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Tinton Falls, Borough of, v. Fellows

January 26, 1996

MARBRO, INC., PLAINTIFF,
v.
BOROUGH OF TINTON FALLS, DEFENDANTS / THIRD PARTY PLAINTIFFS, V. FELLOWS, READ & ASSOCIATES, THIRD PARTY DEFENDANTS.



John D'amico, J.s.c.

The opinion of the court was delivered by: D'amico

CIVIL ACTION

JOHN D'AMICO, J.S.C.

This matter comes before the court on a motion by third party defendant, Fellows, Read & Associates (FRA), for partial summary judgment to enforce as to defendant/third party plaintiff, Borough of Tinton Falls (Borough) a limitation of liability provision in an engineering services contract.

In 1988, the Borough proposed various improvements to a local park and contracted with FRA to design these improvements and serve as consultant during the construction phase of the project. Two separate contracts were entered into by the parties in order to effectuate these objectives.

During the course of construction, large quantities of glass emerged from the soil. The Borough therefore determined that the park was unusable and had to be resurfaced.

The construction phase contract dated September 27, 1988, includes the following limitation of liability provision as Paragraph 13:

The Client agrees to limit the Consultant's liability to the Client and to all Construction Contractors and Subcontractors on this project due to the Consultant's professional negligent acts, errors or omissions such that the total liability to all those named shall not exceed $32,500. It is agreed that this paragraph applies only to this contract for construction services.

The Borough was sued by plaintiff, Marbro *fn1, which subsequently filed a third-party complaint against FRA, alleging various counts of negligence. FRA now moves for summary judgment as to the amount of damages which may be recovered against it, arguing that the aforementioned provision limits its liability to the amount of $32,500. The Borough opposes this motion, arguing that the provision in question is void as a matter of law and is unenforceable.

There being no reported New Jersey decision on this issue, FRA relies upon the recent Third Circuit decision in Valhal Corp. v. Sullivan Assoc., Inc., 44 F.3d 195 (3d Cir. 1995), in support of its contention that the provision in question is enforceable. In that case, Valhal Corporation was a real estate developer, and Sullivan Associates was an architectural firm. The parties entered into a consulting agreement, which included the following provision:

The OWNER agrees to limit the Design Professional's liability to the OWNER and to all construction Contractors and Subcontractors on the project, due to the Design Professionals professional negligent acts, errors or omissions, such that the total aggregate liability of each Design Professional shall not exceed $50,000 or the Design Professional's total fee for services rendered on this project.

[ Id. at 198.]

At some point, a dispute arose as to height restrictions on a particular property. Valhal brought suit against Sullivan in Federal District Court, seeking damages in excess of $2,000,000 for breach of contract, negligence, gross negligence and negligent misrepresentation based upon Sullivan's failure to apprise Valhal of the height restriction. Id. at 199.

Sullivan moved for partial summary judgment, arguing that its liability was expressly limited to $50,000 pursuant to the aforementioned limitation of liability clause. Ibid. Valhal made a motion to strike this provision, arguing that it was unenforceable as a matter of public policy. The District Court ruled that the provision was indeed contrary to Pennsylvania law and public policy, particularly the state's anti-indemnification statute, Pa. Stat. Ann. tit. 68, ยง 491 (1994). Ibid. The court held that ...


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