A federal court in Louisiana last week refused to enforce a limitation of liability provision included in an extra work order holding that it was trumped by the parties’ subcontract (see Planet Construction v. Gemini Insurance, 2023 WL 4675387 (W.D. La. July 20, 2023)). Planet Construction was the general contractor hired to construct the Club 4 Fitness Center in Lake Charles, Louisiana. Planet Construction subcontracted the sprinkler system work to S&S Sprinkler Company. As the work progressed, S&S and Planet Construction executed two work orders for extra work. The extra work orders included a general terms and conditions section that contained the following provision:
If S&S shall be found liable for loss or damages due to a failure of inspection and/or testing in any respect, S&S liability shall be limited to the lesser of one-half of the current annual inspection charge paid by [Planet Construction] or $1,000.00 as liquidated damages and not as a penalty
After Hurricane Laura made landfall, Plant Construction discovered alleged defects in S&S’s workmanship and brought suit to recover breach of contract damages. S&S contended that its liability was limited to $1,000 by the provision included in the extra work orders. The court rejected this argument in light of the following provision in S&S’s Subcontract:
This Contract controls and governs the Work (as defined below) performed by Subcontractor for Contractor. It may be used in conjunction with written Work Orders between the Parties; however, nothing contained in any Work Order will be construed to change or amend the terms and conditions of this Contract.
Because the subcontract expressly prohibited modification or abrogation by work orders, the limitation of liability provision in the work order was deemed ineffective. Planet Construction’s breach of contract claim will therefore proceed to trial, where S&S’s liability will not be limited to $1,000.
