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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Transactions

Date & Time
  • event Date

    Thursday, July 21, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00
CLE
ALL

This CLE webinar will guide construction counsel on the exceptions to limitation of liability in construction agreements and claims. The panel will discuss how to address issues of bad faith, potential fraud, and recklessness in the initial agreement and how to mitigate those risks.

Faculty

Patrick A. Tighe
Attorney
Snell & Wilmer L.L.P.

Mr. Tighe has a varied commercial litigation practice and assists clients in resolving complex disputes through trial, alternative dispute resolution, and on appeal. He has experience in many types of business disputes, including real estate and construction litigation, employment litigation, appellate law, business tort and corporate governance litigation, class action, internal investigations, civil rights and constitutional litigation, replevin, and judgment enforcement. In his appellate practice, Mr. Tighe has argued before the United States Court of Appeals for the Ninth Circuit.

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Steven Nudelman
Partner
Greenbaum Rowe Smith & Davis, LLP

Mr. Nudelman concentrates his practice in construction law. For over two decades he has represented members of the construction industry across a broad spectrum of matters. Mr. Nudelman has defended and asserted claims on behalf of owners, developers, condominium associations, general contractors, design professionals, subcontractors, vendors and sureties involved in public and private construction projects. Mr. Nudelman has extensive experience handling construction claims related to a wide range of issues. These include payment disputes, change orders and extra work, construction defects, design and performance defects, errors and omissions/professional malpractice, building code violations, project management, delay and disruption, acceleration, liquidated damages, lost productivity, site conditions, warranties, project closeout, construction liens, municipal mechanic’s liens, condominium liens, payment and performance bonds, and public contracting.

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Description

A common feature of many construction and design contracts is a limitation of liability clause that limits or "caps" the amount of potential damages a party faces in the event of a breach. Courts will generally enforce limitation of liability clauses but there are at least four common ways to attack their enforceability under common law.

It is typically held that as a matter of public policy, a party should not benefit from a bargain it performed in bad faith. Examples of bad faith include "evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms and interference with or failure to cooperate in the other party's performance."

Another way to attack a limitation of liability clause is to consider whether a party seeking to invoke the limitation clause acted fraudulently or engaged in other intentional torts. The Restatement (Second) of Contracts prohibits contracts from exempting parties from "intentional ... tort liability." Fraud is one type of intentional tort, but this general statement about "intentional tort liability" would encompass other intentional torts, such as a breach of a fiduciary duty and the intentional interference with contract or business expectancy.

A party's reckless tort behavior may also render a limitation of liability clause unenforceable. Again, the Restatement (Second) of Contracts prohibits contracts exempting parties from "reckless tort liability." A party acts recklessly even if the party did not realize the high degree of risk involved but a reasonable person would have.

Listen as our expert panel discusses how a limitation of liability clause is not ironclad. The panel will discuss best practices when bringing a claim that seeks to avoid the limitation of liability due to one of these exceptions.

Outline

  1. Limitation of liability
    1. Cap on damages
  2. Exceptions
    1. Bad faith
    2. Intentional torts and fraud
    3. Recklessness
  3. Other exceptions

Benefits

The panel will discuss these and other issues:

  • When would an act by a construction professional be deemed bad faith?
  • What types of intentional torts by a construction stakeholder may be an exception to a limitation of liability?
  • What are other potential exceptions to limitation of liability provisions?