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Uzan v. 845 UN Limited Partnership

New York Court of Appeals
10 A.D.3d 230, 778 N.YS.2d 171 (2004)


In 1998, Cem Uzan and Hakan Uzan (plaintiffs), Turkish billionaires, contracted to purchase seven apartment units in the not-yet-constructed Trump World Tower building from 845 UN Limited Partnership (845 UN). The Uzans were represented by counsel and made deposits of 25 percent of the purchase price, with the express agreement that 845 UN would keep the entire deposit if there was an uncured default. The Uzans later failed to appear at the October 19, 2001 closing. The Uzans sent 845 UN a letter stating that they were entitled to rescind their contracts in light of the September 11, 2001 terrorist attacks. The Uzans claimed that the Trump building would be an attractive terrorist target because it was the tallest residential building in the world, bore the name of Donald Trump, and was near the United Nations complex in New York City. 845 UN sent the Uzans letters demanding that they perform under the contract within 30 days. The Uzans failed to cure their nonperformance. 845 UN terminated the Uzans’ contracts and kept the 25 percent deposits. The Uzans sued 845 UN to recover the deposits, arguing that the forfeiture of the deposits was an unenforceable penalty. Donald Trump and Marilyn Weitzman, who was the president of a national real-estate consulting firm, submitted affidavits that 25 percent was a standard deposit amount in New York City. Other condominium-offering plans were presented in support of this assertion. The trial court held that the Uzans had forfeited a part of their deposits amounting to 10 percent of the purchase price, but that the remainder of the deposits was subject to a liquidated-damages analysis to determine whether there was a reasonable relation to 845 UN’s actual or probable loss. 845 UN appealed from the portion of the order denying full relief.

Rule of Law


Holding and Reasoning (Mazzarelli, J.)

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