A business relationship between two contract partners sours and the pair ends up in commercial litigation. There’s not necessarily anything noteworthy in that alone. However, the court action between a North Florida airpark authority and an engineering firm once again demonstrates the importance of careful contract negotiation and drafting, as well as the extent to which small details can make a big difference in the outcome of your commercial contract case. As always, be sure you have reliable Florida business and commercial attorneys on your side at every step in the process.
The agreement that preceded the litigation related to a construction job. The airpark authority contracted with the engineering firm to work on the construction of hangars and taxiways. The contract said that the firm would provide, among other things, resident engineering and inspection, along with material testing. Specifically, the firm was supposed to observe the construction of the hangars and taxiways to determine if the work was adequate.
The relationship between the authority and the engineering firm fell apart shortly after the hangars and taxiways did. According to the authority’s breach of contract lawsuit, the contractor used sub-standard materials but the engineering firm wrongfully failed to catch that fact, which caused the hangars and taxiways to deteriorate prematurely.
The lawsuit that followed focused not upon whether or not the firm had breached its obligations under the agreement, but how the harm that the breach caused should be categorized. That was supremely important because the contract between this airpark authority and the engineering firm said that, if a dispute arose, the authority could pursue a legal action to collect direct or general damages but that the engineering firm would “have no liability for indirect, special, incidental, punitive, or consequential damages of any kind.”
That left the parties to litigate exactly what type of damages it was that the authority sought. If the authority was right and the harm amounted to general damages, it could recover. If the firm was right and damages were consequential, then the authority would take $0.
The authority argued that the damages clearly were general damages, even citing to a well-known (especially to law school students) English case from the 1850s that says that general damages include things that arise “naturally” from the breach and also those things that the parties either did or reasonably could have contemplated at the time of the signing of agreement. The firm’s argument was that the deterioration happened due to a combination of its failure to supervise the contractor and the contractor’s improper preparation of the subgrade. This combination amounted to consequential damages, it contended.
The appeals court concluded that neither side’s supporting arguments were entirely “on point,” but that the firm was correct about the damages being consequential damages. In the past, when Florida courts have been presented with cases involving damages incurred by property owners who had to make repairs or replacements due, in part, to an inspector’s failure to detect a problem, that deficient inspection constituted a claim for consequential damages. This, the court reasoned, was a sufficiently similar type of situation.
Because the damages were consequential, that meant that they were subject to the waiver provision in the contract and the authority was not entitled to collect from the engineering firm.
For advice and advocacy upon which you can rely in your breach of contract or other commercial litigation action, reach out to the skilled South Florida commercial litigation attorneys at Stok Kon + Braverman. Our experienced team has been helping clients protect their business interests for many years.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.
More blog posts:
Piercing the Corporate Veil in Florida to Obtain the Damages Owed to You Under a Breach of Contract Judgment, Florida Business Lawyers Blog, Oct. 29, 2018
Two Little Words: How Even a Single Word Pair Can Make All the Difference in Your Florida Forum Selection Clause, Florida Business Lawyers Blog, Nov. 10, 2017