ILNews

Limitation of liability provision enforceable

Back to TopCommentsE-mailPrintBookmark and Share

DTCI-Temple-DavidOn March 2, 2011, the federal district court in Indianapolis issued a rather innocuous and unassuming opinion in SAMS Hotel Group, LLC v. Environs, Inc. (S.D. Ind. 2011), No. 1:09-CV-00930-TWP-TAB. However, its ramifications may be far-reaching and are surely welcomed by design professionals working on projects in Indiana.

The court granted an architectural firm’s motion for partial summary judgment and denied the owner’s motion for partial summary judgment, finding that (1) the owner’s negligence claim is barred by the economic loss doctrine, based on the reasoning articulated by the Indiana Supreme Court in Indianapolis-Marion County Public Library v. Charles Clark & Linard, P.C., 929 N.E.2d 722 (Ind. 2010), and (2) the architectural firm’s liability is contractually limited to the lump-sum fee paid by the owner. It is the latter finding that is most significant, yet it should not be surprising in light of contract law in Indiana. While the court’s decision does not cite to significant case law on this issue, the court found the contractual language at issue to be unambiguous, stating that “[e]ven a person with limited acumen would interpret this contract to mean that Environs could owe SAMS no more than what it was paid if it did not deliver a sound design as promised.”

SAMS Hotel Group owned a Homewood Suites Hotel under construction in Fort Wayne which the Allen County building commissioner ordered to be demolished because of its structural instability. SAMS sued Environs Inc., the architectural firm hired to design the hotel and perform certain oversight functions during construction, as well as the steel fabricator and the engineering firm that provided engineering services relating to the steel framing. The parties stipulated to the dismissal of the steel fabricator and the engineering firm leaving Environs Inc. as the sole defendant.

The parties’ contract provided: “The Owner agrees that to the fullest extent permitted by law, Environs Architect/Planners Inc.[’s] total liability to the Owner shall not exceed the amount of the total lump sum fee due to negligence, errors, omissions, strict liability, breach of contract or breach of warranty.” SAMS asserted that the provision was unenforceable because it did not unequivocally make clear that Environs’ liability was limited for its own wrongful acts. However, the court rejected SAMS’s argument, finding in part that the provision at issue was a limitation of liability provision, not an exculpatory clause. Moreover, the court found “the limiting language in the contract is unmistakably clear” and that “[t]his is not a situation where an unsuspecting or unknowing party is disadvantaged by a murky provision.”

Under Indiana law, absent an ambiguity, Indiana courts give the terms of a contract their plain and ordinary meaning. Indiana Dept. of Transp. v. Shelley & Sands, Inc., 756 N.E.2d 1063, 1069-1070 (Ind. Ct. App. 2001). Furthermore, a “contract is unconscionable if a great disparity in bargaining power exists between the parties which leads the weaker to sign a contract unwillingly or without being aware of its terms.” White River Conservancy Dist. v. Commonwealth Eng., 575 N.E.2d 1011, 1017 (Ind. Ct. App. 1991). The court made it clear that in this situation, it was faced with neither ambiguous terms nor disparate bargaining power between the parties.

The court ultimately concluded that “[i]f SAMS wanted greater protection from a negligent design, it could have obtained such protection through different contractual terms or a performance bond.” The court appears to have implicitly rejected any invitation to rewrite the parties’ contract based upon the limitation of liability provision somehow violating public policy. From an outsider’s perspective, the court’s decision is one of the purest forms of applying the four corners’ doctrine, and it serves as a reminder to contracting parties that unambiguous contractual provisions – even if they later seem like a “bad deal” for one of the parties – can and will be enforced.•

__________

 David A. Temple
  is a partner at Drewry Simmons Vornehm in Carmel, where he focuses on professional liability, construction, products liability and environmental insurance matters. He is on the board of directors of the Defense Trial Counsel of Indiana and a member and former chair of the Construction Law Section. The opinions expressed in this column are the author’s.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. No second amendment, pro life, pro traditional marriage, reagan or trump tshirts will be sold either. And you cannot draw Mohammed even in your own notebook. And you must wear a helmet at all times while at the fair. And no lawyer jokes can be told except in the designated protest area. And next year no crucifixes, since they are uber offensive to all but Catholics. Have a nice bland day here in the Lego movie. Remember ... Everything is awesome comrades.

  2. Thank you for this post . I just bought a LG External DVD It came with Cyber pwr 2 go . It would not play on Lenovo Idea pad w/8.1 . Your recommended free VLC worked great .

  3. All these sites putting up all the crap they do making Brent Look like A Monster like he's not a good person . First off th fight actually started not because of Brent but because of one of his friends then when the fight popped off his friend ran like a coward which left Brent to fend for himself .It IS NOT a crime to defend yourself 3 of them and 1 of him . just so happened he was a better fighter. I'm Brent s wife so I know him personally and up close . He's a very caring kind loving man . He's not abusive in any way . He is a loving father and really shouldn't be where he is not for self defense . Now because of one of his stupid friends trying to show off and turning out to be nothing but a coward and leaving Brent to be jumped by 3 men not only is Brent suffering but Me his wife , his kids abd step kidshis mom and brother his family is left to live without him abd suffering in more ways then one . that man was and still is my smile ....he's the one real thing I've ever had in my life .....f@#@ You Lafayette court system . Learn to do your jobs right he maybe should have gotten that year for misdemeanor battery but that s it . not one person can stand to me and tell me if u we're in a fight facing 3 men and u just by yourself u wouldn't fight back that you wouldn't do everything u could to walk away to ur family ur kids That's what Brent is guilty of trying to defend himself against 3 men he wanted to go home tohisfamily worse then they did he just happened to be a better fighter and he got the best of th others . what would you do ? Stand there lay there and be stomped and beaten or would u give it everything u got and fight back ? I'd of done the same only I'm so smallid of probably shot or stabbed or picked up something to use as a weapon . if it was me or them I'd do everything I could to make sure I was going to live that I would make it hone to see my kids and husband . I Love You Brent Anthony Forever & Always .....Soul 1 baby

  4. Good points, although this man did have a dog in the legal fight as that it was his mother on trial ... and he a dependent. As for parking spaces, handicap spots for pregnant women sure makes sense to me ... er, I mean pregnant men or women. (Please, I meant to include pregnant men the first time, not Room 101 again, please not Room 101 again. I love BB)

  5. I have no doubt that the ADA and related laws provide that many disabilities must be addressed. The question, however, is "by whom?" Many people get dealt bad cards by life. Some are deaf. Some are blind. Some are crippled. Why is it the business of the state to "collectivize" these problems and to force those who are NOT so afflicted to pay for those who are? The fact that this litigant was a mere spectator and not a party is chilling. What happens when somebody who speaks only East Bazurkistanish wants a translator so that he can "understand" the proceedings in a case in which he has NO interest? Do I and all other taxpayers have to cough up? It would seem so. ADA should be amended to provide a simple rule: "Your handicap, YOUR problem". This would apply particularly to handicapped parking spaces, where it seems that if the "handicap" is an ingrown toenail, the government comes rushing in to assist the poor downtrodden victim. I would grant wounded vets (IED victims come to mind in particular) a pass on this.. but others? Nope.

ADVERTISEMENT