## Facts

- Potomac Constructors, LLC served as general contractor for the Maryland approach spans of the Woodrow Wilson Bridge replacement project under a contract with strict schedule requirements and daily delay penalties.
- Potomac issued a purchase order to EFCO Corp. (about $2.075 million) to engineer and supply steel formwork used to cast concrete segments for the bridge support structure.
- Potomac alleged EFCO caused major project delay through late deliveries and poor-quality formwork, and sought roughly $13 million in damages.
- Potomac sued for (1) breach of contract based on late delivery, defective design, and nonconforming formwork; (2) negligence in design; and (3) indemnification for costs owed to third parties allegedly impacted by EFCO’s negligence.
- The purchase order included (a) an exclusive remedy limiting EFCO’s liability to repair or replacement of defective property and (b) broad disclaimers barring incidental and consequential damages and limiting any recovery to actual direct repair/replacement costs; it also stated EFCO assumed no liability for loss or damage arising from delay.
- EFCO moved for partial summary judgment to limit contract damages and moved for summary judgment on the negligence and indemnification claims, relying on the economic loss doctrine.

## Issues

1. Whether the purchase order’s exclusive-remedy and limitation-of-liability provisions barred Potomac’s claimed consequential, incidental, and delay-related damages for breach of contract.
2. Whether the economic loss doctrine barred Potomac’s negligence and indemnification claims seeking project-delay and other economic losses, and whether any exception permitted a portion of those claims to proceed.

## Decision

- The court granted EFCO’s motion for partial summary judgment on contract damages, enforcing the purchase order’s exclusive remedy and liability limitations to bar consequential, incidental, and most delay-related damages.
- The court granted in part and denied in part EFCO’s motion for summary judgment on negligence and indemnification, holding that the economic loss doctrine barred most claimed tort damages but that a narrow exception could allow limited recovery on a subset of the claims.

## Legal Principles

- In a commercial transaction governed by an express contract, unambiguous limitation-of-liability and consequential-damages exclusion clauses are generally enforceable and will restrict recovery to the remedies specified by the parties.
- An exclusive remedy limiting recovery to repair or replacement does not open the door to consequential damages unless the remedy fails of its essential purpose.
- Contractual allocations of delay risk and disclaimers of delay-related liability can bar attempts to shift project delay costs and penalties to a supplier through contract damages.
- The economic loss doctrine generally bars tort recovery for purely economic losses arising from a contractual relationship; tort claims may proceed only within recognized exceptions (e.g., damage to other property or an independent duty).

## Conclusion

The court enforced the purchase order’s repair-or-replacement remedy and broad damages limitations to prevent the contractor from recovering consequential and delay damages for alleged late and defective formwork, and it applied the economic loss doctrine to dispose of most negligence and indemnification theories while permitting only a narrow, exception-based portion of the tort claims to continue.


Potomac Constructors, LLC v. EFCO Corp., 530 F. Supp. 2d 731 (D. Md. 2008)