Will a Nebraska court enforce this cap or release on our own negligence?
Yes for ordinary negligence if the intention is clear and unequivocal, and no as to gross negligence or willful and wanton misconduct, and in Nebraska that second rule kills a damages CAP as readily as a full release. Sinu v. Concordia University states the test: “Exculpatory clauses are enforceable only where and to the extent that the intention to be relieved was made clear and unequivocal in the contract, and the wording must be so clear and understandable that an ordinary and knowledgeable party will know what he [or she] is contracting away”; such a clause “is strictly construed against the party claiming its benefit”; and “[e]ven if clear and unambiguous, an exculpatory clause will be unenforceable if it is unconscionable or void as against public policy”, because “[p]ublic policy prevents a party from limiting its damages for gross negligence or willful and wanton misconduct.” New Light Co. v. Wells Fargo Alarm Services is where that rule reaches a cap. It holds “public policy with regard to gross negligence and willful and wanton misconduct applies both to clauses attempting to exculpate liability and clauses attempting to limit damages to a nominal sum”, and “We therefore hold that this limitation-of-damages clause does not create an enforceable limitation on Wells Fargo’s liability for an action based upon gross negligence or willful and wanton misconduct”. Whether a clause survives is fact-specific and subject-matter driven: “Whether a particular exculpatory clause in a contractual agreement violates public policy depends upon the facts and circumstances of the agreement and the parties involved”, and “[t]he greater the threat to the general safety of the community, the greater the restriction on the party’s freedom to contractually limit the party’s liability.” Two things do survive in construction, both insurance-backed. Lexington Insurance Co. v. Entrex Communication Services, Inc.: “We conclude that the district court correctly determined that contractual waivers of subrogation are effective to bar gross negligence claims”, expressly declining to extend New Light. And Hearst-Argyle Television, Inc. v. Entrex Communication Services: “a contractual provision should not be declared void as contrary to public policy unless it is clearly and unmistakably repugnant to the public interest”, upholding an AIA deductible allocation.
The trap
Your cap fails in Nebraska not because it is too low but because it is silent, and then it fails again if you fix the silence. New Light took both routes in one opinion. First as construction: “The exculpatory clause makes no mention of gross negligence or willful and wanton misconduct on the part of Wells Fargo. Therefore, gross negligence and willful and wanton misconduct were not contemplated by the parties.” Then as policy: “Even if the exculpatory clause could be construed to include gross negligence and willful and wanton misconduct, public policy prohibits such an exclusion.” There is no drafting cure. The $10,000 cap struck there was drafted the ordinary way (“this limitation on damages is unqualified, limiting all damages of whatever cause”), which is exactly how an “in no event shall liability exceed the fees paid” clause reads. Second trap: the exposure tracks the stakes of the work, not the size of the number, so the same cap that holds on a low-risk services deal loses on life-safety work. Third trap, and it is the one that catches counsel from Tunkl states: Nebraska has never cited Tunkl (0 occurrences in all 51,154 published Nebraska opinions), so there is no six-factor public-interest test to argue. What Sinu offers instead is a two-prong framing the Court attributed to a Minnesota case, “(1) whether there was a disparity of bargaining power between the parties and (2) the types of services being offered or provided”, and it is described as what “[o]ther jurisdictions have adopted” rather than announced as Nebraska law. Fourth: the durable Nebraska device in construction is not a cap at all. It is a mutual waiver of subrogation backed by builder's risk insurance, which Lexington and Hearst-Argyle enforce even against gross-negligence claims because the contract put the loss where insurance was supposed to be: in Hearst-Argyle that still cost the owner its own $250,000 deductible. Fifth, a research trap: Bedrosky v. Hiner upheld a lessor's exculpation on very broad words, but New Light confines it. The Bedrosky plaintiffs made no allegation of gross negligence or willful and wanton misconduct, and New Light says it does not interpret Bedrosky as a blanket approval of exculpatory clauses in all factual situations.
28 authorities
The words that state the rule
Exculpatory clauses are enforceable only where and to the extent that the intention to be relieved was made clear and unequivocal in the contract, and the wording must be so clear and understandable that an ordinary and knowledgeable party will know what he [or she] is contracting away.
The words that state the rule
Both exculpatory and indemnity clauses must make clear the effect of the agreement. And such a clause is strictly construed against the party claiming its benefit.
The words that state the rule
Even if clear and unambiguous, an exculpatory clause will be unenforceable if it is unconscionable or void as against public policy.
The words that state the rule
Public policy prevents a party from limiting its damages for gross negligence or willful and wanton misconduct.
The words that state the rule
Other jurisdictions have adopted a two-prong test for determining whether exculpatory clauses are invalid as contrary to public policy: (1) whether there was a disparity of bargaining power between the parties and (2) the types of services being offered or provided.
The words that state the rule
Further, the services offered by the university were not a public or essential service.
The words that state the rule
We agree with the New York court that public policy with regard to gross negligence and willful and wanton misconduct applies both to clauses attempting to exculpate liability and clauses attempting to limit damages to a nominal sum.
The words that state the rule
We therefore hold that this limitation-of-damages clause does not create an enforceable limitation on Wells Fargo’s liability for an action based upon gross negligence or willful and wanton misconduct
The words that state the rule
The exculpatory clause makes no mention of gross negligence or willful and wanton misconduct on the part of Wells Fargo. Therefore, gross negligence and willful and wanton misconduct were not contemplated by the parties.
The words that state the rule
Even if the exculpatory clause could be construed to include gross negligence and willful and wanton misconduct, public policy prohibits such an exclusion.
The words that state the rule
Whether a particular exculpatory clause in a contractual agreement violates public policy depends upon the facts and circumstances of the agreement and the parties involved.
The words that state the rule
The greater the threat to the general safety of the community, the greater the restriction on the party’s freedom to contractually limit the party’s liability.
The words that state the rule
this limitation on damages is unqualified, limiting all damages of whatever cause, including those that *65 accrue due to Wells Fargo’s gross negligence or willful and wanton misconduct.
- case749 N.W.2d 124Lexington Insurance Co. v. Entrex Communication Services, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
We conclude that the district court correctly determined that contractual waivers of subrogation are effective to bar gross negligence claims.
- case749 N.W.2d 124Lexington Insurance Co. v. Entrex Communication Services, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
We decline, however, to extend our discussion in New Light Co. to this case involving a contractual waiver of subrogation.
- case778 N.W.2d 465Hearst-Argyle Television, Inc. v. Entrex Communication ServicesNeb.decided 2010read it at the source ↗
The words that state the rule
a contractual provision should not be declared void as contrary to public policy unless it is clearly and unmistakably repugnant to the public interest
- case778 N.W.2d 465Hearst-Argyle Television, Inc. v. Entrex Communication ServicesNeb.decided 2010read it at the source ↗
The words that state the rule
On balance, based on the facts and circumstances of the contract and the parties involved, [26] we conclude that enforcement of subparagraph 11.4.1.3 is not contrary to public policy.
The words that state the rule
In Bedrosky , we did not specifically address the issue of gross negligence or willful and wanton misconduct, and we do not now interpret Bedrosky to be a blanket approval of exculpatory clauses in all factual situations.
The words that state the rule
The Court of Appeals’ application of Bedrosky would have been correct if this case had involved exculpation from ordinary negligence.
The words that state the rule
It is important to note at this juncture that the student and his mother’s claim is limited to ordinary negligence. We need not address the release’s enforceability if the student and his mother had alleged gross negligence.
- case778 N.W.2d 465Hearst-Argyle Television, Inc. v. Entrex Communication ServicesNeb.decided 2010read it at the source ↗
The words that state the rule
If the property insurance requires deductibles, [Hearst] shall pay costs not covered because of such deductibles.
- case778 N.W.2d 465Hearst-Argyle Television, Inc. v. Entrex Communication ServicesNeb.decided 2010read it at the source ↗
The words that state the rule
Hearst continued to press its claim for $250,000 in alleged damages that had not been covered by insurance, because of its insurance policy deductible.
- case778 N.W.2d 465Hearst-Argyle Television, Inc. v. Entrex Communication ServicesNeb.decided 2010read it at the source ↗
The words that state the rule
And had the terms of the contract been followed to the letter, none of the alleged damages would have been uninsured.
- case749 N.W.2d 124Lexington Insurance Co. v. Entrex Communication Services, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
The Owner and Contractor waive all rights against . . . each other and any of their subcontractors . . . for damages caused by fire or other causes of loss to the extent covered by property insurance obtained pursuant to this Paragraph 11.4 or other property insurance applicable to the Work, except such rights as they have to proceeds of such insurance held by the Owner as fiduciary.
- case749 N.W.2d 124Lexington Insurance Co. v. Entrex Communication Services, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
Unless otherwise provided, the Owner shall purchase and maintain . . . property insurance written on a builder's risk "all-risk" or equivalent policy form in the amount of the initial Contract Sum, plus value of subsequent Contract modifications and cost of materials supplied or installed by others, comprising total value for the entire Project at the site on a replacement cost basis without optional deductibles.
- case749 N.W.2d 124Lexington Insurance Co. v. Entrex Communication Services, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
The contract between Hearst and Entrex was an American Institute of Architects (AIA) standard form of agreement, document A101-1997.
The words that state the rule
For example, a contractual agreement to dig a ditch does not have the same public policy considerations as would the installation of a fire alarm system *64 in a school, hospital, nursing home, restaurant, or other heavily occupied building.
The words that state the rule
The plaintiffs made no allegations of gross negligence or willful and wanton misconduct.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.