“They say marriages are made in heaven. But so is thunder and lightning.”
Bride-to-be Jennifer Corona contracted with The Architects Golf Club in May 2012 to host her wedding reception. The terms were simple enough.
The club agreed to make available its catering hall in Lopatcong, New Jersey, and to provide the food and beverages. Corona agreed to pay a pre-set amount, and made three deposit payments pursuant to the contract.
The wedding was originally to take place in July 2013. Alas, and perhaps with the heavenly thoughts of Dirty Harry’s alter ego on her mind, Corona postponed it by one year. The club accommodated the change.
Then, in January 2014, six months before the rescheduled date, she alerted the club her wedding was not to be after all.
Relying on the contract’s “Cancellation” clause, the club not only retained the deposit, but billed Corona for the full contract amount, just as if her matrimonial bells had actually rung. Corona proceeded to the Superior Court of Warren County, New Jersey, not as alternative wedding venue, but to recover the thousands she had deposited with the club.
The contract’s “Cancellation” clause plainly supported the actions taken by the defendant club. It began rather ominously by suggesting that love is legally irrelevant and that Corona’s nuptials should have gone forward because “Cancellation under any circumstances is not acceptable”.
For those who failed to grasp the message, the form contract continued: “in addition to forfeiting all deposits, the Patron will remain responsible for paying the entire balance of the contract price for the Event even if the Event does not occur.”
This plain language was enough for the New Jersey trial judge. On cross-motions for summary judgment, he ruled that Corona “twice breached the contract,” and wholly rejected her argument that paying the entire price of a wedding that did not occur was disproportionate to the actual damages suffered by the club, and operated as a penalty.
The judge pronounced the non-wife in breach of a “clear and unambiguous” contract, one that must be enforced as written.
Not apparent from the record is whether the trial judge would have likewise enforced an unambiguous contract provision requiring the Patron to cede title to his home, car, 401(k) account, and dog in the event of cancellation.
Hell having no fury like her, Corona appealed.
The New Jersey appellate court determined that New Jersey law (like Illinois), holds a liquidated damages clause is enforceable if it comprises a reasonable forecast of the damages resulting from the breach. However, a clause imposing additional damages comprises an unenforceable penalty. (Compare GK Development, Inc. v. Iowa Malls Financing Corp., 2013 IL App (1st) 112802, ¶47 (“A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty” (quoting Restatement (Second) of Contracts § 356 (1979)).
Applying these principles to the Corona wedding that wasn’t, the appellate court refused to require Corona to pay just as much as though the wedding was held, the food consumed, and the bar emptied.
The defendant “was obviously spared incurring this cost,” the court noted, and accordingly, “the liquidated damages clause is untethered to any reasonable basis for determining the actual economic loss defendant may have sustained” after Corona canceled the contract six months in advance.
The unpublished decision invalidating the contract served the dual purpose of enabling the still single Corona to recover her deposit, while striking a blow against the rote enforcement of penalty provisions just because they are phrased unambiguously. Corona v. Stryker Golf, LLC d/b/a The Architects Golf Club, No. A-2956-14T3 (N.J. App. Div. Mar. 20, 2017).
After postponing and then abandoning her wedding plans, the appellate court likely sensed Jennifer Corona had been through enough. It determined that forcing her to provide the golf club with a windfall payment, when it incurred no expense associated with actually hosting an event canceled well in advance, was squarely against public policy.
The larger principle to emerge is that drafting unreasonable and exploitative contract terms unambiguously ought not circumvent judicial consideration of whether the language improperly imposes a penalty.
This is easier said than done. Confusion can readily set in when courts attempt to reconcile the duty to strictly interpret unambiguous contracts with the rule against enforcing penalty provisions.
Anticipating the problem, Clint Eastwood again offers sage advice: “It’s a very confusing era that we’re in.”