Court Opinion

ID: 9716892
Source: CourtListenerOpinion
Date Created: 2023-08-26 06:53:23.604897+00
Date Added: 2024-06-11T18:23:49.807425
License: Public Domain

LIPEZ, Justice,
with whom CLIFFORD Justice, joins, dissenting.
Although I agree with the Court’s decision to affirm the judgment in favor of the town on SeaPAC’s claim for rescission, I do not agree with its affirmance of the judgment in favor of the town regarding the indemnification agreement. Accordingly, I respectfully dissent.
By failing to close as required, SeaPAC breached the purchase and sale agreement with the town. That agreement provides for consequences in the event of breach by Sea-PAC:
If for any reason other than those which would excuse Buyer’s performance hereunder, it shall fail to extend as above provided or shall otherwise fail to complete this purchase according to its terms, the payments made in accordance with Paragraphs 3 and J of this Agreement shall he forfeited as liquidated damages and neither party shall have any further rights herein.
(emphasis added). Pursuant to this provision, the town is entitled to the exclusive remedy of the liquidated damages specified in the contract.1 The agreement defines the *487liquidated damages as the forfeiture of the payments itemized in paragraphs 3 and 4 of the purchase and sale agreement. By its very nature, an indemnification agreement is not a payment subject to forfeiture and in-cludable in the calculation of liquidated damages.
Although the court acknowledges that the indemnification agreement is not a payment pursuant to the purchase and sale agreement, the court avoids the implications of that conclusion by characterizing SeaPAC’s duty to indemnify the town as an “unconditional obligation” that survives SeaPAC’s breach. The significance of this characterization is unclear. SeaPAC’s duty to indemnify is not unconditional in the sense of being independent of the purchase and sale agreement, for the very reason stated by the court: it was partial consideration for the purchase and sale agreement. As consideration, SeaPAC’s indemnification obligation constitutes a performance required for fulfillment of the contract, not a “payment” to be made in lieu of performance.
The court’s inclusion of the indemnification obligation in the liquidated damages remedy misses the point that liquidated damages are, as a matter of law, a fixed amount of money arrived at by the parties to a contract at the time of the contract.2 The uncertainty of an ongoing obligation, defined according to the terms of the breached contract, undermines the very purpose of liquidated damages, which is to provide certainty of remedy to the nonbreaching party and certainty about the extent of liability to the breaching party.3 *488In effect, the court’s approach results in an award of specific performance to the Town under the guise of liquidated damages. Such an approach reflects a misapprehension of applicable legal principles.
For the foregoing reasons, I would vacate the court’s grant of a summary judgment in favor of the town on its counterclaim seeking a declaration that SeaPAC has a continuing duty to indemnify the town.

. The payments that comprise the liquidated damages in case of breach ¿ire defined by paragraphs 3 and 4 of the purchase and sale agreement. Paragraph 3 provides:
(a) The total purchase price (the "Purchase Price") for the Property shall be payable as follows: (i) Twenty-Five Thousand Dollars ($25,000) as a non-refundable Deposit to be credited to Buyer’s payment pursuant to Paragraph 4(a) hereunder; and (ii) Buyer shall assume at the Time of Closing and cause Seller to be released of all Seller's obligations under that certain promissory note to Finance Authority of Maine (“FAME”) in the amount of *487$2,200,000 dated July 28, 1987 which note bears interest at the rate of 6.75% per annum and is payable in accordance with a sixteen year amortization schedule (the "FAME Note"); all interest accruing on the FAME Note from the date hereof through the Time of Closing shall be the sole obligation of the Buyer, and Buyer hereby agrees to pay and satisfy the same.
(b) At the execution of this Agreement, Buyer shall satisfy the outstanding real estate taxes and personal property taxes in the amount of $100,500 by delivery to Seller of Buyer’s Promissory Note in the principal amount thereof, principle payable in three (3) substantially equal annual installments of principal on June 30, 1989, June 30, 1990, and June 30, 1991, together with interest on the unpaid balance as of July 1, 1989 at the prime rate established from time to time by First National Bank of Boston, adjusted semi-annually, which Note shall be personally guaranteed by Dale A. Blow and Frank J. Russo. Buyer will thereupon be released by Seller of any obligations in respect of real estate taxes accruing prior to July 1, 1989.
(c) At the execution of this Agreement, Buyer shall deliver to Seller its agreement in writing, in form and content satisfactory to Seller, to indemnify, defend and hold Seller harmless from any and all claims, demands, liens, attachments, civil actions or causes of action against the Seller and/or the Real Estate arising out of Seller’s ownership of the Real Estate since July 28, 1987, which claims are identified on Schedule B attached hereto.
Paragraph 4 provides in relevant part:
The closing of this Agreement shall take place at the offices of Bernstein, Shur, Sawyer and Nelson, 100 Middle Street, Portland, Maine 04101 at 10:00 o’clock a.m. on October 15, 1989; hereinafter referred to as the “Time of Closing.” It is agreed that time is of the essence of this Agreement.
The Time of Closing may be extended by Buyer to the following Extended Time(s) of Closing:
a. To October 15, 1990, by payment to Seller of $150,000 prior to October 1, 1989; and
b. To October 15, 1991 by payment to Seller of $100,000 prior to October 1, 1990; and
c. To December 31, 1991 by payment to Seller of $50,000 prior to October 1, 1991.
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... even if Buyer shall fail to extend this Agreement prior to October 1 of each year during the continuation of this Agreement, it shall nonetheless be required to make that year’s extension payment.

. A leading treatise defines liquidated damages as a “sum fixed as an estimate made by the parties at the time when the contract is entered into, of the extent of the injury which a breach of the contract will cause.” 5 Samuel Williston & Walter H.E. Jaeger, A Treatise on the Law of Contracts § 776 (3d ed.1961).

. Pursuant to paragraph 3(a) of the purchase and sale agreement, SeaPAC paid the town $25,000 in earnest money. Although paragraph 3(a) also obligated SeaPAC to assume at closing a $2.2m FAME Note, no payments associated with the FAME Note were made because the closing never took place. Pursuant to paragraph 3(b), at the time of breach SeaPAC had paid three promissory note installments to satisfy $100,500 in certain past taxes on the Ballpark plus interest.
Paragraph 4 of the purchase and sale agreement identifies annual payments to be made to the town for the right to extend the date of closing. At the time of breach, SeaPAC had tendered letters of credit and promissoiy notes *488fulfilling all but the third installment payment of $50,000.
Thus at the time of its breach of the purchase and sale agreement, it appears from the record that SeaPAC’s "payments made in accordance with Paragraphs 3 and 4” included the $25,000 earnest money deposit, $100,500 in tax obligations, and $250,000 in extension payments.