Here at Musings, I have often (some might say too often) discussed the fact that in Virginia (as well as other places), your construction contract language will be strictly enforced. I have also discussed the need for attorney fees provisions as well as other language in order to mitigate your risk as a contractor. A recent case from the City of Roanoke Circuit Court discussed both of these principals and their intersection.
In LAM Enterprises, LLC v. Roofing Solutions, Inc., the Roanoke Court looked at a contract between LAM and Roofing Solutions, Inc. that contained two provisions of the construction contract between the parties. The first provision limited the liability of Roofing Solutions to the contract price. The second provision is a relatively typical “prevailing party” attorney fees provision in which the winner of any lawsuit would be entitled to collect its attorney fees. For the specific language of these provisions, I commend the opinion linked above for your reading.
Where this case got interesting was when the total of liability for the breach of contract by Roofing Solutions plus the attorney fees of LAM’s attorneys exceeded the total contract price. Roofing Systems filed a motion for partial summary judgment to limit the total liability including attorney fees to the capped amount, in this case $44,900.00. Needless to say, the plaintiff’s attorneys argued that the attorney fees provision was wholly separate from the contractual liability cap. The Court, in reconciling the two provisions determined that the liability cap imposed a total liability (fees and all) of the $44,900.00. In doing so, the Court stated:
The parties, with eyes wide open, entered into their contract and specifically agreed to the liability cap provision. Thus, for this court to conclude that Roofing Solutions’ liability could exceed the contract price would ignore the plain meaning of that provision. Should LAM be the prevailing party in a suit or arbitration to resolve a contract dispute, then it would be entitled to recover attorneys’ fees, as long as those fees don’t exceed the liability cap.
In short, the well drafted provision capping liability was key in limiting the total exposure of Roofing Systems for contractual liability of any kind and giving Roofing Systems some certainty of risk. While this is a trial court opinion and it looks as if the trial has yet to occur, the Court followed the usual course of Virginia courts and gave full effect to all of the contract’s provisions. The case also highlights the need to get the assistance of an experienced construction attorney when either drafting or reviewing any contractual language that you may be asked to sign relating to a construction project.
As always, I recommend that you read the opinion and let me know if you have any thoughts.
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