Title: Cummings Properties, LLC v. Hines
Citation: N/A
Docket Number: SJC-13406
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: September 25, 2023

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us 
 
SJC-13406 
 
CUMMINGS PROPERTIES, LLC  vs.  DARRYL C. HINES. 
 
 
 
Middlesex.     May 3, 2023. - September 25, 2023. 
 
Present:  Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, 
& Georges, JJ. 
 
 
Real Property, Lease.  Contract, Lease of real estate, Rent 
acceleration clause, Provision for liquidated damages.  
Damages, Liquidated damages, Mitigation.  Guaranty.  
Penalty. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
January 6, 2020. 
 
 
The case was heard by Christopher K. Barry-Smith, J. 
 
 
After review by the Appeals Court, the Supreme Judicial 
Court granted leave to obtain further appellate review. 
 
 
 
Joseph B. Simons for the defendant. 
 
Joseph P. Mingolla for the plaintiff. 
 
The following submitted briefs for amici curiae: 
 
John Pagliaro & Daniel B. Winslow for New England Legal 
Foundation. 
 
Charles L. Solomont & Andrew M. Buttaro for NPS LLC. 
 
Thomas Bhisitkul & Michael Riley for Real Estate Bar 
Association for Massachusetts, Inc., & another. 
 
 
2 
 
 
BUDD, C.J.  For over a century, Massachusetts courts have 
recognized and enforced liquidated damages clauses.1  Although it 
is true that these clauses potentially can result in an 
unwarranted penalty for a party committing a breach and a 
windfall for the party not committing a breach, it long has been 
the rule that "parties are to be held to their words . . . 
except in exceptional cases."  Garst v. Harris, 177 Mass. 72, 74 
(1900).  As discussed infra, we recognize that liquidated 
damages clauses do not always match the actual damages resulting 
from a contract breach.  However, we are careful to distinguish 
between clauses that are true penalties and those that, although 
imprecise, were reasonable predictions of damages at the time 
the contract was entered into by willing parties.  In this case, 
we ultimately find the latter. 
The defendant, Darryl C. Hines, contends that the 
liquidated damages clause in a commercial lease is unenforceable 
where the landlord, Cummings Properties, LLC (Cummings), was 
able to relet the property after Hines's company defaulted on 
the rent.  Because we conclude that Hines failed to meet his 
burden in proving that the amount provided for in the clause was 
 
1 If there occurs a breach of a contract, a liquidated 
damages clause entitles the party not committing the breach to 
collect from the party committing the breach an amount 
corresponding to what the parties predicted the breach would 
cost the party that did not commit the breach.  See generally 24 
R.A. Lord, Williston on Contracts § 65.1 (4th ed. 2018). 
3 
 
an unreasonable forecast of damages at the time the lease was 
signed, we affirm the judgment of the Superior Court in favor of 
Cummings.2 
 
Background and procedural posture.  We recite the 
undisputed facts as found by the trial judge,3 supplementing them 
where necessary with undisputed evidence in the record and 
leaving some details for later discussion.  See Miramar Park 
Ass'n v. Dennis, 480 Mass. 366, 369 (2018). 
 
On April 15, 2016, Cummings entered into a five-year lease 
with Massachusetts Constable's Office, Inc. (MCO), a service of 
process company, of which Hines was founder, sole officer, and 
director.  Hines signed as guarantor, "personally and 
unconditionally guarantee[ing] the prompt payment of rent by 
[MCO] and the performance by [MCO] of all financial and 
nonfinancial obligations arising out of [the] lease." 
The lease provided that in the event that MCO failed to pay 
the rent due ($1,364.50 per month), after a ten-day grace period 
and notice to MCO, Cummings would have the right to terminate 
the lease and the "entire balance of rent due . . . immediately 
 
2 We acknowledge the amicus briefs submitted by New England 
Legal Foundation; the Real Estate Bar Association for 
Massachusetts, Inc., and the Abstract Club; and NPS LLC. 
 
3 We accept the trial judge's findings of fact unless they 
clearly are erroneous.  See Anastos v. Sable, 443 Mass. 146, 149 
(2004). 
4 
 
[would] become due and payable as liquidated damages, since both 
parties agree that such amount is a reasonable estimate of the 
actual damages likely to result from such breach." 
Less than one month after the lease agreement took effect, 
MCO lost a lucrative contract it had secured with the Department 
of Revenue (DOR).  The next month, MCO failed to pay its rent.  
Cummings sent a notice of default and, after ten days, commenced 
summary process proceedings in the District Court.  One year 
after MCO had vacated the premises, Cummings secured a four-year 
lease with a new tenant. 
Cummings later filed a complaint in the Superior Court 
seeking to enforce Hines's obligations as guarantor of the 
lease.  After a bench trial, the trial judge concluded that the 
liquidated damages provision was enforceable.  The judge further 
found that Hines was "sufficiently sophisticated" to have 
understood that by signing as personal guarantor, he would be 
liable if MCO failed to meet its obligations.  Consequently, the 
judge found in favor of Cummings, awarding it $68,650.24, the 
balance owed under the liquidated damages clause after 
subtracting any payments already made by MCO.  The Appeals Court 
reversed, concluding that because the liquidated damages 
provision did not account for the possibility that Cummings 
could relet the premises and collect rent from a new tenant in 
mitigation of the breach, it was an unenforceable penalty.  
5 
 
Cummings Props., LLC v. Hines, 102 Mass. App. Ct. 28, 33-34, 37 
(2022).  We granted Cummings's application for further appellate 
review. 
Discussion.  Hines argues that in these circumstances the 
clause operates as an impermissible penalty.  He also contends 
that he was an unsophisticated party who should not be required 
to fulfill his end of the original agreement.  As explained 
infra, we are not persuaded by either argument. 
1.  Enforceability of liquidated damages clauses.  "[T]he 
general rule of our law is freedom of contract . . . [and] it is 
in the public interest to accord individuals broad powers to 
order their affairs through legally enforceable agreements" 
(quotations and citations omitted).  Beacon Hill Civic Ass'n v. 
Ristorante Toscano, Inc., 422 Mass. 318, 320 (1996).  This is so 
even where, as here, the enforcement of the contract appears to 
produce harsh results.  See, e.g., NPS, LLC v. Minihane, 451 
Mass. 417, 422 (2008). 
So it is with liquidated damages clauses.  "It has long 
been the rule in Massachusetts that a contract provision that 
clearly and reasonably establishes liquidated damages should be 
enforced, so long as it is not so disproportionate to 
anticipated damages as to constitute a penalty."  TAL Fin. Corp. 
v. CSC Consulting, Inc., 446 Mass 422, 431 (2006), citing Kaplan 
v. Gray, 215 Mass. 269, 270-273 (1913). 
6 
 
Generally, jurisdictions test the enforceability of a 
liquidated damages clause in one of two ways:  by analyzing the 
circumstances at the time the contract was formed, known as the 
"single look" approach, or by considering the circumstances at 
the time of the breach, i.e., the "second look" approach.  See 
Kelly v. Marx, 428 Mass. 877, 879 (1999).  This court has 
adopted the single look approach.  Id. at 880. 
We recognize that the second look approach allows for an 
after-the-fact adjustment to avoid a windfall for the party not 
committing the breach "by assessing the reasonableness . . . 
against the actual damages resulting from the breach."  Id. at 
879.  However, as we explained when we opted to follow the 
single-look approach, of the two, it "most accurately matches 
the expectations of the parties, who negotiated a liquidated 
damage amount that was fair to each side based on their unique 
concerns and circumstances surrounding the agreement, and their 
individual estimate of damages in event of a breach."  Id. at 
880.  By assigning a specific value to a contract breach ahead 
of time, a liquidated damages clause has the potential to 
promote certainty, resolve disputes efficiently, and, 
notwithstanding the instant case, avoid litigation.  See 
Cummings Props., LLC v. National Communications Corp., 449 Mass. 
490, 496 (2007) (Cummings Props.).  See also 24 R.A. Lord, 
Williston on Contracts § 65.17 (4th ed. 2018) ("The more popular 
7 
 
view is that the reasonableness of a liquidated damages clause 
should be determined as of the time the contract was executed, 
not with the benefit of hindsight"). 
In contrast, the second look approach encourages an 
aggrieved party to bring suit and attempt to show evidence of 
damage due to a contract breach.  That is, under the second-look 
approach, "the 'parties must fully litigate (at great expense 
and delay) that which they sought not to litigate.'"4  Kelly, 428 
Mass. at 881, citing Watson v. Ingram, 124 Wash. 2d 845, 851-852 
(1994).  See Note, "Keep the Change!":  A Critique of the No 
Actual Injury Defense to Liquidated Damages, 65 Wash. L. Rev. 
977, 991 (1990).  For this reason, we have "squarely rejected 
the 'second look' approach."  TAL Fin. Corp., 446 Mass. at 431. 
2.  Application of the single look approach.  Under the 
single look approach, a liquidated damages clause will be 
enforced if (1) the actual damages resulting from a breach were 
difficult to ascertain at the time the contract was signed; and 
(2) the sum agreed on as liquidated damages represents a 
"reasonable forecast of damages expected to occur in the event 
 
4 Indeed, as Justice Spina aptly pointed out when he sat on 
the Appeals Court, the "'second look' reveals nothing that the 
parties had not contemplated" when they entered their contract.  
Kelly, 428 Mass. at 880-881, quoting Kelly v. Marx, 44 Mass. 
App. Ct. 825, 833 (1998) (Spina, J., dissenting). 
8 
 
of a breach."  NPS, LLC, 451 Mass. at 420, quoting Cummings 
Props., 449 Mass. at 494. 
As the party seeking to invalidate the liquidated damages 
provision, Hines had the burden to prove either that (1) damages 
resulting from a contract breach were easily ascertainable at 
the time the contract was signed, or (2) the "damages to which 
[MCO] agreed are disproportionate to a reasonable estimate of 
those actual damages likely to result from a breach."  Cummings 
Props., 449 Mass. at 494-495.  Hines failed to prove either. 
With regard to the first prong, although Hines asserted 
that Cummings, a high-volume commercial landlord, was likely to 
relet the premises on default and that any damages resulting 
from the default thus would not have been difficult to 
ascertain, he failed to present evidence to support these 
claims.5  In the absence of such evidence, the trial judge 
concluded that there was no way to predict when a breach might 
occur, whether or when a new tenant would be secured, what the 
new rent might be, and what costs Cummings would incur in the 
meantime, and that damages therefore were indeed difficult to 
ascertain.  See Cummings Props., 449 Mass. at 496; Kelly, 428 
 
5 In contrast, Cummings called an employee to the stand who 
testified that due to market forces and other factors, the 
company had no reliable method for predicting how long it would 
take to relet a vacant office space.  The employee further 
testified that multiple units in the same office building where 
MCO had rented space had been empty for as long as twelve years. 
9 
 
Mass. at 881-882.  Cf. 275 Washington St. Corp. v. Hudson River 
Int'l, LLC, 465 Mass. 16, 25-26 (2013). 
As for the second prong, we previously have held that 
where, as here, the liquidated damages amount provided for in 
the lease represents the agreed-on rental value of the property 
at the time of the breach and decreases during the term of the 
lease, it is a "reasonable anticipation of damages that might 
accrue from the nonpayment of rent."  NPS, LLC, 451 Mass. at 
422, quoting Cummings Props., 449 Mass. at 496-497.  
Correspondingly, where the tenant "is required to pay no more 
than the total amount [it] would have paid had [the tenant] 
performed [its] obligations under the agreement[, t]he sum 
provided for . . . bears a reasonable relationship to the 
anticipated actual damages resulting from a breach."  NPS, LLC, 
supra.  See Panagakos v. Collins, 80 Mass. App. Ct. 697, 702-703 
(2011). 
 
Contrary to the holding of the Appeals Court, we never have 
required that the amount of a liquidated damages clause take 
into account any future rents collected from a new tenant to be 
enforceable.6 
 
6 Relying on TAL Fin. Corp., 446 Mass. 422 (TAL), the 
Appeals Court concluded that the liquidated damages clause was 
an unenforceable penalty because it did not account for rent 
that Cummings collected from the new tenant during the original 
lease term.  Cummings Props., LLC, 102 Mass. App. Ct. at 33-34.  
 
10 
 
Even though Hines failed to meet his burden to demonstrate 
that the liquidated damages provision amounted to a penalty, he 
nevertheless contends that the sum should be decreased by the 
amount Cummings collected by reletting the space.  This position 
does not comport with our case law.  As discussed supra, in our 
view, the single look approach aligns with the purpose of a 
liquidated damages clause, i.e., to provide certainty for 
parties at the time the contract is formed. 
"When parties agree in advance to a sum certain that 
represents a reasonable estimate of potential damages, they 
exchange the opportunity to determine actual damages after 
a breach, including possible mitigation, for the peace of 
mind and certainty of result afforded by a liquidated 
damages clause.  In such circumstances, to consider whether 
a plaintiff has mitigated its damages not only is 
illogical, but also defeats the purpose of liquidated 
damages provisions."  (Quotation and citations omitted.) 
 
NPS, LLC, 451 Mass. at 423.  As we already have determined that 
the liquidated damages clause does not amount to a penalty, it 
is enforceable according to the terms of the contract regardless 
of when, if ever, Cummings was able to relet the premises. 
 
However, in TAL we determined that the amount set by the 
liquidated damages clause "b[ore] no rational relation to the 
parties' expectation of the true value of the leased items" at 
the time the contract was signed.  TAL, 446 Mass. at 433.  The 
clause also provided a separate source of damages in addition to 
the lessor's "independent ability to collect all future monthly 
payments [from the lessee] still due under the lease."  Id. at 
432-433.  In contrast, here, as discussed supra, the amount set 
by the liquidated damages clause was a reasonable estimate of 
damages that could occur from a breach at the time the contract 
was formed. 
11 
 
Hines has not persuaded us to abandon our method of 
applying the single look approach.7  We remain convinced that 
where a contract is unambiguous and freely entered into, it is 
preferable for parties to bargain with one another as they see 
fit, rather than to have courts step in to decide whether and 
how to restructure a contract because certain contingencies were 
not accounted for by one of the parties.  See NPS, LLC, 451 
Mass. at 420 ("we look to the circumstances at the time of 
contract formation; we do not take a 'second look'").  Cf. Le 
 
7 Many jurisdictions similarly have determined that under 
the single look approach, actual damages are not material in 
evaluating the enforceability of a liquidated damages clause.  
See, e.g., Old Colony Constr., LLC v. Southington, 316 Conn. 
202, 222 (2015); Proulx v. 1400 Pa. Ave., SE, LLC, 199 A.3d 667, 
673-674 (D.C. 2019).  This is so even where enforcing the clause 
resulted in the party that did not commit the breach receiving 
more than it would have under the original contract.  See, e.g., 
Guiliano v. Cleo, Inc., 995 S.W.2d 88, 100-101 (Tenn. 1999); 
Stein Eriksen Lodge Owners Ass'n v. MX Techs. Inc., 2022 UT App 
30, ¶¶ 57-59. 
 
Conversely, some jurisdictions, despite espousing single 
look principles, have adopted exceptions to the analysis that 
alter it significantly.  See, e.g., General Elec. Capital Corp. 
v. Nucor Drilling, Inc., 551 F. Supp. 2d. 1375, 1381 (M.D. Ga. 
2008) (mitigation required under Georgia law to enforce 
liquidated damages clause); Fortune Bridge Co. v. Department of 
Transp., 242 Ga. 531, 532 (1978) (liquidated damages clauses 
presumed unenforceable in close cases); 172 Van Duzer Realty 
Corp. v. Globe Alumni Student Assistance Ass'n, 24 N.Y.3d 528, 
536-537 (2014) (remanding judgment enforcing liquidated damages 
clause for consideration of actual damages); Frank Nero Auto 
Lease, Inc. v. Townsend, 64 Ohio App. 2d 65, 71 (1979) 
(mitigation required to enforce liquidated damages clause). 
12 
 
Fort Enters., Inc. v. Lantern 18, LLC, 491 Mass. 144, 153-154 
(2023). 
3.  Sophistication.  "A contractual liquidated damages 
provision is entitled to a presumption of validity, especially 
where . . . it was negotiated between two sophisticated 
parties."  Nantasket Beachfront Condominiums, LLC v. Hull Redev. 
Auth., 87 Mass. App. Ct. 455, 469 (2015).  See Cummings Props., 
449 Mass. at 495-496.  Hines claims that he was not a 
sophisticated party, thus, the liquidated damages clause is not 
enforceable against him.  This argument fails. 
As an initial matter, Hines's contention that one's level 
of sophistication in business matters is a question of law 
rather than fact is incorrect.8  See Drakopoulos v. U.S. Bank 
Nat'l Ass'n, 465 Mass. 775, 788 (2013), citing O'Connor v. 
Redstone, 452 Mass. 537, 550 (2008) (judge's determinations that 
plaintiffs were "reasonably sophisticated" and "knew what they 
were doing" were based on "weigh[ing of] the evidence" and 
"credibility assessments" properly left to trier of fact).  See 
also Miller, Contract Law, Party Sophistication and the New 
Formalism, 75 Mo. L. Rev. 493, 497 n.21, 520 (2010) (collecting 
cases from other jurisdictions addressing sophistication as 
 
8 Hines's position also is contradicted by the basis for his 
argument that he lacked the requisite sophistication, which is 
entirely grounded in his view of the facts. 
13 
 
question of fact).  Cf. Sparrow v. Demonico, 461 Mass. 322, 327-
328 (2012) (determining competency to contract is question of 
fact). 
At trial, Hines alleged that his previous lease for office 
space was an informal arrangement and that he did not have 
experience negotiating a lease with a large commercial landlord.  
He also pointed to the fact that he was not represented by an 
attorney, and that he did not read the lease carefully before 
signing it on behalf of MCO and as personal guarantor.  However, 
there was also undisputed evidence that Hines started at least 
two businesses and, at some point, converted MCO from a for-
profit to a not-for-profit company, all of which required the 
filing of the appropriate corporate forms.  In addition to MCO, 
where he held a number of officer positions simultaneously and 
had up to ten employees, Hines also ran a company that provided 
tax preparation services.  Further, MCO's move to Woburn was the 
result of Hines having negotiated a contract for MCO to provide 
services to the DOR. 
Based on these facts, the judge reasoned that Hines 
"demonstrate[d] some facility for business management and 
planning," and that the process of entering into a government 
contract with the DOR likely required the "same skills [that] 
are relevant to negotiating commercial leases."  The judge thus 
determined that although Hines was not a "highly sophisticated 
14 
 
business person," he was "sufficiently sophisticated to be held 
to the provisions of the contract he signed" (emphasis in the 
original).9  See H1 Lincoln, Inc. v. South Washington St., LLC, 
489 Mass. 1, 13 (2022), citing Commissioner of Revenue v. 
Comcast Corp., 453 Mass. 293, 302 (2009) (judge's findings of 
fact reviewed for clear error). 
Conclusion.  As Hines has failed to meet his burden to show 
that the liquidated damages clause is unenforceable, we affirm 
the judgment of the Superior Court. 
 
 
 
 
 
 
 
Judgment affirmed. 
 
9 Although Hines argues that his ventures were more informal 
than they otherwise might appear, we cannot say that the judge 
committed clear error in relying on them.  Moreover, Hines's 
claim that he did not read the lease agreement does not alter 
our analysis.  See Miller v. Cotter, 448 Mass. 671, 680 (2007) 
("failure to read the agreement 'word-for-word' makes no 
difference"); Yorke v. Taylor, 332 Mass. 368, 372 (1955) 
(generally, "the court should exhibit no greater interest in 
protecting a plaintiff's rights than he himself has shown").  
Similarly, that Hines is not an attorney, and was not 
represented by one, does not mean that he is unsophisticated for 
the purposes of enforcing the terms of the lease.  Cf. NPS, LLC, 
451 Mass. at 420 (sophistication, like reasonableness, "depends 
on the circumstances of each case").