<em>Zirkelbach Construction, Inc. v. DOWL, LLC dba DOWL HKM</em>: Do Parties Have the Freedom to Contractually Limit their Liability?

Appellant Zirkelbach paid over $1,000,000 to fix the mistakes of their subcontractor, Appellee DOWL. When Zirkelbach attempted to recover for DOWL’s negligence, the District Court held a clause in the parties’ contract limited DOWL’s liability to $50,000. On appeal, Zirkelbach argues that the limitation of damages constitutes an illegal exculpatory clause, which Montana’s courts have a long history of prohibiting. Zirkelbach contends that allowing DOWL to limit their liability would effectively permit DOWL to contract away repercussions for their negligence.

Zirkelbach also maintains that the clause is ambiguous and therefore should be disregarded. DOWL argues on appeal that their clause simply limits a part of liability, and therefore is not exculpatory. DOWL contends that this kind of clause is not only enforceable, but common between two sophisticated entities––such as Zirkelbach and DOWL––who have the freedom to contract. Ultimately, the Court must decide on appeal whether the freedom to contract extends to a party’s ability to limit their own liability to a minimal amount of their foreseeable damages.