
126 L. Ed. 2d 524, 114 S. Ct. 517 (1993). "Ascertaining whether
or not a writing is ambiguous is a question of law for the trial
court." Sayers v. Rochester Tel. Corp. Supp. Mgmt. Pension
Plan, 7 F.3d 1091, 1094 (2d Cir. 1993). If the Court determines
that the contract is unambiguous, it will assign the plain and
ordinary meaning to each term and interpret the contract without
the aid of extrinsic evidence. Int'l Multifoods Corp. v.
Commercial Union Ins. Co., 309 F.3d 76, 83 (2d Cir. 2002)
(citation omitted). However, "when the provisions of the contract
are susceptible to conflicting constructions and when there is
also relevant extrinsic evidence of the parties' actual intent,
the meaning of the provisions becomes an issue of fact barring
summary judgment." Williams and Sons Erectors, Inc. v. South
Carolina Steel Corp., 983 F.2d 1176, 1183-84 (2d Cir. 1993).
B. The Liquidated-Damages Clause
It is common for contracting parties to determine in advance
the amount of damages due in the event of a future breach of an
agreement by including a liquidated-damages clause. United Air
Lines, Inc. v. Austin Travel Corp., 867 F.2d 737, 740 (2d Cir.
1989). Whether or not a liquidated-damages clause will be
enforced is a question of law to be decided by the court. DAR &
Assocs., Inc. v. Uniforce Servs., Inc., 37 F. Supp. 2d 192, 201
(E.D.N.Y. 1999). If the clause "is intended by the parties to
operate in lieu of performance, it will be deemed a
liquidated-damages clause and may be enforced by the courts. . . .
If such a clause is intended to operate as a means to compel
performance, it will be deemed a penalty and will not be
enforced." Brecher v. Laikin, 430 F. Supp. 103, 106 (S.D.N.Y.
Under New York law, it is well-established that courts will
enforce a liquidated-damages clause as long as it is not
unconscionable or contrary to public policy. Truck
Rent-A-Center, Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420,
424-25, 361 N.E.2d 1015, 1018, 393 N.Y.S.2d 365, 369 (1977); see
also Morgan Servs., Inc. v. Lavan Corp., 59 N.Y.2d 796,
451 N.E.2d 480, 464 N.Y.S.2d 733 (1983). A clause fixing damages in
the event of a breach will be enforced if: (1) the liquidated
amount is a reasonable estimate of potential damages, that is,
not plainly or grossly disproportionate to the possible loss; and
(2) the estimated actual damages are difficult to determine, or
are not readily ascertainable. Leasing Service Corp. v.
Justice, 673 F.2d 70, 73 (2d Cir. 1982); Howard Johnson Int'l
Inc. v. HBS Family, 1998 U.S. Dist. LEXIS 11040 at *13-14
(S.D.N.Y. July 21, 1998). "Both the reasonableness of the
liquidated damages and the certainty of actual damages should be
measured as of the time the parties entered the contract, not as
of the time of the breach." DAR & Assocs., Inc.,
37 F. Supp. 2d at 200-01 (E.D.N.Y. 1999) (citing Vernitron Corp. v. CF 48
Assocs., 104 A.D.2d 409, 478 N.Y.S.2d 933, 934 (2d Dep't 1984)).
Under the second prong, courts will not enforce a clause that
is grossly disproportionate to the estimated actual loss as it is
a penalty that is contrary to public policy. JMD Holding Corp.
v. Congress Fin. Corp., 309 A.D.2d 645, 765 N.Y.S.2d 848 (1st
Dep't 2001); see, e.g., Hanover Direct, Inc. v. T.R.
Acquisition Corp., 309 B.R. 830, 837 (S.D.N.Y. 2003). A clause
setting an amount much higher than the estimated actual amount
does not provide fair compensation, but secures "performance by
the compulsion of the very disproportion." Truck Rent-A-Center,
Inc., 41 N.Y.2d at 424.
Estimating actual damages at the time of contract formation may
be difficult. "The utility of liquidated damages clauses is
manifest in those cases where calculation of the amount of actual
loss is difficult, if not impossible; in such case, the parties
may agree in advance of the breach or default as to the amount of
damages to be paid thereupon, rather than requiring proof and an
assessment thereof in some future proceeding." LeRoy v. Sayers,
217 A.D.2d 63, 69, 635 N.Y.S.2d 217 (1st Dep't 1995).
Koylum argues that it is possible to estimate the actual
damages that have been suffered by the landlord and that such
damages are limited to the amount of rent owed to the landlord
under the Lease. Koylum also argues that it is proper to use the
rent as an estimate of future actual damages because the rent
schedule was established through negotiating what the parties
believed to be the fair market rental value for the Premises
throughout the term of the Lease. In support of this argument,
Koylum relies on Hanover Direct, which held that a landlord's
actual damages under a commercial lease could be estimated by
looking at the amount of rent owed under the lease, and that a
double rent liquidated-damages clause is grossly disproportionate
to those actual damages. 309 B.R. at 837-38.
Koylum's reliance on Hanover Direct, is misplaced for several
reasons. Hanover Direct involved a commercial lease of property
for a term of less than five years. Id. at 832. The Lease at
issue in this case was for a duration of almost twenty years. In
addition, the lease in Hanover Direct only covered possession,
while Koylum's lease is expressly tied to the Supply Agreement.
Under the terms of this agreement, Koylum was required to carry
out several obligations beyond merely paying the rent under the
Lease. Koylum was obligated to: (1) purchase all of its
requirements of petroleum products from Ocean; (2) operate under
Ocean's designated brand name, trademark, logo, and insignia; and
(3) utilize National Petroleum Transporters, Inc. to transport
any and all petroleum products sold to the premises. The
existence of these additional agreements compels the conclusion
that the rent schedule established in the Lease was not solely
based on the fair market rental value of the property. Under
these circumstances, the Court finds that the liquidated-damages
clause passes the second prong of the test in that estimating
actual damages would have been difficult, if not impossible, at
the time the parties entered into the agreement.
Turning to the first prong, in order for a court to enforce a
liquidated-damages clause, the liquidated amount must bear a
reasonable proportion to the probable loss. Leasing Service
Corp. v. Justice, 673 F.2d 70, 73 (2d Cir. 1982); Truck
Rent-A-Center, 41 N.Y.2d at 425, 393 N.Y.S.2d 365, 361; Howard
Johnson Int'l Inc., 1998 U.S. Dist. LEXIS 11040 at *13-14. If
"the amount fixed is plainly or grossly disproportionate to the
probable loss, the provision calls for a penalty and will not be
enforced." Truck Rent-A-Center, 41 N.Y.2d at 425,
393 N.Y.S.2d 365, 361. On the other hand, courts will enforce a
liquidated-damages clause when the liquidated amount reasonably
measures the anticipated harm. Id. at 425; see also
Vernitron Corp., 104 A.D.2d at 409-10, 478 N.Y.S.2d at 934.
"Where there is no evidence of a gross deviation from actual
damages, courts will enforce a liquidated damages clause calling
for double or even treble rent when a tenant fails to timely
vacate premises." Hanover Direct, Inc., 309 B.R. at 837 (citing
Federal Realty L.P. v. Choices Women's Med. Ctr.,
289 A.D.2d 439, 735 N.Y.S.2d 159 (2d Dep't 2001) (granting summary judgment
enforcing a treble-rent liquidated-damages clause against
non-vacating tenant, absent evidence that sum was grossly
disproportionate to the actual damages); see also Thirty-third
Equities Company, LLC v. Americo Group, Inc., 294 A.D.2d 222,
222, 743 N.Y.S.2d 10, 10 (1st Dep't 2002) (enforcing a
liquidated-damages clause obligating the holdover tenant to pay
two and one-half times the monthly rent); Bates Adver. USA, Inc.
v. 498 Seventh, LLC, 291 A.D.2d 179, 181, 739 N.Y.S.2d 71, 73
(1st Dep't 2002) (upholding a liquidated-damages clause calling
for a one-half rent abatement per day if the landlord fails to
make timely improvements of the premises).
The parties disagree as to whether the Supply Agreement should
be considered a factor in determining the reasonableness of the
liquidated-damages clause. Koylum argues that 1677 Ridge has no
right to enforce the Supply Agreement because it purchased the
Premises from Peksen after Ocean terminated the Supply Agreement,
and thus Peksen had no rights to assign to 1677 Ridge. However,
the reasonableness of a liquidated-damages clause should be
measured as of the time the original parties entered into the
contract. DAR & Assocs., Inc., 37 F. Supp. 2d at 200-01
(E.D.N.Y. 1999). The fact that Koylum was in breach of the Supply
Agreement when 1677 Ridge purchased the Premises and assumed the
Lease should not affect the reasonableness of the
liquidated-damages clause. Therefore, the Court agrees with the
Defendant that in determining the reasonableness of the
liquidated-damages clause, the Supply Agreement must be
considered together with the terms of the Lease.
Moreover, as stated above, the Lease and the Supply Agreement
are inextricably linked. For example, the Lease and the Supply
Agreement provided for cross defaults in that "any default of the
terms of this [Supply Agreement] shall be considered a default
under the terms of that certain lease agreement dated January 1,
1994 for the subject premises. Any default under the terms of the
lease agreement shall be construed to constitute a default there
under [the Supply Agreement]." (Dft. Ex. J ¶ 1). This type of
cross default is exactly the scenario that occurred between the
parties. When both the Lease and the Supply Agreement are read
together, it appears that the parties intended the
liquidated-damages clause to determine the fair and reasonable
future rent and to compensate the landlord for the loss of the
right to supply gasoline to the gasoline station in the event of
a holdover by the tenant.
General industry standards or customs may also be helpful in
deciding whether a liquidated-damages clause is reasonable. See
M. Viaggio & Sons, Inc. v. New York, 114 A.D.2d 939, 941,
495 N.Y.S.2d 680, 681 (2nd Dep't 1985) (upholding a
liquidated-damages clause by looking at general industry
standards for profit and overhead); Bates, 291 A.D.2d at 181,
739 N.Y.S.2d at 73 (explaining that rent abatement is commonly
used to ensure landlords make timely improvements to the
leasehold). Here, the Defendant contends that the double rent
clause was customary:
Leases for gasoline stations routinely provide that
liquidated damage provisions in an amount normally of
200% or more of the minimum and additional rent
especially in circumstances in which the landlord
either has the right to supply gasoline or designate
a supplier of gasoline to the premises, which
gasoline is to be purchased for him to operate the
premises as a gasoline service station.
(Dft. Aff. ¶ 5).
Koylum does not refute the Defendant's assertion that double
rent provisions are customary under these circumstances, but
argues that 1677 Ridge has suffered no damage from Koylum's
two-year holdover. However, the Defendant submits that if it had
been supplying gasoline to the station on the Premises it would
have been able to earn an approximate profit of 3 cents per
gallon. There is a dispute between the parties as to whether the
property was selling 60,000 or 120,000 gallons of gasoline per
month, but in either case it appears that the landlord would be
realizing a profit from the premises in addition to the rent owed
under the Lease.
Moreover, Koylum has adduced no evidence that the
liquidated-damages clause is a gross deviation from actual
damages. Although the reasonableness of the liquidated-damages
clause is to be measured at the time the parties enter into the
contract, a comparison of actual damages and liquidated damages
is helpful to the court in determining whether the amount is
reasonable. See Federal Realty L.P., 289 A.D.2d at 441,
735 N.Y.S.2d at 161 (2d Dep't 2001); see, e.g., Norwalk Door
Closer Co. v. Eagle Lock & Screw Co., 153 Conn 681, 220 A2d 263
(1966). Koylum argues that the liquidated-damages clause should
not be enforced because the Defendant has been sufficiently
compensated throughout the holdover period with the minimum
monthly rental payments. Koylum submitted an affidavit from an
appraiser that estimated the rental value of the property at
approximately $4,500 per month, an amount equal to the minimum
rent set forth in the Lease. Koylum also contends that the
Defendant could not possibly suffer any damages under the
Purchase Agreement because it was entitled to purchase petroleum
from other sources under the terms of the agreement. The Court
finds that this line of reasoning does not refute the Defendant's
assertions, but instead, disputes the Court's September 30, 2002
Order, which found that Koylum had materially breached the Supply
On the other hand, the Defendant presented specific evidence
alleging that the liquidated-damages clause was not a gross
deviation from actual damages, but rather a reasonable measure
designed to compensate the landlord for the loss of rent under
the Lease and profits under the Supply Agreement. The affidavits
offered by 1677 Ridge demonstrate that under the Supply Agreement
the landlord could expect a profit of approximately $3,600 per
month if the station were selling 120,000 gallons of gasoline a
month. 1677 Ridge also presented evidence that the current
tenant's rent is $6,000 per month. When combined, the potential
damage add up to $9,600 per month. This amount is not a gross
deviation from the amount of liquidated damages in the Lease,
which are approximately $11,800 per month. In light of the highly
volatile retail gas market and the unpredictable commercial real
estate market, the Court finds that this double rent provision is
not plainly or grossly disproportionate to the estimated probable
Consequently, the Court concludes that the liquidated-damages
clause was a reasonable estimate of the landlord's potential
damages from the Koylum's use and enjoyment of the premises as a
holdover tenant. Under the terms of the Lease, the Supply
Agreement was inextricably linked to the Lease and the
liquidated-damages clause calling for double rent in the event of
a holdover. The Court also finds that the amount of the
Defendant's prospective actual damages are not a gross deviation
from the amount of liquidated damages. Therefore, the Court
grants the motion of the Defendant for summary judgment and finds
that the liquidated-damages clause is enforceable.
Based on the foregoing, it is hereby
ORDERED, that 1677 Ridge's motion for summary judgment is
GRANTED; and it is further
ORDERED, that the cross-motion by Koylum, Kiriscioglu, and
Bayraktar for summary judgment is DENIED; and it is further
ORDERED, that the Defendant's counsel is directed to serve
and file a proposed judgment with notice of entry on or before
December 23, 2004.
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