739 S.E.2d 882
S.C.2013Background
- Palmetto sold a home inspection service with a limit of liability clause capping liability to the inspection fee.
- Mrs. Gladden paid for a home inspection; after reporting undisclosed defects, Palmetto refunded the inspection fee.
- Gladdens sued several parties; as to Palmetto, alleged breach of contract for negligent inspection and failure to report defects.
- The Gladdens moved for summary judgment on enforceability of the liability cap; Palmetto cross-moved, asserting enforceability since it refunded the fee.
- Circuit Court granted Palmetto summary judgment; Gladdens appealed contending the cap violated public policy and was unconscionable.
- The court affirmed the circuit court, holding the cap not violative of public policy and not unconscionable under the circumstances.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Public policy compliance of the liability cap | Gladden contends the cap violates public policy by insulating negligence in a professional service. | Palmetto argues public policy supports freedom of contract and permits liability limits where permitted by statute. | Cap does not contravene public policy. |
| Unconscionability of the liability cap | Gladden asserts the cap is unconscionable due to adhesion contract, unequal bargaining power, and one-sided terms. | Palmetto contends the clause is commercially reasonable and not oppressive or lacking meaningful choice. | Cap is not unconscionable. |
Key Cases Cited
- Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14 (2007) (defines unconscionability and balancing factors in consumer contracts)
- Pride v. S. Bell Tel. & Tel. Co., 244 S.C. 615 (1964) (public policy considerations regarding exculpatory clauses)
- Lucier v. Williams, 366 N.J. Super. 485 (2004) (exculpatory home inspection clause disfavored; public policy concerns notable)
- Pitts v. Watkins, 905 So.2d 553 (Miss. 2005) (unconscionability in home inspection contracts; emphasis on meaningful choice)
- South Carolina Electric & Gas Co. v. Combustion Engineering, Inc., 283 S.C. 182 (Ct. App. 1984) (public policy considerations in exculpatory clauses among sophisticated parties)