Marbro, Inc. v. Borough of Tinton Falls

688 A.2d 159, 297 N.J. Super. 411, 1996 N.J. Super. LEXIS 496
CourtNew Jersey Superior Court Appellate Division
DecidedJanuary 26, 1996
StatusPublished
Cited by6 cases

This text of 688 A.2d 159 (Marbro, Inc. v. Borough of Tinton Falls) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marbro, Inc. v. Borough of Tinton Falls, 688 A.2d 159, 297 N.J. Super. 411, 1996 N.J. Super. LEXIS 496 (N.J. Ct. App. 1996).

Opinion

D’AMICO, J.S.C.

This matter comes before the court on a motion by third party defendant, Fellows, Read & Associates (FRA), for partial summary judgment to enforce as to defendant/third party plaintiff, Borough of Tinton Falls (Borough) a limitation of liability provision in an engineering services contract.

In 1988, the Borough proposed various improvements to a local park and contracted with FRA to design these improvements and serve as consultant during the construction phase of the project. Two separate contracts were entered into by the parties in order to effectuate these objectives.

During the course of construction, large quantities of glass emerged from the soil. The Borough therefore determined that the park was unusable and had to be resurfaced.

[415]*415The construction phase contract dated September 27, 1988, includes the following limitation of liability provision as Paragraph 13:

The Client agrees to limit the Consultant’s liability to the Client and to all Construction Contractors and Subcontractors on this project due to the Consultant’s professional negligent acts, errors or omissions such that the total liability to all those named shall not exceed $32,500. It is agreed that this paragraph applies only to this contract for construction services.

The Borough was sued by the plaintiff, Marbro 1 which subsequently filed a third-party complaint against FRA, alleging various counts of negligence. FRA now moves for summary judgment as to the amount of damages which may be recovered against it, arguing that the aforementioned provision limits its liability to the amount of $32,500. The Borough opposes this motion, arguing that the provision in question is void as a matter of law and is unenforceable.

There being no reported New Jersey decision on this issue, FRA relies upon the recent Third Circuit decision in Valhal Corp. v. Sullivan Assoc., Inc., 44 F.3d 195 (3d Cir.1995), in support of its contention that the provision in question is enforceable. In that case, Valhal Corporation was a real estate developer, and Sullivan Associates was an architectural firm. The parties entered into a consulting agreement, which included the following provision:

The OWNER agrees to limit the Design Professional’s liability to the OWNER and to all construction Contractors and Subcontractors on the project, due to the Design Professionals professional negligent acts, errors or omissions, such that the total aggregate liability of each Design Professional shall not exceed $50,000 or the Design Professional’s total fee for services rendered on this project.
[Id at 198.]

At some point, a dispute arose as to height restrictions on a particular property. Valhal brought suit against Sullivan in Federal District Court, seeking damages in excess of $2,000,000 for breach of contract, negligence, gross negligence and negligent misrepresentation based upon Sullivan’s failure to apprise Valhal of the height restriction. Id. at 199.

[416]*416Sullivan moved for partial summary judgment, arguing that its liability was expressly limited to $50,000 pursuant to the aforementioned limitation of liability clause. Ibid. Valhal made a motion to strike this provision, arguing that it was unenforceable as a matter of public policy. The District Court ruled that the provision was indeed contrary to Pennsylvania law and public policy, particularly the state’s anti-indemnification statute, Pa. StatAnn. tit. 68, § 491 (1994). Ibid. The court held that the provision was unenforceable, and the jury returned a verdict in favor of Valhal in the amount of $1,000,000. Id. at 199-200.

Sullivan thereafter appealed to the United States Court of Appeals, Third Circuit, which reversed the District Court’s ruling. The Court of Appeals held that the limitation of liability clause did not bar any cause of action which Valhal might have pursued. Id. at 202. The court further noted that Sullivan still remained liable for its negligence up to $50,000. Although the amount of liability was capped, Sullivan still bore substantial liability for its negligent acts and omissions. Ibid. Moreover, the court concluded that limitations of liability provisions are not disfavored under Pennsylvania law, and are routinely upheld so long as the bargaining power of the respective parties was equal at the time the contract was fashioned. Id. at 204. To be enforceable, however, a limitation of liability clause must be “reasonable and not so drastic as to remove the incentive to perform with due care____” Ibid. The court made the following observation:

Though it is possible that an agreement setting damages at a nominal level may have the practical effect of avoiding almost all culpability for wrongful action, the difference between the two concepts is nevertheless a real one. The distinction becomes more apparent in a situation which [sic] the damage level set is substantial rather than minimal____
[Ibid, (quoting Posttape Assocs. v. Eastman Kodak Co., 537 F.2d 751, 755 (3d Cir.1976).]

The issue, the court held, “is whether the cap is so minimal compared to Sullivan’s expected compensation as to negate or drastically minimize Sullivan’s concern for the consequences of a breach of its contractual obligations.” Ibid,

[417]*417FRA argues, and this court agrees, that the analysis undertaken by the Third Circuit in Valhal Corp. should be employed by this court in disposing of this motion for summary judgment.

A court should ordinarily “enforce contracts as made by the parties.” Vasquez v. Glassboro Serv. Ass’n, 83 N.J. 86, 101, 415 A.2d 1156 (1980); Saxon Const. v. Masterclean, 273 N.J.Super. 231, 236, 641 A.2d 1056 (App.Div.1994), certif. denied, 137 N.J. 314, 645 A.2d 142 (1994). “When the terms of a ... contract are clear, it is the function of a court to enforce it as written and not to make a better contract for either of the parties.” Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43, 161 A.2d 717 (1960); Levison v. Weintraub, 215 N.J.Super. 273, 276, 521 A.2d 909 (App.Div.1987), certif. denied, 107 N.J. 650, 527 A.2d 470 (1987). Moreover, courts may not “rewrite the contract merely because one might conclude that it might well have been functionally desirable to draft it differently.” Brick Tp. Mun. Util Auth. v. Diversified R.B. & T., 171 N.J.Super. 397, 402, 409 A.2d 806 (App.Div.1979).

Our courts have traditionally upheld contractual limitations of liability. See, e.g., Tessler and Son, Inc. v.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Thrash Commercial Contractors, Inc. v. Terracon Consultants, Inc.
889 F. Supp. 2d 868 (S.D. Mississippi, 2012)
In re Heartland Payment Systems, Inc.
834 F. Supp. 2d 566 (S.D. Texas, 2011)
1800 OCOTILLO, LLC v. WLB Group, Inc.
196 P.3d 222 (Arizona Supreme Court, 2008)
Lucier v. Williams
841 A.2d 907 (New Jersey Superior Court App Division, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
688 A.2d 159, 297 N.J. Super. 411, 1996 N.J. Super. LEXIS 496, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marbro-inc-v-borough-of-tinton-falls-njsuperctappdiv-1996.