Thrash Commercial Contractors, Inc. v. Terracon Consultants, Inc.

889 F. Supp. 2d 868, 2012 WL 2407551, 2012 U.S. Dist. LEXIS 87338
CourtDistrict Court, S.D. Mississippi
DecidedJune 25, 2012
DocketCivil Action No. 3:11CV577TSL-MTP
StatusPublished

This text of 889 F. Supp. 2d 868 (Thrash Commercial Contractors, Inc. v. Terracon Consultants, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thrash Commercial Contractors, Inc. v. Terracon Consultants, Inc., 889 F. Supp. 2d 868, 2012 WL 2407551, 2012 U.S. Dist. LEXIS 87338 (S.D. Miss. 2012).

Opinion

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on cross-motions by plaintiff Thrash Commercial Contractors, Inc. (Thrash) and defendant Terracon Consultants, Inc. (Terracon) for [871]*871partial summary judgment on Terracon’s third and fourth affirmative defenses, which seek to limit Thrash’s recoverable damages in this case based on a limitation of liability provision and waiver of consequential damages provision in the contract that is the subject of Thrash’s claims in this cause. By its motion, Thrash seeks a ruling that the subject provisions are void and unenforceable; Terracon, on the other hand, has moved the court to enforce both provisions and thereby limit Thrash’s recovery in this cause to $50,000, in accordance with the limitation of liability provision, and to dismiss Thrash’s claim for lost profits and loss of use, pursuant to the contract’s waiver of consequential damages provision.

The following facts are undisputed. On April 27, 2010, Thrash contracted with the Mississippi Bureau of Buildings and Grounds (the Bureau) to serve as general contractor for the renovation of the Naval Reserve Records Center in Jackson, Mississippi. Subsequently, on June 14, Thrash subcontracted Terracon to perform “laboratory testing of proposed fill materials to determine compliance with the project specifications ... to determine the in-place density, moisture content and compaction level achieved on each lift of the compacted materials” in accordance with the plans and specifications set forth in the prime contract. Thrash alleges that rather than testing the soil density of the fill material every 1,000 square feet, as required by the project plans and specifications, Terracon tested soil density only every 2,500 square feet, in violation of the specifications. According to Thrash, when this error was discovered, the Bureau and project architect required Thrash to hire an independent testing lab to determine whether the fill material met the required soil density level. The independent testing lab’s results showed that, in fact, the required soil density level had not been achieved, and as a result, the Bureau and project architect required Thrash to remove the top six feet of fill material and the already installed concrete footings for the foundation and reinstall both in accordance with the plans and specifications.1 [872]*872Thrash filed the present action alleging claims for breach of contract and breach of the duty of good faith and fair dealing and seeking to recover the approximately $300,000 it contends it was required to spend due to Terracon’s alleged “failure to perform soil density tests in accordance with the Project plans and specifications and/or identifying and notifying Thrash of specific instances in which the soil density tests did or should have indicated non compliance with the compaction requirements in the Project plans and specifications.” 2

Terracon filed its answer denying it breached the contract and raising affirmative defenses based on two provisions in the contract, a limitation of liability provision and a waiver of consequential damages provision. These provisions appear in the contract, in bold, capitalized letters, as follows:

LIMITATION OP LIABILITY. CLIENT AND CONSULTANT HAVE EVALUATED THE RISKS AND REWARDS ASSOCIATED WITH THIS PROJECT, INCLUDING CONSULTANT’S FEE RELATIVE TO THE RISKS ASSUMED, AND AGREE TO ALLOCATE CERTAIN OF THE RISKS, SO, TO THE FULLEST EXTENT PERMITTED BY LAW, THE TOTAL AGGREGATE LIABILITY OF CONSULTANT (AND ITS RELATED CORPORATIONS AND EMPLOYEES) TO CLIENT AND THIRD PARTIES GRANTED RELIANCE IS LIMITED TO THE GREATER OF $50,000 OR ITS FEE, FOR ANY AND ALL INJURIES, DAMAGES, CLAIMS, LOSSES, OR EXPENSES (INCLUDING ATTORNEY AND EXPERT FEES) ARISING OUT OF CONSULTANT’S SERVICES OR THIS AGREEMENT REGARDLESS OF CAUSE(S) OR THE THEORY OF LIABILITY, INCLUDING NEGLIGENCE, INDEMNITY, OR OTHER RECOVERY. UPON WRITTEN REQUEST FROM CLIENT, CONSULTANT MAY NEGOTIATE A HIGHER LIMITATION OF LIABILITY AMOUNT FOR AN ADDITIONAL FEE. THIS LIMITATION SHALL NOT APPLY TO THE EXTENT THE DAMAGE IS PAID UNDER CONSULTANT’S COMMERCIAL GENERAL LIABILITY POLICY.
CONSEQUENTIAL DAMAGES. NEITHER PARTY SHALL BE LIABLE TOT HE OTHER FOR LOSS OF PROFITS OR REVENUE; LOSS OF USE OR OPPORTUNITY; LOSS OF GOOD WILL; COST OF SUBSTITUTE FACILITIES, GOODS OR SERVICES; COST OF CAPITAL; OR FOR ANY SPECIAL CONSEQUENTIAL, INDIRECT, PUNITIVE, OR EXEMPLARY DAMAGES.

Thrash has now moved for partial summary judgment, contending that both of these provisions are unenforceable under Mississippi law. Terracon has responded and filed its own motion for partial summary judgment, seeking enforcement of these provisions.

In support of its motion, Thrash notes that among factors courts have identified as bearing on the determination of wheth[873]*873er a particular limitation of liability clause is enforceable is whether the party against whom the provision is sought to be enforced was actually free to bargain during contract negotiations, see 6 Philip L. Bruner & Patrick J. O’Connor, Jr., Construction Law, § 19:52.69 (2011); the amount of the limitation compared to the scope of the potential liability of the party seeking enforcement of the provision, see TSI Seismic Tenant Space, Inc. v. Superior Court, 149 Cal.App.4th 159, 56 Cal.Rptr.3d 751 (Cal.Ct.App.2007); and whether there are other conflicting provisions within the same document, see Shorr Paper Prods., Inc. v. Aurora Elevator, Inc., 198 Ill.App.3d 9, 144 Ill.Dec. 376, 555 N.E.2d 735, 736 (Ill.Ct.App.1990). It contends that all of these factors counsel against enforcement of the limitation of liability provision. Further, it asserts that because the provision effectively provides for indemnity to Terraeon for its own negligence, then it is void and unenforceable under Mississippi’s anti-indemnity statute, Miss.Code Ann. § 31 — 5—41. The court considers these arguments in turn.

Thrash is certainly correct that a party’s ability to negotiate with respect to a clause that limits liability (which here would include the limitation of liability clause as well as the waiver of consequential damages provision), bears directly on the enforceability of such provision. Indeed, under Mississippi law, “[cjlauses that limit liability are given strict scrutiny ... and are not to be enforced unless the limitation is fairly and honestly negotiated and understood by both parties.” Pitts v. Watkins, 905 So.2d 553 (Miss.2005) (quoting Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857 So.2d 748, 754 (Miss.2003)). See also Turnbough v. Ladner, 754 So.2d 467, 469 (Miss.1999) (stating that limitation of liability clauses are not enforced unless “fairly and honestly negotiated and understandingly entered into” and “are not upheld unless the intention of the parties is expressed in clear and unmistakable language”). Thrash also correctly notes that “[w]hen a project implicates the public interest, courts are even less deferential to any limitations of liability.” Lyndon Prop. Ins. Co. v. Duke Levy and Assocs., LLC, 475 F.3d 268, 272 (5th Cir.2007) (citing Kroger Co. v.

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

Related

1800 OCOTILLO, LLC v. WLB Group, Inc.
196 P.3d 222 (Arizona Supreme Court, 2008)
Turnbough v. Ladner
754 So. 2d 467 (Mississippi Supreme Court, 1999)
McEver v. Planners & Engineers Collaborative, Inc.
663 S.E.2d 240 (Supreme Court of Georgia, 2008)
Holmes v. Clear Channel Outdoor, Inc.
644 S.E.2d 311 (Court of Appeals of Georgia, 2007)
Vecellio & Grogan, Inc. v. Piedmont Drilling & Blasting, Inc.
644 S.E.2d 16 (Court of Appeals of North Carolina, 2007)
Sierra v. Garcia
746 P.2d 1105 (New Mexico Supreme Court, 1987)
Smith v. Orkin Exterminating Co., Inc.
791 F. Supp. 1137 (S.D. Mississippi, 1990)
Yazoo Prop. v. Katz & Besthoff No. 284, Inc.
644 So. 2d 429 (Mississippi Supreme Court, 1994)
Palmer v. Orkin Exterminating Co., Inc.
871 F. Supp. 912 (S.D. Mississippi, 1994)
Pitts v. Watkins
905 So. 2d 553 (Mississippi Supreme Court, 2005)
Hopton Bldg. Maintenance v. UPS
559 So. 2d 1012 (Mississippi Supreme Court, 1990)
Kroger Co. v. Chimneyville Properties, Ltd.
784 F. Supp. 331 (S.D. Mississippi, 1991)
ROYER HOMES OF MS., INC. v. Chandeleur Homes, Inc.
857 So. 2d 748 (Mississippi Supreme Court, 2003)
Hagerman Construction Corp. v. Long Electric Co.
741 N.E.2d 390 (Indiana Court of Appeals, 2000)
Shorr Paper Products, Inc. v. Aurora Elevator, Inc.
555 N.E.2d 735 (Appellate Court of Illinois, 1990)
Cox v. Lumbermens Mutual Casualty Co.
439 N.E.2d 126 (Appellate Court of Illinois, 1982)
Callahan v. AJ WELCH EQUIP. CORP. SUTTON
634 N.E.2d 134 (Massachusetts Appeals Court, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
889 F. Supp. 2d 868, 2012 WL 2407551, 2012 U.S. Dist. LEXIS 87338, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thrash-commercial-contractors-inc-v-terracon-consultants-inc-mssd-2012.