September 22, 2020
- Whether the trial court erred in granting the defendant’s motions to dismiss?
The defendant provided technology support to the plaintiff under a contract which included a limitation of liability clause that indicated the defendant would not be liable for, among other things, consequential damages for loss of data. The plaintiff filed breach of contract and negligence claims against the defendant arising out of the plaintiff’s loss of data after the defendant had failed to properly back it up. The defendant filed a motion to dismiss based on the limitation of liability clause in the contract which the defendant alleged barred the plaintiff’s damages because they were consequential. The defendant also argued that New Hampshire law did not allow for the plaintiff’s theory of negligence. The trial court granted the motions to dismiss finding that the plaintiff’s negligence claim was precluded by the economic loss doctrine and finding that the limitation of liability clause was enforceable and therefore, the consequential damages sought by the plaintiff could not be recovered. The trial court awarded the plaintiff $40,000.00 in direct damages. On appeal, the plaintiff argued that its damage claims for the cost of recreating the lost data and lost business were direct damages. The Court affirmed the trial court’s finding that such damages were consequential damages. The plaintiff also argued that the limitation of liability clause in the contract was unenforceable because it prevented the plaintiff from obtaining a minimum adequate remedy and was therefore contrary to public policy. The Court held that the limitation of liability clause precluding recovery for consequential damages was enforceable and therefore, the plaintiff could not recover consequential damages. The plaintiff’s complaint did not allege that the defendant had negligently misrepresented facts in order to induce entrance into the contract, but instead alleged that the defendant had failed to exercise a reasonable standard of care in performing its work by failing to confirm that the plaintiff’s data was being backed up. Therefore, the Court found that the economic loss doctrine prohibited the plaintiff’s negligence claim as it was essentially a claim that the defendant failed to perform under the contract.
Shaheen, Guerrera & O’Leary, of North Andover, Massachusetts (Peter G. Shaheen on the brief and orally), for the plaintiff. Peabody & Arnold, of Boston, Massachusetts (John J. O’Connor on the brief and orally and Robert A. McCall on the brief) for the defendant.