RCN Telecom Services, Inc. v. 202 Centre Street Realty, LLC
Docket: No. 05-1508-cv
Court: Court of Appeals for the Second Circuit; November 7, 2006; Federal Appellate Court
RCN Telecom Services, Inc. initiated a lawsuit against 202 Centre Street Realty LLC, seeking approximately $6 million for damages related to a breach of lease and contract. After a bench trial, the district court awarded RCN half of the claimed damages. Both parties appealed; RCN's appeal focused on the remaining damages. The appellate court previously affirmed the award for rent mistakenly paid by RCN but vacated the rest of the decision, instructing the district court to clarify its findings on whether Centre Street breached the contract, if the walk-away clause was RCN's exclusive remedy, and the potential for consequential damages. Upon remand, the district court did not clarify the breach or exclusivity of the walk-away clause but determined RCN had assumed the risk of incomplete electrical repairs, thus denying consequential damages. RCN appealed this judgment, and the appellate panel reviewed the factual findings for clear error and legal issues de novo. It concluded that Centre Street breached the contract by not completing the electrical work timely and that the lease did not limit RCN to the walk-away clause as the exclusive remedy. Under New York law, exclusive remedy provisions must be explicitly stated in contracts, which was not the case here. The court found RCN entitled to recover full damages due to Centre Street's breach, as the damages were foreseeable at the contract's inception. The district court's contrary findings were deemed clearly erroneous. Consequently, the appellate court vacated part of the amended judgment and remanded it with instructions to award RCN the full amount of claimed damages, settle prejudgment interest, and close the case.