Indiana Supreme Court Unequivocally Endorses The Economic Loss Doctrine

Posted on August 23, 2010 by Doug Allen

 

Economic losses concern defeated or diminished expectation interests arising out of inadequate or failed contractual performance, which involve neither personal injury nor physical damage to other property. The Economic Loss Doctrine provides that purely economic losses, originating out of and concerning contractual performance, are addressable, if at all, under contract principles. Conversely, economic losses are not recoverable in tort, given that none of its safety-protection interests are implicated by such disputes.

The Indiana Supreme Court recently affirmed this tenet in a landmark ruling, which upheld the trial and appellate courts preclusion of tort recovery against design professionals by a project owner for damages associated with alleged design and construction defects. 

On June 29, 2010 the Indiana Supreme Court issued its opinion in Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 2010 WL 2594314 (Ind.). This dispute arose from the renovation and expansion of a library and parking garage.  The Library directly entered into contracts with the architect and general contractor for the project. The project architect, in turn, subcontracted for services with various design professional consultants.  

The Library asserted negligence claims against some subcontractors and the architect’s structural engineer, seeking recovery for construction and design defects in its renovated and expanded facilities. The trial court dismissed the negligence actions based on the Economic Loss Doctrine, with the state’s court of appeals affirming. Indiana’s endorsement of the Economic Loss Doctrine in Indianapolis-Marion County Public Library eliminated any doubt as to its application to design professionals given the authoritative nature of the Court’s opinion.

In justifying the application of the Economic Loss Doctrine to this design/construction dispute, the Court reasoned that the Library established the expectations of the parties by entering into various contracts.  If recovery in tort were permitted, the Library could effectively circumvent the bargained-for exclusions and risk allocation outlined in the governing contracts. The Court, citing Chief Judge Cardozo’s seminal opinion in Ultramares Corp. v. Touche, noted that allowing tort recovery for economic losses would effectively eliminate the line between tort and contract and expose a party “‘to a liability in an indeterminate amount for an indeterminate time to an indeterminate class.’"

In Indianapolis-Marion County Public Library, the owner advanced five arguments against the application of the Economic Loss Doctrine, including: 1) “other property” was damaged; 2) the damages were physical or created imminent risk of physical harm; 3) the defendants are professionals; 4) the defendants negligently misrepresented facts; and 5) the defendants provided solely services and not tangible products. 

So what constitutes other property in the context of the Economic Loss Doctrine? In Indiana, the issue is addressed by examining what product or service was secured by the plaintiff. The rationale behind this approach is that a supplier of an allegedly defective product or service is only in a position to bargain for the appropriate risk allocation with the purchaser relative to performance expectations. However, a supplier of a component product or service cannot generally negotiate with the end user or consumer. If damage to the finished product constituted other property, suppliers would be subject to uncertain liability, which is an underlying policy justification for the application of the Economic Loss Doctrine. To provide further context, in Indianapolis-Marion County Public Library, the Court found that the Library purchased a complete, renovated library and parking garage. The alleged defective “products” were the designs, construction materials and construction services, all of which collectively comprised the final product. Accordingly, the Indiana Supreme Court held that any physical damage in the completed facility would not and could not constitute “other property”.

Having decided that the plaintiff’s damages were not to other property, there was no reason for the Indiana Court to address the argument that the Library’s damages were physical damages to property. Nevertheless, the Court addressed the owner’s contention that the alleged defects created an imminent risk of physical harm, thereby excepting this case from the economic loss rule. Here, the Court simply relied on the precedent it established in Progressive Ins. Co. v. General Motors, Corp., which precluded a strict tort products liability action where the absence of personal injury was concededly fortuitous. Consequently, the Court held that the Economic Loss Doctrine applied the owner’s negligence claim despite the alleged presence of imminent risk of physical danger.

Regardless of the nature of injury, the Library maintained that the Economic Loss Doctrine should not apply to professionals, negligent misrepresentation claims and/or defective services.

The owner contended that the Economic Loss Doctrine should not be applied to design professionals as a matter of law. The Library compared design professionals to other service professionals (e.g. attorneys) where tort liability exists based on duties that arise outside of contractual obligations. For support in extending such a paradigm to design professionals, the plaintiff relied on Peters v. Forster where the Indiana Supreme Court found that design professionals owe a duty of care to third parties where injury is foreseeable. 

The Court rejected this analysis in relying on decisional law of other jurisdictions which addressed the application of the Economic Loss Doctrine to design professionals. The foreign decisions were divided into cases where privity of contract was present and cases where it was not.

Where plaintiffs were in privity of contract with the defendant-design professional, the Indiana Supreme Court cited Arizona and Nevada opinions in finding no justifiable distinction for applying the Economic Loss Doctrine to contractors while allowing tort claims against design professionals. There was simply no differing policy concern underlying contractors and design professionals relative to the application of the economic loss rule since each were being charged with alleged qualitative dissatisfaction in the performance of contractual duties.

In circumstances where plaintiffs are not in contractual privity with the defendant-design professionals, the Court ruled that the absence of a contractual right of action would not therefore create a negligence liability against such parties. Alternatively stated, the Library did not acquire an impermissible right of action against those entities who were not in privity of contract with the owner. 

The Indiana Supreme Court clearly recognized that permitting tort recovery for qualitative injuries would undermine and frustrate the bargained-for allocation of risk throughout the network of agreements without any overriding “unfairness” to justify upsetting the negotiated balance. A project owner allegedly sustaining economic losses is permitted its rights of action against those entities in privity of contract (or against those who extend warranties in their favor). Those entities may, in turn, pursue their derivative contractual rights against their privity parties through the network of contracts until liability resides with the ultimately culpable and responsible party. As such, the Indiana Supreme Court held that the Economic Loss Doctrine precludes negligence actions by owners against design professionals wherever and whenever the underlying claims consist of nothing more than defeated or diminished contractual expectations.

The Library’s position respecting the negligent misrepresentation exception to the Economic Loss Doctrine was summarily rejected by the Court. Of interest, no distinction was drawn between those engagements where the design professional’s services results in a tangible improvement to property as opposed to those where “pure information” was provided (e.g. an architect’s building audit for a prospective purchaser). Here, the Court held that the negligent misrepresentation exception was inapplicable since the Library and defendants were connected through a series of contracts.

The arguments limiting the application of the Economic Loss Doctrine to qualitative dissatisfaction in tangible product disputes, as opposed to services, was also summarily rejected. Again referencing the policy considerations underlying the Economic Loss Doctrine, the Indiana Supreme Court failed to recognize a meaningful distinction in the application of the principle in product and service settings.

The Indianapolis-Marion County Public Library decision not only provides a long-needed and definitive Indiana statement on the application of the Economic Loss Doctrine to design professionals, it raises and explores the universal policy considerations associated with the rule’s implementation where contractual interests are at issue. Quite simply, a party seeking recovery for defeated or invalidated expectation interests should not be permitted the extension of tort law for dispute resolution which can only serve to eviscerate the contracting parties’ intentions and agreed to risk/reward allocations.

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Class Certification Granted Against Pella

Posted on August 3, 2010 by Doug Allen

Beginning in 1991, Pella began selling its “Proline” casement windows. Owners of buildings with these Proline windows filed a class action lawsuit alleging that the windows contain a design defect. The Proline windows are constructed with an aluminum cladding over wood. According to the plaintiffs, the window design allows moisture to seep behind the aluminum cladding and prematurely rot the wood. In order to handle the volume of replacements due to the alleged defect, Pella created the Pella Proline Customer Service Enhancement Program (PCSEP) to compensate customers. However, Pella did not notify its customers of the defect or of the program. Furthermore, the consumer-plaintiffs alleged that Pella, through the PCSEP, modified the Pella warranty without notifying the consumers. 

 

In Pella v. Salzman, the U.S. District Court for the Northern District of Illinois certified two classes of consumers. One class includes members nationwide who own buildings containing the Proline windows that have not yet manifested the alleged defect or have shown signs of rotting but have not been replaced. The second class is a group of six statewide classes from Illinois, New York, New Jersey, California, Florida and Michigan, wherein Pella’s failure to disclose the defect is alleged to have violated those states’ consumer fraud laws. The members in the second group owned windows that manifested the defect and had their windows replaced.

 

The district court granted certification but limited the issue of the class certification to liability. Accordingly, the class action jury will only decide: (1) if there was a design defect present in the windows; (2) whether Pella had a duty to disclose the defect; and (3) whether Pella attempted to modify its warranty. Issues concerning causation and damages will be decided on an individual basis. 

Pella appealed the certification of the classes. However, for the first time, the 7th Circuit Court of Appeals affirmed the certification in a consumer fraud action. The 7th Circuit explicitly stated that “there is not and should not be a rule that” consumer fraud actions cannot be granted class certification. Pella Corp. v. Saltzman, 606 F.3d 391, 393 (7th Cir. 2010). Rather, the panel agreed with the district court’s finding that the individual issues that typically arise in consumer fraud actions would not be preclude class treatment of the limited issues of liability presented in the Pella case.

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First District Addresses Home Repair and Remodeling Act in Advance of Amendment

Posted on July 13, 2010 by Garrett Kern

 

On June 30, 2010, the First District Appellate Court of Illinois reversed the decision of the trial court and remanded the case of Universal Structures, Ltd. v. Dr. Alan Buchman, et al. The trial court had dismissed the plaintiff general contractor’s mechanic’s lien foreclosure action claiming that the general contractor had failed to procedurally comply with the Home Repair and Remodeling Act (815 ILCS 513/20) by not obtaining the homeowners’ signatures on work orders and failing to furnish the homeowners with a Consumer Rights brochure. The First District reversed the finding of the trial court finding that the general contractor was not precluded from asserting mechanic’s lien rights upon the homeowners’ property even though it had failed to comply with Sections 20 and 30 of the Act.

The First District surveys recent opinions we have discussed throughout our dialogue on the Act. Relying predominantly on Fandel v. Alan, 398 Ill.App.3d 177, 188-189 (3d Dist. 2010), the First District found that the general contractor’s procedural errors in not securing the homeowners’ signatures on work orders prior to beginning construction and failing to provide the homeowners with the Consumer Rights brochure, even though unlawful violations under the Act, did not invalidate an otherwise enforceable agreement. 

“Nothing in the Act provides that a contractor who fails to get a signature on a written work order or provide the homeowner with a Consumer Rights brochure cannot collect for his or her work and that the homeowner is entitled to receive a valuable benefit without paying for it. . . . Merely because a contract may violate some law or some regulation does not necessarily make that contract unenforceable. Rather, contracts are unenforceable when the subject matter of the contract where the purpose of the contract violated the law.”

Federal Land Bank of St. Louis v. Walker, 212 Ill.App.3d 420, 422 (1991). The Appellate Court found that the underlying agreement between the parties was valid and that the general contractor’s procedural violation under the Act did not bar it from asserting a mechanic’s lien or breach of contract claim. 

This opinion also references the amendment to language in Section 30 of the Act (to be discussed in detail as it was signed by the Governor on July 12, 2010) as support for its decision in this case. The First District notes in a footnote that it believes that Artesan Design, Behl and Fandel are better reasoned than the Third District’s opinion in Roberts v. Atkins, 397 Ill.App.3d 858 (3d Dist. 2010). It also distinguishes the Roberts case based on the fact that the plaintiff in that case never provided a written contract or work order to the defendant. 

The Universal Structures strengthens the long line of cases which focus on the law of contracts and a contractor’s right to recover pursuant to contract theories despite the fact that the contractor has failed to comply with procedural aspects of the Home Repair and Remodeling Act.We will have a thorough discussion of the Amendment to the Act as in the very near term.  Please stay tuned.  

 

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Surety bonds provide legal protection for construction projects

Posted on July 7, 2010 by FGPP Construction Group

We are pleased to present as a guest author, Danielle Rodabaugh, an authority on surety bonds.  Ms. Rodabaugh is a principal for Surety Bonds.com and can be reached through the Surety Bonds.com website:

Financing a construction project motivates a proprietor to consider effective ways to protect the investment. Surety bonds provide legal protection for those backing a construction project in Illinois, especially if the project requires considerable funding for a high-end remodel or an entirely new structure. When working on such projects, utilizing construction bonds ensures stabilization for a project's contract from beginning to end, which is why the terms "construction bond" and "contract bond" are used interchangeably.

 

Legal bonding requirements for construction in Illinois

United States law requires each state to set bonding regulations for its many industries. The regulations vary depending on how the particular law outlines bonding requirements for the industry. In construction, the Miller Act requires contract surety bonds to be utilized for all federal projects involving the construction, alteration, or repair of any building or public work project in an amount exceeding $100,000. This law also requires a contractor working on such a project to post two bonds: a performance bond and a labor and material payment bond.

The Illinois Public Works Act requires a bond for any person who enters into a contract in the amount of $100,000 or greater with any political subdivision. This includes contractors working with government entities such as cities, housing districts or federally-funded colleges, just to name a few. The state's Bond Act mandates that contractors must secure a labor and material payment bond in the project's full amount, listing the public body as the bond's obligee. Furthermore, the Bond Act requires its provisions to be incorporated into every bond issued in Illinois.

Functionality of Illinois surety bonds

Oftentimes even those required to be bonded by law get confused as to how an Illinois surety bond works. Essentially, a surety bond is a legal agreement between three parties to help ensure the fulfillment of a contract:

  • The principal performs a service and secures a bond to guarantee his work according to the contract.
  • The obligee receives the work performed by the principal and is protected by the financial security of the bond.
  • The surety issues the bond as a neutral third party to ensure that all work done by the principal is completed on time and according to the contract. The surety is also responsible for overseeing obligations on the part of both the principal and the obligee.

Since bonds are legally binding documents, they encourage the principal to follow the contract's terms or else face financial retribution. The obligee can make a claim on the bond if the principal fails to fulfill some part of the contract, such as completing the project on time. Depending on the bond type and its specific language, the surety bond company can be held fully accountable for the principal's faults. This encourages surety bond specialists take great care in completing thorough financial reviews before issuing the bond.

Surety bonds in construction

Most public contracts are required by Illinois state law to incorporate bonding of some sort. Surety bond agencies generally issue various types of construction bonds for large projects that involve in-depth, provisional contracts. Nearly all construction bonds fall into one of three major subcategories:

  • Bid Bonds primarily assure that the bidder will enter into a contract with the client for the price quoted in its bid. They also confirm that the bidder will secure other appropriate performance and payment bonds necessary throughout the project.
  • Performance Bonds simply guarantee that the contractor will fulfill his contract, performing all duties as outlined. Should the contractor fail, the surety company becomes solely responsible for all contractual obligations.
  • Labor and/or Material Payment Bonds protect those who provide labor and/or materials for public projects.

Although each of these bonds functions in a different way, they work together to produce a solid foundation for a construction project.

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Federal District Court Quashes Subpoena of Non-Party Deposition, Cites FAA

Posted on June 23, 2010 by Bryan Johnson

 

The United States District Court for the Northern District of Illinois recently held in Ware v. C.D. Peacock, Inc., 2010 WL 1856021 (N.D. Ill. 2010), that Section 7 of the Federal Arbitration Act does not authorize arbitrators to issue subpoenas for depositions of non-parties outside the physical presence of the arbitrator.  Plaintiff, a former employee of C.D. Peacock, filed an action with the American Arbitration Association alleging employment discrimination.  Following some discovery, C.D. Peacock filed a summary judgment motion.  In opposition, Plaintiff submitted an affidavit from a former co-worker, Helene Tomasian.  The motion for summary judgment was denied based in large part on Tomasian's affidavit.  On C.D. Peacock's request, the arbitrator issued a subpoena for Tomasian's deposition. 

At issue before the court was Tomasian's motion to quash the subpoena for deposition.  She argued that she could not be compelled to participate in a deposition without her consent.  The court began by noting that an arbitrator's authority over parties that are not contractually bound by the arbitration agreement is strictly limited by the Federal Arbitration Act.  Ware, 2010 WL 1856021, at *1.  And, because the Seventh Circuit had not addressed the specific issue in question, the court analyzed the split opinions of the other Circuit Courts of Appeal, ultimately adopting the position of the Second and Third Circuits.  Id., at *3. 

While it is true that non-parties can consent to discovery in arbitrations, the court stated that Tomasian clearly did not do so in this case.  Id.  In addition, C.D. Peacock would not be prejudiced by its inability to depose Tomasian prior to the arbitration.  To the contrary, C.D. Peacock was in possession of Tomasian's affidavit and could expect that her testimony would be consistent with her affidavit.  Id.  Finally, the court commented that by voluntarily entering into arbitration with Plaintiff, C.D. Peacock could not have reasonably expected to obtain full-blown discovery from non-parties.  Id.  "Parties to a private arbitration agreement forego certain procedural rights attendant to formal litigation in return for a more efficient and cost-effective resolution of their disputes... A hallmark of arbitration-and a necessary precursor to its efficient operation-is a limited discovery process."  Id. (citing COMSAT Corp. v. National Science Foundation, 190 F.3d 269, 276 (4th Cir. 1999).  Tomasian's motion to quash the subpoena was granted. 

The Ware Court's holding serves as a reminder of the limited, and hopefully efficient, nature of arbitration.

 

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SB 2540 Headed to Governor's Desk for Signature

Posted on June 14, 2010 by Garrett Kern

We have been following Senate Bill 2540. The bill was sent to Governor Quinn for signature on May 14, 2010.  The bill eliminates an ongoing issue prevalent in some recent judicial opinions and dissents regarding a private right of action under the Illinois Home Repair and Remodeling Act.

As we have discussed, recent opinions like K. Miller Constr. Co. v. McGinnis, 394 Ill. App. 3d 248, 913 N.E.2d 1147 (1st Dist. 2009); Smith v. Bogard, 377 Ill. App. 3d 842, 879 N.E.2d 543 (4th Dist. 2007); and Central Illinois Electrical Services, LLC v. Slepian, 358 Ill.App.3d 545, 831 N.E.2d 1169 (3rd Dist. 2005) have resulted in different conclusions about the rights and remedies asserted under the Act. The Illinois Supreme Court has yet to rule on the matter, although Artisan Design Build v. Bilstrom remains on the Leave to Appeal Docket for this term.

Senate Bill 2540 will entirely replace Section 30 of the Act to clarify and more accurately identify the remedies available to private parties under the Act. Specifically, it replaces a portion of the Act that declared a contractor’s practice of performing work without a contract or an informed rejection or acceptance of an arbitration provision with a clause that provides a direct private right of action for actual damages against the contractor under the Consumer Fraud Act. 

Even with the Governor’s signature on Senate Bill 2540, the Illinois Supreme Court should weigh in by accepting the Artisan case and clearing up the confusion and settling these issues and giving guidance to home-repair and remodeling contractors.

 

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News & Notes -- April 28, 2010

Posted on April 28, 2010 by Garrett Kern

 

As we noted here, as of April 22, 2010, federal law requires contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 to be certified and must follow specific work practices to prevent lead contamination. The requirements apply to renovation, repair or painting activities.

We have been monitoring Illinois SB 2540, introduced by Senator Wilhelmi, which will address at least part of the confusion regarding the remedy associated with the Home Repair Act.  SB 2540 passed the Illinois Senate on April 15, 2010, and appears to be headed to the Illinois General Assembly. The proposed amendment will entirely replace Section 30 of the Act to clarify and more accurately identify the remedies available to private parties under the Act.  The Home Repair Act has the laudable goal of making sure that a contractor utilizes a written contract and provides a Consumer Rights Brochure to home owners who engage them to undertake home remodeling work valued in excess of $1,000. As a consumer protection oriented statute, the intended remedy for a violation of the Act was to be found under the Consumer Fraud and Deceptive Business Practices Act. However, the Act does not sufficiently spell out this remedy, and the Illinois Appellate Courts have been inconsistent in applying it.  The goal of the bill is to clarify the confusion that now exists among the courts. We will continue to keep you advised.

We are also happy to report that the Illinois Construction Law Blog is now available to iPhone and iPad users through the AEC Info iPhone App. This is a free iPhone/iPad app available in the iTunes store in the Law category.  You may access the website through your iPhone/iPad web browser, make posts, send them through email, or even share them on Twitter. The app offers the latest industry headlines and insight from across the web.

 

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First District Rules on Block 37 Receivership

Posted on April 19, 2010 by Garrett Kern

 

In a March 31, 2010 decision, the First District Appellate Court of Illinois ruled in favor of Bank of America and other lenders against the Block 37 mall developer.  Bank of America led a group of lenders that moved to foreclose on Block 37 in late October, claiming the developer was in default on a $205-million construction loan. The Cook County Circuit Court appointed real estate services firm CB Richard Ellis as receiver on November 24. CBRE officially took control of the mall on February 1, after delays over insurance issues were resolved. The developer appealed the trial court’s ruling, citing the Illinois mortgage foreclose statute and arguing that Bank of America had not proven that there was a “reasonable probability” that it would prevail in the underlying foreclosure action and that it had shown “good cause” for not appointing a receiver.

In affirming the trial court’s order in appointing a receiver, the court noted the construction loan made to the developer is out of balance and, therefore, was in default pursuant to the terms of the loan agreement. The court found that the developer presented no evidence showing a commitment from a lender or investor to provide funding that would cure the imbalance. In addition, the arguments that the developer was in a better position to complete the project or that Bank of American had not shown or alleged fraud, mismanagement or waste were all deemed impermissible arguments that attempt to shift the burden of proof back on to the lender, when the burden of proof was on the developer to show why a receiver should not be appointed.

The First District’s ruling has made the road much easier for Bank of America to proceed with its foreclosure proceeding.

We will continue to keep you advised as to the progress of the Block 37 project, both during construction and in the court system.

 

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Second District Reverses Ruling on Injunctive Equitable Attachments

Posted on April 7, 2010 by Garrett Kern

 

The Second District Appellate Court of Illinois recently discussed the application of injunctive equitable attachments with respect to two consolidated cases brought by the same plaintiff, Hensley Construction, LLC against defendants Pulte Home Corporation and Del Webb Communities of Illinois, Inc. In each case, Hensley entered into contracts by which the defendant would provide and install underground utilities in residential home communities. The plaintiff’s complaints alleged that each defendant owed the plaintiff money for the work performed and filed a motion to compel deposit of retention funds into an escrow account. In each case, the trial court granted the plaintiff’s motion and ordered each defendant to deposit funds into an escrow account. Each defendant appealed claiming that the trial court’s rulings amounted to prejudgment equitable attachment and the plaintiff had failed to establish the requisite elements for those injunctions. 

The Second District, in overturning the trial court’s order in each case, reiterated that Illinois courts have consistently forbade such injunctions and, further, the only exception is when the claimant has an interest in the specific funds (known as the “specific funds exception”). In these cases, plaintiff Hensley did not show that the specific funds exception applied because the funds that were ordered deposited were not specific to the underlying dispute. The court also noted that the plaintiff failed to earn the remaining 3% of the retainage because it failed to establish that municipalities gave their approval of the projects (a condition precedent to recovering the remaining retainage) and failed to show the irreparable harm requirement of injunctive relief.

The most compelling aspect of the testimony in these cases was that of the defendants’ affidavits. Defendants in both cases stated that funds for the project were not held in segregated accounts or earmarked for the specific project. Therefore, plaintiff could not state that the specific funds that were to be placed in escrow were directly related to the project at issue. 

This seems to be a very convenient way for a defendant-debtor to avoid equitable attachment. However, it is also noted that these types of equitable attachment are frowned upon in the law because the equitable attachment is a restraint of the defendant’s control over property in its possession to satisfy a claim not yet reduced to judgment.

 

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Contractual Limitations Period Upheld

Posted on March 29, 2010 by Bryan Johnson

In Abari Construction Co., Inc. v. State of Illinois, 59 Ill. Ct. Cl. 316, 2007 WL 7076039 (2007), the Illinois Court of Claims dismissed a contractor's complaint for the contractor's failure to timely file suit under the terms of its contract with the Illinois Department of Transportation ("IDOT").  Abari sought delay damages from IDOT for a bridge reconstruction project.  The contract mandated three levels of administrative review prior to commencement of suit before the Court of Claims, but also required that suit be filed within 60 days of the final decision from the IDOT third level reviewers.

Abari made a contract claim, which made its way through the administrative review process and a final decision was issued in January 2003.  Abari did not file suit in the Court of Claims until October 2003, over eight months after the final decision was rendered by IDOT.  The State, on behalf of IDOT, moved to dismiss the complaint as time-barred by the contractual limitations period.

 

The Court granted the State's motion to dismiss, noting that Illinois law is clear that parties can contractually agree to shorter limitations periods to replace statutory limitations periods, so long as the contractual period is reasonable.  Moreover, the Court of Claims Act specifically allows for the applicability of shorter limitations periods than those set forth by the Court of Claims Act.

 

What should we take away from the holding in Abari?  Quite simply, reasonable contractual limitations periods will be upheld in nearly any context.  Contractors must be knowledgeable concerning the limitations periods in their contracts and vigilant in enforcing those limitations periods. 

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