Getting Liquidated Damages in Your Default Judgment

By Luke Farley

Owners, if you want liquidated damages to be included in your default judgment against a contractor, then be sure to plead the LDs in your complaint.

In Aoun & Cole, Inc. v. Fitzpatrick, a new, unpublished opinion from the N.C. Court of Appeals, the court affirmed an order under Rule 60(b)(6) setting aside liquidated damages that were awarded to an owner against a contractor as part of a default judgment.

On appeal, the court determined that the trial court properly exercised its discretion to set aside the LDs because the prayer for relief made no reference to liquidated damages and sought only “compensatory damages in an amount exceeding $25,000.” LDs, however, aren’t considered compensatory damages. While the contract (which had an express LDs clause) was attached as an exhibit to the complaint, the failure to reference the LDs provision in the prayer for relief meant that the relief afforded by the default judgment exceeded the relief sought in the complaint. Affirmed.