Zirkelbach Construction, Inc. v. DOWL, LLC

Zirkelbach Construction, Inc. v. DOWL, LLC, 2017 MT 238 (Sept. 26, 2017) (Wheat, J.) (7-0, aff’d)

Issue: Whether the district court erred in granting DOWL’s motion for partial summary judgment.

Short Answer: No.

Affirmed

Facts: SunCap owns real property in Billings on which a FedEx Ground facility was to be built. SunCap hired Zirkelbach, a company with extensive experience building FedEx facilities, as the general contractor. Zirkelbach hired DOWL, an experienced design company, to design the facility.

Zirkelbach and DOWL entered into an agreement under which Zirkelbach would pay DOWL $122,967 for services. The parties later added addenda to the agreement, which raised the final fee to DOWL to $655,000. The agreement included a provision under which both parties waived an special, incidental or consequential damages, and agreed that DOWL’s liability to Zirkelbach would be limited to $50,000.

Zirkelbach first sued Knife River over construction liens on the facility, and then added a third-party complaint against DOWL for negligence and breach of contract. Zirkelbach claimed that its damages caused by DOWL’s actions amounted to about $1.2 million.

Procedural Posture & Holding: DOWL moved for partial summary judgment, arguing it cannot be liable to Zirkelbach for more than $50,000 under the contract. Zirkelbach argued that the liability limitation violates § 28-2-702, MCA. The district court granted DOWL’s motion, and Zirkelbach appeals. The Supreme Court, sitting en banc, affirms.

Reasoning: Zirkelbach argues that the liability limitation is against public policy, and that the contract is ambiguous. The Court agrees with the district court that the contractual provision is clear and unambiguous. The Court has interpreted § 28-2-702, MCA, as preventing parties from contracting away all liability, but does not prohibit clauses that merely limit a party’s liability. Although DOWL’s feel increased substantially over the course of the project, its total liability did not. The Court is unwilling to allow Zirkelbach to avoid a term of the contract simply because it has become more burdensome due to Zirkelbach’s failure to renegotiate. Zirkelbach and DOWL are experienced, sophisticated businesses that had equal bargaining power, and the Court is unwilling to apply Tunkl to find the agreement unenforceable.