CUMMINGS PROPERTIES, LLC v. DARRYL C. HINES., 201 N.E.3d 295 (2022)

Citation: CUMMINGS PROPERTIES, LLC v. DARRYL C. HINES., 201 N.E.3d 295 (2022)
Parent Document: CUMMINGS PROPERTIES, LLC v. DARRYL C. HINES., 201 N.E.3d 295 (2022)
Jurisdiction: Massachusetts (state)
Effective Date: 2022-12-05
Original Source: https://www.courtlistener.com/opinion/10271850/cummings-properties-llc-v-darr... ↗

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The award of liquidated damages here cannot stand under these principles. The acceleration clause permits Cummings to retake possession of the premises, relet it and collect rent from the new tenant, and recover all the remaining rent owed by MCO, without having to account for the rent received from the new tenant during the term of the original lease. A provision such as this bears no reasonable relationship to expected damages and is thus unenforceable as a penalty. See 22 Am. Jur. 2d Damages § 545 (2013) (acceleration clause is penalty "if it allows one party to repossess and resell while still collecting the entire unpaid rental for the rest of the term from the party in default"). In so concluding, we do not engage in an impermissible "second look" at the circumstances at the time of breach. Because the acceleration clause allows Cummings to repossess and relet the premises, then at the time of contract formation a reasonable estimate of expected damages would have included either some accounting to MCO for any rent received from a new tenant or some discounting of the stipulated damages to reflect the likelihood of reletting. See Ultra Group of Cos. v. S&A 1488 Mgt., Inc., 357 Ga. App. 757, 760 (2020) (liquidated damages provision "was not a reasonable pre-estimate of the probable loss resulting from a breach" where it did not take into account possibility of rerenting). Cf. TAL Fin. Corp., 446 Mass. at 432 ("Failing to provide any recognition for the type, or timing, of the default . . . tends to indicate that the provision's intended purpose was not to estimate the different types of damages that might arise from a future default, but to penalize for any failure . . . ."). Instead, the acceleration clause requires MCO to pay the full five years of rent owed Page 34

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