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Atlantic City Associates LLC v. Carter & Burgess Consultants, Inc.

2008 WL 4951354 (U.S. Dist. Ct. D. N.J. 2008) (Unpublished)

CONTRACTS — Where a damage capping provision in one part of an agreement is, by the terms of the agreement, expressly overriden by another part of the agreement that permits indemnity for negligence, the provision to cap damages will not survive.

A company provided architectural, engineering, and other design services for a construction project. At the outset, it submitted a service proposal which capped any legal damages. Subsequently, the parties entered into a signed agreement that incorporated the service proposal’s terms unless they would conflict with the express terms of the agreement. The agreement had a waiver of consequential damages provision. The agreement also contained an expressed indemnity provision under which the service provider was to indemnify and hold the property owner harmless from any and all claims caused by the service provider’s negligence.

Disputes arose under the agreement, and the owner filed suit seeking damages. The service provider filed a motion for summary judgment seeking dismissal of the claims for consequential damages and for a limitation on the amount of damages that the owner could potentially recover under the contract. The Court first found that the indemnification provision of the agreement could be harmonized with the consequential damages provision of the agreement by permitting indemnity for direct damages allegedly caused by the service provider’s negligence. As to any damages cap, the Court found the proposal’s damage capping provision in the original services proposal was in conflict with the agreement’s provisions for indemnification for all claims except for consequential damages to the extent caused by negligent acts. Therefore, that proposal’s provision to cap damages could not survive under the integrated agreement.

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