Rubinstein v. Rubinstein

Henry Rubinstein (plaintiff) and Leo Rubinstein (defendant) were distant relatives that operated several joint enterprises together. Eventually Henry and Leo encountered differences and decided to part ways. Henry and Leo negotiated and developed an agreement to divide up the businesses. The two primary businesses operated a grocery store and a deli, respectively, and were valued at approximately $70,000. Under the agreement, Henry was entitled to choose one of the two businesses to take, and Leo would take the other one. The agreement provided that closing would take place within one week of Henry’s selection. The agreement also required Henry and Leo to each place $5,000 in escrow to pay for any required closing costs. The escrow amount was also stated to be forfeited as liquidated damages if a party failed to close the transaction. Henry sent a letter choosing the deli, but various disputes arose, and Leo refused to close on the transaction. Henry filed a lawsuit seeking specific performance. Leo, while represented by the same attorney who negotiated and drafted the agreement, filed an answer and counterclaim also seeking specific performance of the agreement. Leo later changed attorneys and strategies and asserted that the liquidated-damages reference in the escrow provision of the contract was an adequate remedy and was intended to be the exclusive remedy in the contract for a breach. The trial court determined that the liquidated-damages provision was the sole relief for Leo’s breach. Henry appealed.