A limitation to the consequential damages between two parties is valid and enforceable in Missouri, according to an Eighth Circuit Court of Appeals ruling.
On Sept. 7, the federal appeals court affirmed a $3.6 million judgment in favor of Jacobson Warehouse Company in contract litigation against Schnucks grocery store chain, according to media reports.
“It’s a long-standing precedent but it has confirmed that the principle is the law of Missouri and the specific limitation of liability in Jacobson’s contract is valid,” said attorney Lawrence Friedman, who represented Jacobson. “That was important to us because we have other contracts with other entities.”
Consequential damages are special damages resulting from a litigant’s breach or failure.
“It is reciprocal,” Friedman told the St. Louis Record. “Schnucks agreed not to sue us for consequential damages and we agreed not to sue Schnucks for consequential damages.”
The Jacobson Warehouse Company was managing Schnuck’s Northpark distribution center in St. Louis at the time the dispute emerged.
“The jury correctly decided that any problems in the warehouse were not caused by mismanagement on the part of Jacobson,” Friedman said. “We argued that there were problems with the start-up in the warehouse and those problems were caused by the fact that Schnucks required Jacobson to begin operations before the warehouse was completely ready and before we had time to train the workforce on site. The jury, demonstrated by its verdict, agreed with us and that's why the jury rejected the argument that Schnucks should not have to pay for the expenses we incurred.”
In Jacobson Warehouse Co., Inc. v. Schnuck Markets, Inc., Schnucks alleged that their warehouse had been mismanaged to the point of food spoiling, as previously reported in the St. Louis Record. The warehouse sued after Schnucks began withholding payments.
“The judge ruled that we were the net prevailing party and I think anybody would agree with that,” Friedman said. “We sought $3.2 million in damages and the jury awarded us $3.1 million. Schnucks sought originally more than $2 million in damages and the jury awarded them $147,000.”
The Eighth Circuit upheld the U.S. District Court for the Eastern District of Missouri’s denial of attorney fees that Jacobson had requested.
“We had argued that under the contract we should be able to recover our legal fees but the judge ruled that the attorney's fee recovery provision in the contract did not apply," Friedman added. "We argued that it did apply to this particular claim. The trial judge disagreed with that. We asked the Eighth Circuit to reverse it but the circuit affirmed. So our award includes costs, but not attorney's fees."