Enforceability of Limitation of Liability Clauses
Limitation of Liability
West Virginia courts generally permit limitations of liability. State of W. Va. ex rel. Johnson Controls, Inc. v. Tucker, 729 S.E.2d 808, 820 (W. Va. 2012) (enforcing provision in arbitration clause that limited the right to recover consequential damages). If the court finds the parties lacked equal bargaining power, it may find the limitation of liability unconscionable. See Art’s Flower Shop, Inc. v. Chesapeake & Potomac Tel. Co. of W. Va., Inc., 413 S.E.2d 670, 675 (W. Va. 1992) (finding a limitation of liability clause void for unconscionability where the bargaining power of the parties was grossly unequal).
West Virginia courts also recognize exculpatory provisions and enforce them unless contrary to public policy. A clause will be held contrary to public policy if it absolves a party of liability for failure to conform to a statutorily imposed standard of conduct. See Finch v. Inspectech, LLC, 727 S.E.2d 823, 832 (W. Va. 2012) (holding that a limitation of liability clause in a home inspection contract was invalid and unenforceable as contrary to public policy because the home inspector sought to limit liability for a standard of care regulated by statute); see also Murphy v. N. Am. River Runners, Inc., 412 S.E.2d 504, 510-11 (W. Va. 1991) (holding that exculpatory clause was unenforceable because it attempted to relieve a whitewater rafting company of its duty to act in accordance with the statutory standard of conduct prescribed by the legislature to protect the consumers). Parties may exculpate themselves from gross negligence only if the circumstances clearly indicate the parties’ intent. Murphy, 412 S.E.2d at 510.
- Va. Code Ann. § 55-8-14 (West 2021) invalidates provisions in construction contracts that purport to indemnify against liability for damages arising out of bodily injury to persons or property damage caused by the indemnitee’s sole negligence. Under the “sole negligence” standard, courts only apply this statute when finding the indemnitee one hundred percent negligent. Dalton v. Childress Serv. Corp., 432 S.E.2d 98, 101-02 (W. Va. 1993). The statute does not apply to a requirement to purchase insurance. W. Va. Code Ann. § 55-8-14 (West 2021).
Enforceability of Waiver of Consequential Damages Clauses
West Virginia courts have not directly addressed the enforcement of contractual waivers of consequential damages in the construction context, but it appears that they may likely enforce such clauses because they have enforced contractual limitations of liability in other contexts. Generally, West Virginia courts recognize the validity of contractual waivers, provided they are not unconscionable or operate to limit liability for conduct regulated by statute. See Steinbrecher v. Jones, 153 S.E.2d 295, 301–02 (W. Va. 1967) (noting that lack of consideration “does not prohibit the waiver of any rights that the parties may have under the provisions of a building contract”).
In the context of transactions for the sale of goods, the West Virginia Uniform Commercial Code allows a buyer to recover consequential damages from the seller under appropriate circumstances. See W. Va. Code §§ 46-2-711 – 46-2-14, 46-2-715(2). However, West Virginia code section 46-2-719 permits the buyer and seller to contract to limit or exclude consequential damages unless the limitation or exclusion is unconscionable or where the circumstances cause a contractually specified limited or exclusive remedy to fail of its essential purpose. Moreover, with respect to goods that are the subject of or are intended to become the subject of a “consumer transaction,” section 46A-6-107(2) provides that “no merchant may . . . [e]xclude, modify or attempt to limit any remedy provided by law, including the measure of damages available, for a breach of warranty, express or implied.” “Consumer transaction” is defined as a “sale or lease to a natural person or persons for a personal, family, household or agricultural purpose.” W. Va. Code § 46A-6-102(2); see, e.g., Wolfe v. Welton, 558 S.E.2d 363, 375 (W. Va. 2001) (holding as void “any exclusion, modification, or attempted limitation of warranties or legal remedies . . . arising in sales of goods” to consumers, including both the sales of new goods and used goods); but see Appalachian Leasing, Inc. v. Mack Trucks, Inc., 765 S.E.2d 223, 230 (W. Va. 2014) (enforcing dealer’s and manufacturer’s disclaimers of warranties where both parties agreed that the purchase of four trucks was not a consumer transaction subject to section 46A-6A-1).
Application of Economic Loss Doctrine
West Virginia courts recognize the traditional economic loss doctrine to negligence claims but provide a narrow exception to the doctrine’s application when a “special relationship” exists between the parties. Aikens v. Debow, 541 S.E.2d 576, 579 (W. Va. 2000) (“An individual who sustains economic loss … may not recover [tort] damages in the absence of physical harm to that individual’s person or property, a contractual relationship with the alleged tortfeasor, or some other special relationship between the alleged tortfeasor and the individual who sustains purely economic damages sufficient to compel the conclusion that the tortfeasor had a duty to the particular plaintiff and that the injury complained of was clearly foreseeable to the tortfeasor”); see also Glascock v. City Nat’l Bank of W. Va., 576 S.E.2d 540, 546 (W. Va. 2002) (holding that a special relationship existed between borrowers and construction loan lender such that the lender had a special duty to disclose adverse information to the borrower). The doctrine also applies to strict liability claims. See Waters v. Electrolux Home Prods., Inc., No. 5:13CV151(STAMP), 2016 WL 3926431, at *3 (N.D.W. Va. July 18, 2016) (citing Star Furniture Co. v. Pulaski Furniture Co., 297 S.E.2d 854, 859 (W. Va. 1982)).
In the design and construction context, the Supreme Court of Appeals of West Virginia has expressly held that a design professional and a contractor on the same project have a “special relationship” such that the design professional owes a special duty of care to a contractor who relies on the design professional’s work product in carrying out its obligations to the owner, notwithstanding an absence of privity. Eastern Steel Constructors, Inc. v. City of Salem, 549 S.E.2d 266, 275 (W. Va. 2001). Consequently, a contractor in West Virginia may, upon proper proof, recover purely economic damages for negligence against a design professional. Id.
Enforceability of No Damages for Delay Clauses
While West Virginia courts have not directly addressed the enforceability of no-damages-for-delay clauses, the U.S. District Court for the Northern District of West Virginia predicted that West Virginia courts would enforce such clauses. See U.S. v. Travelers Cas. & Sur. Co., 55 F. Supp. 3d 852, 860-61 (N.D. W. Va. 2014).
Strict Interpretation of Contract
West Virginia courts strictly interpret contracts and the court’s goal is to give effect to the parties’ intent. In re Joseph G., 589 S.E.2d 507, 512 (W. Va. 2003). The language of a contract must be afforded its plain meaning and where the language is plain, it must be given effect, such that no further construction or interpretation is permissible. Stone v. Nat’l Sur. Corp., 125 S.E.2d 618, 619 (W. Va. 1962). If the contract language is ambiguous the court will look to extrinsic evidence to determine the parties’ intent. Fraternal Order of Police, Lodge No. 69 v. City of Fairmont, 468 S.E.2d 712, 716 (W. Va. 1996). However, “[t]he mere fact that parties do not agree to the construction of a contract does not render it ambiguous. The question as to whether a contract is ambiguous is a question of law to be determined by the court.” Lee v. Lee, 721 S.E.2d 53, 56 (W.Va. 2011) (citing Berkeley County Public Service Dist. v. Vitro Corp. of America, 162 S.E.2d 189 (W.Va. 1968)). Generally, whenever the language of a contractual provision is reasonably susceptible of two different meanings or where reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous. Shamblin v. Nationwide Mut. Ins. Co., 332 S.E.2d 639 (W.Va. 1985). Stated differently, “[c]ontract language is considered ambiguous where an agreement’s terms are inconsistent on their face or where the phraseology can support reasonable differences of opinion as to the meaning of words employed and obligations undertaken.” State ex rel. Frazier & Oxley, L.C. v. Cummings, 569 S.E.2d 796 (W.Va. 2002). West Virginia courts utilize the contract construction principle of contra proferentem whereby “[u]ncertainties in an intricate and involved contract should be resolved against the party who prepared it.” Jochum v. Waste Management of W. Virginia, 680 S.E.2d 59, 64 (W. Va. 2009) (quoting Syllabus Point 1, Charlton v. Chevrolet Motor Co., 174 S.E. 570 (W. Va. 1934)). However, West Virginia courts will not apply the contra proferentem rule in a way as to contravene the parties’ intent. W. Virginia Inv. Mgmt. Bd. v. Variable Annuity Life Ins. Co., 820 S.E.2d 416, 430 (W. Va. 2018).
Prompt Payment Requirements (Public/Private)
West Virginia Public – W. Va. Code §§ 7-5-7 (2022) (county); W. Va. Code § 8-13-22d (2022) (municipality) (owner to prime within 60 days of receipt of legitimate invoice; interest at statutory rate).
West Virginia Private – N/A
False Claims Statute
Federal False Claims Act – 31 U.S.C. § 3729-3733 – Many states have enacted false claims statutes modeled on the federal False Claims Act (referenced as the “FCA” throughout this survey). 31 U.S.C. §§ 3729–3733. State analogues to the FCA aim to address claims involving state and local governments instead of the federal government. This summary identifies the FCA’s state analogues for construction claims. It does not address false claims statutes for other subjects, such as health care claims, applications for public assistance, or insurance claims.
The FCA defines “claim” as any request or demand for money or property where the government will provide or reimburse any portion of that money or property. Id. § 3729(b)(2). The FCA imposes civil liability for any of seven separate acts including: 1) knowingly presenting a false claim for payment; 2) knowingly making a false record or statement to obtain approval of a claim; 3) conspiring to obtain approval of a false claim; 4) knowingly delivering less than the amount of money or property owed to the government; 5) delivering a receipt for government property without knowledge of the receipt’s veracity and with intent to defraud; 6) knowingly purchasing or receiving public property from a government employee or member of the Armed Forces illegally; and 7) knowingly making or using a false record or statement to decrease a payment obligation to the government. Id. § 3729(a)(1).
A person found guilty of any of the above acts is liable to the government for: 1) a civil penalty between $5,000 and $10,000, as adjusted by inflation; 2) three times the amount of damage sustained by the government; and 3) the costs of a civil action brought to recover damages sustained by the government. Id. § 3729(a)(1-3). The FCA, however, allows mitigation of the penalty if the violator cooperates with the government’s investigation. Courts may reduce the violator’s liability to two times the amount of damage sustained by the government when the violator: 1) provides all of the information known about that violation to the investigative team within 30 days of gaining such knowledge; 2) provides the information without actual knowledge of the investigation and before the government files charges; and 3) fully cooperates with the government’s investigation. Id. § 3729(a)(2).
West Virginia – N/A
Licensing Requirements for Construction Managers
The West Virginia Contractor Licensing Act requires all persons performing construction contracting work in the state to be duly licensed. See W. Va. Code Ann. §§ 30-42-2. The statute’s definition of a contractor expressly includes a “construction manager who performs management and counseling services for a construction project for a professional fee.” Id. § 30-42-3(3). Therefore, construction managers in West Virginia must meet all licensing requirements applicable to contractors.