Zirkelbach Construction, Inc. v. DOWL, LLC
2017 MT 238
| Mont. | 2017Background
- Zirkelbach Construction (general contractor) contracted DOWL, LLC (designer) to provide design services for a FedEx facility in Billings; parties executed DOWL’s form agreement and later multiple addenda.
- Original agreement set a $50,000 contractual cap on DOWL’s liability (§ 5(D)); total fees later increased by addenda to about $665,000 but the cap remained.
- Zirkelbach sued (third-party complaint) alleging negligence and breach of contract by DOWL, claiming about $1.22 million in damages attributable to DOWL’s design.
- DOWL moved for partial summary judgment seeking enforcement of the $50,000 cap; Zirkelbach argued the cap violates Mont. Code § 28-2-702 (contracts exempting liability against public policy) and that the clause was ambiguous.
- The District Court granted DOWL’s partial summary judgment; Montana Supreme Court affirmed, holding the cap is a valid limitation (not an absolute exculpation) between sophisticated, relatively equal business parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $50,000 contractual limitation of liability is unenforceable as against public policy under § 28-2-702, MCA | The cap effectively exculpates DOWL from liability (nominal relative to fees) and violates public policy | The clause is a valid, negotiated limitation between sophisticated parties and does not eliminate all liability | Enforceable: cap limits (does not eliminate) liability; § 28-2-702 not violated |
| Whether the limitation clause is ambiguous or reflects lack of meeting of the minds | Clause is ambiguous and should be voided for lack of mutual assent | Clause is clear and unambiguous; Zirkelbach waived arguments not raised below | Clause is clear and unambiguous; appellate challenge to new theory not considered |
Key Cases Cited
- Miller v. Fallon County, 222 Mont. 214, 721 P.2d 342 (Mont. 1986) (statute barring contracts that exempt parties from responsibility construed to bar absolute exculpatory releases)
- Keeney Constr. Co. v. James Talcott Constr. Co., 45 P.3d 19 (Mont. 2002) (contractual limitations that narrow damages do not necessarily violate § 28-2-702)
- Five U’s, Inc. v. Burger King Corp., 962 P.2d 1218 (Mont. 1998) (limitation clauses that limit specific damages upheld against § 28-2-702 challenge)
- Tunkl v. Regents of Univ. of Cal., 383 P.2d 441 (Cal. 1963) (distinguishes exculpatory clauses affecting public interest from negotiated business limitations)
- CAZA Drilling (California), Inc. v. TEG Oil & Gas U.S.A., Inc., 142 Cal. App. 4th 453 (Cal. Ct. App. 2006) (business-to-business limitation clauses between sophisticated parties unlikely to implicate public policy)