{"id":893307,"date":"2017-12-05T11:41:05","date_gmt":"2017-12-05T18:41:05","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=893307"},"modified":"2017-12-05T11:41:05","modified_gmt":"2017-12-05T18:41:05","slug":"montana-supreme-court-holds-waiver-consequential-damages-partial-limitation-liability-design-contract-not-contrary-montana-law","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/montana-supreme-court-holds-waiver-consequential-damages-partial-limitation-liability-design-contract-not-contrary-montana-law\/","title":{"rendered":"Montana Supreme Court Holds that a Waiver of Consequential Damages and a Partial Limitation of Liability in a Design Contract are not Contrary to Montana Law"},"content":{"rendered":"<p>Emily D. Anderson | <a href=\"https:\/\/constructlaw.com\/2017\/11\/30\/montana-supreme-court-holds-that-a-waiver-of-consequential-damages-and-a-partial-limitation-of-liability-in-a-design-contract-are-not-contrary-to-montana-law\/\" target=\"_blank\">Constructlaw<\/a> | November 30, 2017<\/p>\n<p><strong><em>Zirkelbach Constr., Inc. v. DOWL, LLC<\/em>, 2017 Mont. Lexis 591 (Mont., Sept. 26, 2017)<\/strong><\/p>\n<p>In interpreting a state statute which makes contractual limitations on a party\u2019s liability unenforceable in certain instances, the Supreme Court of Montana recently upheld the validity of a contract provision in a professional services agreement between a general contractor and a designer in which the parties waived consequential damages against each other and limited the liability of the designer to $50,000.00.<\/p>\n<p>Zirkelbach Constr., Inc. (\u201cZirkelbach\u201d) and DOWL, LLC (\u201cDOWL\u201d) entered into a professional services agreement (the \u201cAgreement\u201d), whereby DOWL agreed to provide design work to Zirkelbach, a general contractor, for the construction of a FedEx Ground facility in Billings, Montana.\u00a0 The original contract price was $122,967, but was adjusted to approximately $665,000 after the parties made several addenda to the Agreement to account for additional services.<span id=\"more-2259\"><\/span><\/p>\n<p>The Agreement contained a provision (the \u201climitation of liability clause\u201d) \u2013 which the parties did not renegotiate when they modified the Agreement through addenda \u2013 in which the parties agreed to waive against each other \u201cany and all claims for or entitlement to special, incidental, indirect, or consequential damages arising out of, or resulting from, or in any way related to the Project,\u201d and also agreed that DOWL\u2019s total liability to Zirkelbach under the Agreement \u201cshall be limited to $50,000.\u201d<\/p>\n<p>After Zirkelbach brought suit against DOWL asserting claims of negligence and breach of contract in the amount of $1,218,197.93 for problems allegedly caused directly by DOWL\u2019s design plans, DOWL filed a motion for partial summary judgment arguing that DOWL could not be liable to Zirkelbach in any amount exceeding $50,000 due to the limitation of liability clause. The District Court granted DOWL\u2019s motion and Zirkelbach appealed.<\/p>\n<p>On appeal, Zirkelbach argued that the limitation of liability clause was unenforceable as against public policy under Section 28-2-702, MCA, which provides:<\/p>\n<p>All contracts that have for their object, directly or indirectly, to exempt anyone from responsibility for the person\u2019s own fraud, for willful injury to the person or property of another, or for violation of law, whether willful or negligent, are against the policy of the law.<\/p>\n<p>The Supreme Court disagreed.\u00a0 In holding that the limitation of liability clause was valid under \u00a7 28-2-702, the Supreme Court emphasized the importance of the freedom of parties to mutually agree to the terms governing their private conduct, provided those terms do not conflict with public laws, and emphasized that Zirkelbach and DOWL were two experienced, sophisticated business entities with equal bargaining power.\u00a0 The Court relied on case law in both Montana and California, which has an identical statute, in concluding that \u201cit would be difficult to imagine a situation where a contract between relatively equal business entitles would be able to meet the required characteristics of a transaction that implicated public interest.\u201d<\/p>\n<p>Additionally, the Court noted that the limitation of liability clause only capped damages and did not exempt DOWL from all liability under the Agreement, as the Court had previously held that \u00a7 28-2-702, is not violated when business entities contractually limit liability, but do not eliminate liability entirely, or when a limitation of liability applies only to a narrow type of damages, but not all damages.\u00a0 DOWL remained exposed to liability on the negligence claim asserted by Zirkelbach and for $50,000 under the Agreement.<\/p>\n<p>Finally, the Court rejected Zirkelbach\u2019s argument that the $50,000 limitation of liability indirectly exculpated DOWL from liability because it was a nominal amount compared to DOWL\u2019s total adjusted fee.\u00a0 The Court pointed out that the limitation was a much larger percentage of DOWL\u2019s fee before the parties modified the Agreement to add additional services by addenda, and stressed that it would not \u201callow Zirkelbach to avoid a term of the contract simply because it [had] become more burdensome due to its own failure to renegotiate.\u201d\u00a0 Each time the Agreement was modified, Zirkelbach had an opportunity to renegotiate the cap on liability, but did not.<\/p>\n<p>Accordingly, the Supreme Court affirmed the grant of summary judgment in DOWL\u2019s favor.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Emily D. Anderson | Constructlaw | November 30, 2017 Zirkelbach Constr., Inc. v. DOWL, LLC, 2017 Mont. Lexis 591 (Mont., Sept. 26, 2017) In interpreting a state statute which makes contractual limitations on a party\u2019s liability unenforceable in certain instances, the Supreme Court of Montana recently upheld the validity of a contract provision in a&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/montana-supreme-court-holds-waiver-consequential-damages-partial-limitation-liability-design-contract-not-contrary-montana-law\/\">Continue reading <span class=\"screen-reader-text\">Montana Supreme Court Holds that a Waiver of Consequential Damages and a Partial Limitation of Liability in a Design Contract are not Contrary to Montana Law<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9,9009,3,9914],"tags":[9895,284,23,509,9293,10311],"class_list":["post-893307","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","category-design-professionals","category-insurance-claims","category-insurance-coverage","tag-advise-consult","tag-design-professionals","tag-insurance-coverage","tag-limitation-of-liability","tag-montana","tag-professional-services-agreement","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Montana Supreme Court Holds that a Waiver of Consequential Damages and a Partial Limitation of Liability in a Design Contract are not Contrary to Montana Law - Advise &amp; 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