Board of Contract Appeals General Services Administration Washington, D.C. 20405 ________________________ DENIED: February 26, 1999 ________________________ GSBCA 14733-TD SHELOMOH SAMEYAH, Appellant, v. DEPARTMENT OF THE TREASURY, Respondent. Shelomoh Sameyah of Kings Point, NY, appearing for Appellant. Barbara H. Vail, Office of Chief Counsel, U.S. Customs Service, Department of the Treasury, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), WILLIAMS, and DeGRAFF. DeGRAFF, Board Judge. Appellant contracted to purchase surplus property from the agency, but did not pay for the property within the time required by the sale contract. According to the terms of the contract, the agency is entitled to retain appellant's bid deposit. Findings of Fact On May 14, 1998, the United States Customs Service, a component of the Department of the Treasury, held a sale of seized property and other merchandise in Edison, New Jersey. Exhibit 2. Mr. Shelomoh Sameyah attended the sale and was the successful bidder for $30,700 of merchandise, the bulk of which was gold jewelry. Exhibits 4, 7. Mr. Sameyah signed a bidder registration form which stated, "Final payment of purchases shall be made not later than 5:00 PM on May 18, 1998, with no exceptions." Exhibit 3. The final date for paying for merchandise was also announced before the sale began. Exhibit 8. The sale catalog, which Mr. Sameyah agreed to abide by when he signed the bidder registration form, also provided that successful bidders were required to make final payments by May 18, 1998. In addition, the catalog stated in bold face type, "NO EXTENSIONS FOR PAYMENT." Exhibits 2, 3. The sale catalog required Mr. Sameyah to make a deposit of $5000 on the day of the sale because he purchased more than $5000 of merchandise, and Mr. Sameyah did so. Exhibits 2, 4. Mr. Sameyah asked the cashier when he had to pick up his merchandise and she told him that he had to do so by May 28, 1998. Exhibit 5. This was consistent with the sale catalog, which provided that removal of purchased property had to be completed by May 28, 1998. Exhibit 2. Mr. Sameyah did not pay the balance due for his purchases on May 18, 1998. He wanted to pay on May 19, 1998, but the Customs agent who conducted the sale told Mr. Sameyah that it was too late to pay the balance due and that his deposit had been forfeited. Exhibits 5, 6, 11. The Customs agent based this statement upon two clauses contained in the sale catalog, both of which provided that failure to pay for merchandise within the time set out in the sale catalog "will result in any monies paid being forfeited" and "shall be deemed [a] forfeiture" of the purchaser's interest in the property. Exhibit 2. The bidder registration form that Mr. Sameyah signed also explained that failure to pay for merchandise by May 18, 1998, "will result in automatic forfeiture of all deposited funds and cancellation of all purchases." Exhibit 3. Mr. Sameyah asked the contracting officer to refund his $5000 or else give him his merchandise. Exhibit 11. When the contracting officer denied Mr. Sameyah's claim, he filed this appeal. Exhibit 13. Discussion Mr. Sameyah's contract required him to make full payment for his purchases by May 18, 1998, and his failure to do so was a breach of his contract with Customs. Mr. Sameyah says that Customs' announcement of the May 18 date at the beginning of the sale was useless because the announcement was difficult to hear. Even if Mr. Sameyah is correct about the announcement, the May 18 date was clearly set out in the sale catalog and in the bidder registration form that Mr. Sameyah completed and signed, both of which emphasized that there would be no extensions of this date. Although Mr. Sameyah says that he understood that he had until May 28 to pay the balance due for his merchandise, there was no reasonable basis for such an understanding because the sale catalog stated that May 28 was the date for picking up merchandise, and not the date for paying for merchandise. Mr. Sameyah says that he did not pay by May 18, due to a mistake on his part about the terms of the sale. Whatever mistake Mr. Sameyah made will not, however, relieve him from liability because the record does not establish that Customs knew or should have known of any mistake when it accepted his offer. Baltazar Torres v. General Services Administration, GSBCA 11472, 92-3 BCA 25,178. Finally, Mr. Sameyah says that he did not pay the balance due for his merchandise on May 18 because he was attending his grandchild's college graduation ceremony, and he suggests that this should excuse his default. Although Mr. Sameyah's desire to attend the graduation ceremony is understandable, his attendance did not eliminate his obligation to pay the balance due to Customs on May 18, 1998. The issue here is whether Mr. Sameyah's breach of contract will result in a forfeiture of his bid deposit. Forfeiture provisions such as those contained in the sale catalog allow the Government to retain bid deposits as liquidated damages, and such provisions are nearly always enforced when actual breach damages are either uncertain or difficult to measure. Sun Printing and Publishing Association v. Moore, 183 U.S. 642 (1902); DJ Manufacturing Corp. v. United States, 86 F.3d 1130 (Fed. Cir. 1996); Anthony P. Miller, Inc. v. United States, 161 Ct. Cl. 455 (1963). Occasionally, however, a clause that appears to be a liquidated damages clause is unenforceable because at the time of contracting, the parties did not intend for the clause to establish a fixed amount as compensation for a breach. The intent of the parties is evaluated at the time of contracting, and one means of determining the parties' intent is to look at the amount due according to the clause. If the amount is extravagant or does not bear a reasonable relationship to the loss caused by a breach, then the clause was not intended to establish an amount of liquidated damages and, instead, imposes a penalty. Priebe & Sons v. United States, 332 U.S. 407 (1947); Kothe v. R.C. Taylor Trust, 280 U.S. 224 (1930). It is "rare" and "unusual" to use this "narrow exception" in order to avoid enforcing the terms of a contract, and the party challenging a liquidated damages clause has the burden of proving that the clause is unenforceable. DJ Manufacturing, 86 F.3d at 1133-34; Jennie-O Foods, Inc. v. United States, 580 F.2d 400 (Ct. Cl. 1978). Mr. Sameyah's breach of contract results in a forfeiture of his bid deposit. Mr. Sameyah did not allege that, at the time of contracting, actual damages were either certain or easy to measure, and there are no facts in the record to suggest that when Customs entered into the contract with Mr. Sameyah, it knew what its damages would be if he were to breach the contract. In addition, Mr. Sameyah has not established that he and Customs, at the time of contracting, intended for the sale catalog clauses to establish something other than a fixed amount as compensation for a breach. Although Mr. Sameyah alleges that it is unfair for Customs to retain a deposit as large as $5000, Mr. Sameyah has not established that this amount is either extravagant or so disproportionate to the loss caused by his breach of contract, so as to show that the forfeiture amounts to a penalty. The $5000 retained by Customs is approximately 16% of the amount of Mr. Sameyah's bid, and we have recognized in other cases that retaining a deposit of 20% of a bid amount is not extravagant. See Harry W. Griffith v. General Services Administration, 93-1 BCA 25,421 (1992), and cases cited therein. Mr. Sameyah has not established that there was no reasonable relationship between $5000 and the administrative cost of terminating the contract, the cost of securing and storing gold jewelry worth approximately $30,000 and a notebook computer until the next sale, the cost of advertising and conducting another sale, and the possible loss that would be incurred if the items purchased by Mr. Sameyah were later sold for less than the amount of his bid. In short, Mr. Sameyah has not established that the $5000 bid deposit that he forfeited was so excessive that it plainly amounts to a penalty, and so Customs is entitled to retain the deposit. Decision The appeal is DENIED. __________________________________ MARTHA H. DeGRAFF Board Judge We concur: ___________________________________ __________________________________ STEPHEN M. DANIELS MARY ELLEN COSTER WILLIAMS Board Judge Board Judge