## Facts

- NPS, LLC developed and owned Gillette Stadium and sold long-term licenses for premium “Club Level III” seats.
- Paul Minihane entered a written agreement for a ten-year license (2002–2011) for two seats at $3,750 per seat per year ($7,500 annually).
- The agreement included an acceleration/liquidated damages clause allowing NPS, upon default, to demand the entire unpaid balance for the remaining term.
- Minihane paid a $7,500 security deposit and $2,000 toward the 2002 season and used the seats during the 2002 season; he made no further payments after 2002.
- NPS gave notice of default, invoked the acceleration clause, and demanded the remaining contract balance; Minihane refused to pay.
- NPS sued in Massachusetts Superior Court seeking the accelerated amount as liquidated damages.
- After a bench trial, the Superior Court held the acceleration provision unenforceable as a penalty and awarded NPS substantially less than the accelerated balance.
- The Supreme Judicial Court took the appeal on direct appellate review.

## Issues

1. Whether the contract’s acceleration clause requiring payment of all remaining license fees upon default was an enforceable liquidated damages provision or an unenforceable penalty.
2. If the clause was enforceable, whether NPS nevertheless had a duty to mitigate damages that would reduce recovery.

## Decision

- The Supreme Judicial Court held the acceleration clause was an enforceable liquidated damages provision, not a penalty.
- The court concluded damages from breach were difficult to estimate at contract formation given uncertainty about future demand and resale/relicensing prospects for premium seats over a long term.
- The court ruled the accelerated amount was not unreasonably disproportionate because it required no more than the total contract price remaining under the license.
- The court held the burden to prove a liquidated damages clause is a penalty rests on the party challenging it, and Minihane did not meet that burden.
- The court held that when a liquidated damages clause is enforceable, mitigation is irrelevant in assessing damages.
- The court modified the judgment to award NPS the accelerated amount due under the clause, crediting sums already paid.

## Legal Principles

- A stipulated damages clause is enforceable when, at the time of contracting, (1) actual damages from breach are difficult to ascertain and (2) the amount fixed is a reasonable forecast of anticipated harm and not unreasonably and grossly disproportionate.
- An acceleration clause can function as liquidated damages when it reflects a reasonable estimate of loss in a long-term agreement with uncertain future market conditions.
- The party resisting enforcement bears the burden of showing the clause operates as a penalty.
- When a liquidated damages provision is valid and enforceable, mitigation does not reduce the stipulated recovery.

## Conclusion

The Supreme Judicial Court enforced the ten-year seat license’s acceleration clause as liquidated damages because future damages were hard to predict at contract formation and the stipulated amount did not exceed the remaining contract price; accordingly, mitigation did not apply, and NPS was entitled to the accelerated balance less amounts paid.


NPS, LLC v. Minihane, 451 Mass. 417 (2008)