Summary
This Eighth Circuit opinion affirms the district court's dismissal of a breach of contract claim brought by a software provider against a financial technology company. Applying Delaware substantive law, the court enforced a limitation-of-liability clause in a software lease agreement, holding that the contractual cap on damages based on fees paid barred the plaintiff's recovery. The appellate court rejected the plaintiff's arguments that the clause was unconscionable or failed its essential purpose under the Uniform Commercial Code.
Topics
Practice areas
Questions Presented
- Whether the limitation‑of‑liability clause bars BHMI’s breach of contract and implied covenant claims.
- Whether the limitation‑of‑liability clause is unconscionable.
- Whether the Uniform Commercial Code applies to the lease agreement and whether the clause fails its essential purpose.
Holdings
- The limitation‑of‑liability clause is enforceable and bars BHMI’s breach of contract and implied covenant claims.
- The clause is not unconscionable because it was negotiated at arm’s length between sophisticated parties and is not one‑sided.
- The lease agreement is not a contract for the sale of goods; therefore the UCC does not apply and the clause does not fail its essential purpose.
Key quotations
“We review de novo a district court’s decision granting a motion to dismiss for failure to state a claim, accepting as true all factual allegations and viewing them in the light most favorable to the non‑moving party.”
“Under Delaware law, the court’s “goal is to give effect to the intent of the parties.””
Factual background
BHMI, a Nebraska software company, entered into a 2016 lease with EWS to provide its Concourse Financial Software Suite. The lease required a 90‑day acceptance period after installation, after which EWS would pay annual lease fees. EWS later halted the project, claimed incompatibility, and ultimately terminated the lease. BHMI alleged breach of contract and the implied covenant of good faith; the district court dismissed on the basis of a limitation‑of‑liability clause.
Procedural history
BHMI sued EWS for breach of contract and breach of the implied covenant of good faith after EWS terminated a software lease. The district court granted summary judgment, holding the limitation‑of‑liability clause barred BHMI’s claims. BHMI appealed.