Enforceability of Limitation of Liability Clauses
Author: Saloni Shah and Joanna Kopcyzk
Limitations of Liability
Wyoming courts typically enforce a limitation of liability provision if it does not violate public policy. Fremont Homes, Inc. v. Elmer, 974 P.2d 952, 956 (Wyo. 1999) (finding employment contract contained limitation of remedies but that the clause was unenforceable because it exempted employee from liability for intentional torts). Parties to sale contracts may also limit remedies. Wyo. Stat. Ann. § 34.1-2-719(c) (West 2021).
“Exculpatory clauses or releases are contractual in nature, and [will be interpreted] using traditional contract principles and considering the meaning of the document as a whole.” Massengill v. S.M.A.R.T. Sports Med. Clinic, P.C., 996 P.2d 1132, 1135 (Wyo. 2000); see also Hall v. Perry, 211 P.3d 489, 493 (Wyo. 2009) (“Like any contract, in order to enter into a valid release, there must be offer, acceptance, and consideration.”).
In evaluating the enforceability of such a provision, Wyoming courts consider four factors: (1) whether a duty to the public exists; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language. Massengill, 996 P.2d at 1136 (citing Schutkowski v. Carey, 725 P.2d 1057, 1059-60 (Wyo. 1986)). Therefore, absent a violation of public policy, an exculpatory clause is likely to be enforced in Wyoming. Dimick v. Hopkinson, 422 P.3d 512, 517 (Wyo. 2018) (“Wyoming courts enforce exculpatory clauses releasing parties from liability for injury or damages resulting from negligence if the clause is not contrary to public policy”) (internal citations omitted).
In Excel Constr., Inc. v. HKM Eng’g, Inc., 228 P.3d 40 (Wyo. 2010), the court found that an exculpatory clause in a contract entered into by a town and project engineer concerning the town’s construction project to replace and improve water and sewer lines and which provided that decisions made by the project engineer would not give rise to any duty in contract, tort, or otherwise to the contractor, prohibited the contractor from recovering from the engineer for careless errors that were not made in bad faith, such as negligent acts, but did not bar claims involving bad faith such as fraud. Id. at 49.
Wyo. Stat. Ann. § 30-1-131 (West 2021) invalidates agreements pertaining to oil wells, gas or water, or mineral mines which purport to indemnify an indemnitee against liability for damages arising from (1) the sole or concurrent negligence of the indemnitee, its agents or employees, or (2) any accident which occurs in operations carried on at the direction of the indemnitee to the extent that the indemnification provision relieves the indemnitee from liability for his own negligence.
Enforceability of Waiver of Consequential Damages Clauses
At least one Wyoming court has enforced a waiver of consequential damages clause in the construction context. In Big-D Signature Corp. v. Sterrett Properites, LLC, 288 P.3d 72 (Wyo. 2012), the court referenced the parties’ mutual waiver of consequential damages clause (Article 4.3.10 of the AIA A201 General Conditions) and held that the contract clearly waived consequential damages. See id. at 81. Generally, Wyoming courts will enforce a limitation-of-liability provision if it does not violate public policy. See, e.g., Massengill v. S.M.A.R.T. Sports Med. Clinic, P.C., 996 P.2d 1132, 1136 (Wyo. 2000). In evaluating the enforceability of such a clause, Wyoming courts consider four factors: “(1) whether a duty to the public exists; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language.” Id. (quoting Schutkowski v. Carey, 725 P.2d 1057, 1060 (Wyo. 1986)).
In the context of transactions for the sale of goods, the Wyoming Uniform Commercial Code allows a buyer to recover consequential damages from the seller under appropriate circumstances. See Wyo. Stat. §§ 34.1-2-711 – 34.1-2-714, 34.1-2-715(2). However, Wyoming code section 34.1-2-719 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.
Application of Economic Loss Doctrine
Wyoming courts have adopted the economic loss doctrine. D & D Transp., Ltd. v. Interline Energy Servs., Inc., 117 P.3d 423, 427 (Wyo. 2005) (citing Rissler & McMurry Co. v. Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228, 1234 (Wyo. 1996)) (“Wyoming follows the economic loss rule, which bars recovery in tort when a plaintiff claims purely economic damages unaccompanied by physical injury to persons or property.”). In the context of construction cases, Wyoming courts have applied the economic loss doctrine to bar a general contractor’s negligence and negligent misrepresentation claims against a town’s project engineer, even where the parties did not have privity. Excel Constr. Inc. v. HKM Eng’g, Inc., 228 P.3d 40, 45 (Wyo. 2010) (“The Court continues to believe that parties to a construction contract have the opportunity to allocate the economic risks associated with the work, and that they do not need the special protections of tort law to shield them from losses arising from risks, including negligence of a design professional, which are inherent in performance of the contract.”).
Independent Duty Exception
Wyoming courts have adopted an “independent duty” exception to the economic loss doctrine. See id. at 46 (“[T]ort liability may still be premised on a duty independent of contractual duties.”). “Determining whether a particular [tort] claim is simply a repackaged contract claim requires consideration of the conduct alleged, its relationship to the contractual duties of the parties, the source of the tort duty alleged to have been breached, and the nature of the damages claimed.” Id. at 48; see also Sinclair Wyo. Refinery Co. v. A&B Builders, Ltd, No. 15-CV-91-ABJ, 2018 WL 4677793, at *3 (D. Wyo. Jan. 23, 2018) (rejecting negligence claims where tort duties matched duties set forth in contract). Recently, the Supreme Court of Wyoming held that the doctrine did not apply in a home owner’s negligent construction claim because Wyoming recognizes a home builder’s duty of reasonable care independent of his contractual duties. Rogers v. Wright, 366 P.3d 1264, 1275–76 (Wyo. 2016).
Enforceability of No Damages for Delay Clauses
The Wyoming Supreme Court has suggested that it may enforce no damages for delay provisions, as Wyoming courts seek to “interpret contracts to effectuate the parties’ intention, as expressed in the language of the agreement.” City of Gillette v. Hladky Constr., Inc., 196 P.3d 184, 200 (Wyo. 2008) (nonetheless finding that provision in contract was not a no damages for delay clause and, as such, did not preclude contractor’s recovery).
Strict Interpretation of Contract
In Wyoming, the primary focus in constructing or interpreting contracts is to determine the parties’ intent. Larson v. Burton Construction, Inc., 421 P.3d 538, 544 (Wyo. 2018) (quoting Pope v. Rosenberg, 361 P.3d 824, 830 (Wyo. 2015)). The court’s initial inquiry centers on whether the language of the contract is clear and unambiguous. Wadi Petroleum, Inc. v. Ultra Res., Inc., 65 P.3d 703, 708 (Wyo. 2003) (quoting Williams Gas Processing-Wamsutter Co. v. Union Pacific Resources Co., 25 P.3d 1064 (Wyo. 2001)). In doing so, the words used in a contract are given the plain meaning that a reasonable person would give. Claman v. Popp, 279 P.3d 1003, 1013 (Wyo. 2012). Wyoming courts recognize that the language of a contract is to be construed within the context in which it was written, therefore, the courts also may look to the surrounding circumstances, the subject matter, and the purpose of the contract to ascertain the intent of the parties at the time the agreement was made. Larson, 421 P.3d at 550 (quoting Wadi Petroleum, Inc., 65 P.3d at 708 (Wyo. 2003)). If it is determined as a matter of law that the contract language is clear and unambiguous, “the court only looks to the ‘four corners’ of the document in arriving at the intent of the parties.” Pope, 361 P.3d at 830 (quoting Claman 279 P.3d at 1013 (Wyo. 2012)). However, if the contract language is ambiguous and not apparent, the court will look to extrinsic evidence and rules of construction to determine the intent of the parties. Wolter v. Equitable Resources Energy Co., 979 P.2d 948, 951 (Wyo. 1999). An ambiguous contract is one “which is obscure in its meaning because of indefiniteness of expression or because of a double meaning being present.” Wadi, 65 P.3d at 708 (citing Farr v. Link, 746 P.2d 431, 433 (Wyo. 1987)). The existence of ambiguity is a question of law. Hensley v. Williams, 726 P.2d 90 (Wyo.1986). If ambiguity exists in the contract, Wyoming courts will construe the ambiguous terms against the drafter of the contract. Emulsified Asphalt, Inc. of Wyoming v. Transportation Comm’n of Wyoming, 970 P.2d 858, 864 (Wyo. 1998) (citing Mountain View/Evergreen Improvement and Service Dist. v. Casper Concrete Co., 912 P.2d 529, 532 (Wyo. 1996)). However, if the language of the contract is clear and unambiguous, Wyoming Courts will not resort to strict construction against the drafter. State Farm Fire and Cas. Co. v. Paulson, 756 P.2d 764, 765 (Wyo. 1988) (quoting Worthington v. State of Wyoming, 598 P.2d 796, 806 (Wyo. 1979)).
Prompt Payment Requirements (Public/Private)
Wyoming Public – Wyo. Stat. Ann. §§ 16-6-601 to 16-6-602 (2022) (owner to prime 45 days after invoice; interest at 1.5% per month for primes).
Wyoming 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).
Wyoming – N/A
Licensing Requirements for Construction Managers
In Wyoming, there are no statewide licensing requirements for general contractors or construction managers. Instead, Wyoming contractors may be required to obtain licenses at the local level, with licensing requirements varying by municipality.