{"attribution":{"source":"legal.exploreworldai.com","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca8-23-3502-2025-08-29","cite_as":"NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca8-23-3502-2025-08-29)","license":"https://legal.exploreworldai.com/revision","version":"legal-2026-10-14","fingerprint":"ewai:us:88b5b2","proof":"sha256:b9ea3d3d11fed7c96077e4fb46275767209e17ebfd7b7086bfcda35423539423","jurisdiction":"us","lang":"en","publisher":"NovaCopilot by ExploreWorld Legal","terms":"https://legal.exploreworldai.com/om"},"brand_source":"Source: NovaCopilot","item":{"schema_version":"1.0.0","id":"us:ca8-23-3502-2025-08-29","jurisdiction":"us","lang":"en","brand_source":"Source: NovaCopilot","brand":{"product":"NovaCopilot","platform":"ExploreWorldAI","infrastructure":"ExploreWorld Legal","infrastructure_url":"legal.exploreworldai.com","legal_entity":"Valkiv Ventures AB","permanent_url":"https://legal.exploreworldai.com/novacopilot","source":"Source: NovaCopilot","powered_by":"Powered by NovaCopilot","license":"https://legal.exploreworldai.com/licensvillkor"},"sections":[{"title":"United States Court of Appeals","paragraphs":[]},{"title":"For the Eighth Circuit","paragraphs":["para_3"]},{"title":"No. 23-3502","paragraphs":["para_5","para_6"]},{"title":"Plaintiff - Appellant","paragraphs":["para_8"]},{"title":"Early Warning Services, LLC","paragraphs":[]},{"title":"Defendant - Appellee","paragraphs":["para_11"]},{"title":"Appeal from United States District Court","paragraphs":["para_13","para_14"]},{"title":"Submitted: May 15, 2025","paragraphs":[]},{"title":"Filed: August 29, 2025","paragraphs":["para_17","para_18","para_19","para_20"]},{"title":"Baldwin Hackett and Meeks, Inc. (BHMI) sued Early Warning Services, LLC","paragraphs":[]},{"title":"(EWS) for breach of contract and breach of the implied covenant of good faith and","paragraphs":["para_23","para_24","para_25","para_26","para_27","para_28"]},{"title":"I. Background","paragraphs":[]},{"title":"BHMI, a Nebraska corporation, provides software for processing electronic","paragraphs":["para_31","para_32","para_33"]},{"title":"Agreement) in which BHMI would lease its Concourse Financial Software Suite","paragraphs":[]},{"title":"(Software) that facilitates electronic transactions to EWS for use in its business.4 The","paragraphs":[]},{"title":"Lease Agreement was on BHMI’s letterhead and had EWS marked as the","paragraphs":["para_37","para_38"]},{"title":"3-year term commenced upon acceptance. “[U]pon [a]cceptance[,] EWS was","paragraphs":["para_40","para_41","para_42","para_43"]},{"title":"The installation of the Software required EWS’s assistance in making it","paragraphs":["para_45"]},{"title":"1The Honorable Brian C. Buescher, United States District Judge for the","paragraphs":["para_47","para_48","para_49"]},{"title":"3“Zelle is a digital payments network that allows parties to electronically","paragraphs":["para_51"]},{"title":"4“One of the primary purposes of the [c]ontract was for EWS to use [the","paragraphs":["para_53","para_54","para_55"]},{"title":"Agreement (VSA) under which EWS paid BHMI for preinstallation services. EWS","paragraphs":["para_57","para_58"]},{"title":"COVID-19 pandemic and EWS’s shift in priorities. R. Doc. 11-2, at 1. In October","paragraphs":[]},{"title":"2020, BHMI advised EWS that it did not have the right to unilaterally terminate the","paragraphs":[]},{"title":"Lease Agreement and sought assurances that EWS would perform its obligations","paragraphs":["para_62","para_63","para_64"]},{"title":"EWS sent a termination notice in which it solidified its intent to permanently","paragraphs":["para_66","para_67","para_68"]},{"title":"On March 3, 2023, BHMI filed a suit in Nebraska state court, alleging a claim","paragraphs":["para_70","para_71","para_72","para_73","para_74","para_75"]},{"title":"EWS filed a motion to dismiss BHMI’s amended complaint for failure to state a","paragraphs":["para_77","para_78","para_79"]},{"title":"This appeal turns on the meaning of the Lease Agreement’s limitation-of-","paragraphs":["para_81","para_82","para_83"]},{"title":"18 (internal quotation marks omitted). Subpart A stated the following:","paragraphs":["para_85"]},{"title":"EACH PARTY’S TOTAL LIABILITY UNDER THIS AGREEMENT","paragraphs":["para_87","para_88","para_89"]},{"title":"SHALL NOT EXCEED THE FEES PAID BY [EWS] TO BHMI","paragraphs":[]},{"title":"UNDER THIS AGREEMENT, EVEN IF THE ACTUAL DAMAGES","paragraphs":["para_92"]},{"title":"R. Doc. 11-1, at 4. The district court reasoned that “[t]he cap on damages in [Subpart","paragraphs":[]},{"title":"A] is not ‘fees owed,’ but ‘fees paid.’” R. Doc. 21, at 17 (quoting R. Doc. 11-1, at","paragraphs":[]},{"title":"4). Therefore, “unpaid fees under the Lease Agreement[ ]are unavailable as a matter","paragraphs":["para_96"]},{"title":"The district court stated that it did “not need to consider the limitation in","paragraphs":[]},{"title":"Subpart B” because “the [c]ourt ha[d] already determined that Subpart A bar[red]","paragraphs":[]},{"title":"BHMI’s damages claim.” Id. at 18–19. Nevertheless, the district court held that","paragraphs":["para_100","para_101","para_102"]},{"title":"(capitalization altered). The district court reasoned that “lost profits are not","paragraphs":["para_104","para_105","para_106"]},{"title":"Sept. 30, 2013) (unpublished)). Therefore, the court held that “unpaid fees under the","paragraphs":[]},{"title":"Lease Agreement” were “unavailable lost profits damages as a matter of law under","paragraphs":["para_109","para_110","para_111"]},{"title":"Next, the district court rejected BHMI’s contention that the limitation-of-","paragraphs":["para_113","para_114","para_115","para_116","para_117","para_118"]},{"title":"II. Discussion","paragraphs":[]},{"title":"On appeal, BHMI argues that the district court erred in interpreting the","paragraphs":["para_121","para_122","para_123","para_124"]},{"title":"A. Plain Language Interpretation","paragraphs":["para_126","para_127","para_128"]},{"title":"79 F.4th 949, 961–62 (8th Cir. 2023) (emphasis omitted). We will apply Delaware","paragraphs":["para_130"]},{"title":"Under Delaware law, the court’s “goal is to give effect to the intent of the","paragraphs":["para_132","para_133","para_134"]},{"title":"Acquisition Co., 261 A.3d 1199, 1208 (Del. 2021)). “In doing so, [the court]","paragraphs":["para_136","para_137","para_138","para_139"]},{"title":"2023 WL 2751590, at *6 (Del. Ch. Apr. 3, 2023) (unpublished) (quoting Chi. Bridge","paragraphs":["para_141","para_142","para_143","para_144","para_145","para_146","para_147","para_148"]},{"title":"Id. at *45. Accordingly, “[u]nder Delaware law, limitation[-]on[-]liability clauses","paragraphs":["para_150","para_151","para_152"]},{"title":"BHMI argues that the district court’s interpretation renders a fundamental","paragraphs":["para_154"]},{"title":"Investissements, 607 A.2d 1177, 1183 (Del. 1992). BHMI argues that EWS’s rental","paragraphs":["para_156"]},{"title":"Agreement. BHMI contends that the district court’s interpretation enables EWS to","paragraphs":["para_158","para_159","para_160","para_161","para_162"]},{"title":"When drafted and executed, both BHMI and EWS stood to benefit from the","paragraphs":["para_164"]},{"title":"BHMI, at the time, believed that it was in its best interest to enter into the agreement","paragraphs":["para_166","para_167","para_168","para_169"]},{"title":"5:20–34. In other words, the limitation-of-liability clause would operate as BHMI’s","paragraphs":["para_171"]},{"title":"(internal quotation marks omitted). If the Software malfunctioned, EWS’s damages","paragraphs":["para_173","para_174","para_175"]},{"title":"See Yatra Online, Inc. v. Ebix, Inc., No. CV 2020-0444-JRS, 2021 WL 3855514, at","paragraphs":["para_177","para_178","para_179","para_180"]},{"title":"Doc. 11-1, at 4 (“Each party’s total liability under this agreement . . . shall not exceed","paragraphs":["para_182","para_183"]},{"title":"Therefore, BHMI has not shown that the district court’s interpretation of the","paragraphs":["para_185","para_186","para_187"]},{"title":"Shrader, 991 A.2d 1120, 1126 (Del. 2010) (en banc) (explaining that a court may","paragraphs":["para_189","para_190"]},{"title":"No. CIV.A. 1384-N, 2006 WL 224058, at *2 (Del. Ch. Jan. 23, 2006) (unpublished)","paragraphs":[]},{"title":"(“[I]t is not the job of a court to relieve sophisticated parties of the burdens of","paragraphs":["para_193","para_194"]},{"title":"B. Unconscionability","paragraphs":[]},{"title":"The doctrine of unconscionability is a “countervailing principle[]” to the","paragraphs":["para_197"]},{"title":"2016). “Unconscionability is a concept that is used sparingly.” Id. at 814 (internal","paragraphs":["para_199","para_200","para_201","para_202","para_203"]},{"title":"912 (Del. 1989)). “For a contract clause to be unconscionable, its term must be so","paragraphs":["para_205","para_206","para_207","para_208","para_209","para_210","para_211"]},{"title":"BHMI has not carried its burden to show that enforcement of the plain","paragraphs":["para_213","para_214","para_215","para_216","para_217","para_218","para_219","para_220","para_221","para_222","para_223","para_224","para_225"]},{"title":"C. Failure of Essential Purpose","paragraphs":["para_227","para_228","para_229"]},{"title":"5The district court found that the cap on damages would independently bar","paragraphs":["para_231","para_232","para_233","para_234"]},{"title":"2021) (“We may affirm on any ground supported by the record.” (internal quotation","paragraphs":["para_236","para_237","para_238"]},{"title":"6 § 2-719(2)). “The ‘fails of its essential purpose’ standard applies in cases decided","paragraphs":["para_240"]},{"title":"Uniform Commercial Code.” eCommerce, 2013 WL 5621678, at *46. This provision","paragraphs":["para_242","para_243","para_244"]},{"title":"The district court determined that the Lease Agreement was not a contract for","paragraphs":["para_246","para_247","para_248","para_249","para_250","para_251"]},{"title":"Assuming without deciding that the UCC would apply to this contract, the","paragraphs":["para_253","para_254"]},{"title":"In determining whether the contract limitation fails of its essential","paragraphs":["para_256","para_257","para_258","para_259","para_260","para_261"]},{"title":"Here, from BHMI’s perspective, the Lease Agreement served to provide","paragraphs":["para_263","para_264"]},{"title":"Period and EWS’s ensuing obligation to make rental payments. See R. Doc. 11, at","paragraphs":[]},{"title":"3–4. BHMI’s Software customization and configuration work was fully","paragraphs":["para_267","para_268","para_269","para_270","para_271"]},{"title":"Lease Agreement. Accordingly, the Lease Agreement did not “fail of its essential","paragraphs":["para_273"]},{"title":"A. Jones Constr., 372 A.2d at 552 (holding that application of § 2-719 requires that","paragraphs":["para_275","para_276","para_277"]},{"title":"III. Conclusion","paragraphs":["para_279","para_280"]}],"paragraphs":[{"text":"United States Court of Appeals","paragraph_id":"para_1"},{"text":"For the Eighth Circuit","paragraph_id":"para_2"},{"text":"___________________________","paragraph_id":"para_3"},{"text":"No. 23-3502","paragraph_id":"para_4"},{"text":"___________________________","paragraph_id":"para_5"},{"text":"Baldwin Hackett and Meeks, Inc.","paragraph_id":"para_6"},{"text":"Plaintiff - Appellant","paragraph_id":"para_7"},{"text":"v.","paragraph_id":"para_8"},{"text":"Early Warning Services, LLC","paragraph_id":"para_9"},{"text":"Defendant - Appellee","paragraph_id":"para_10"},{"text":"____________","paragraph_id":"para_11"},{"text":"Appeal from United States District Court","paragraph_id":"para_12"},{"text":"for the District of Nebraska - Omaha","paragraph_id":"para_13"},{"text":"____________","paragraph_id":"para_14"},{"text":"Submitted: May 15, 2025","paragraph_id":"para_15"},{"text":"Filed: August 29, 2025","paragraph_id":"para_16"},{"text":"____________","paragraph_id":"para_17"},{"text":"Before COLLOTON, Chief Judge, SMITH and SHEPHERD, Circuit Judges.","paragraph_id":"para_18"},{"text":"____________","paragraph_id":"para_19"},{"text":"SMITH, Circuit Judge.","paragraph_id":"para_20"},{"text":"Baldwin Hackett and Meeks, Inc. (BHMI) sued Early Warning Services, LLC","paragraph_id":"para_21"},{"text":"(EWS) for breach of contract and breach of the implied covenant of good faith and","paragraph_id":"para_22"},{"text":"fair dealing after EWS unilaterally terminated a lease agreement between the parties","paragraph_id":"para_23"},{"text":"for the use of proprietary software that facilitates electronic transactions. The district","paragraph_id":"para_24"},{"text":"-2-","paragraph_id":"para_25"},{"text":"court1 granted summary judgment in favor of EWS, holding that BHMI had failed","paragraph_id":"para_26"},{"text":"to state a claim on which relief could be granted because the limitation-of-liability","paragraph_id":"para_27"},{"text":"clause in the lease agreement barred the relief that BHMI was seeking. We affirm.","paragraph_id":"para_28"},{"text":"I. Background","paragraph_id":"para_29"},{"text":"BHMI, a Nebraska corporation, provides software for processing electronic","paragraph_id":"para_30"},{"text":"transactions. EWS, a financial technology company, is owned by seven of the","paragraph_id":"para_31"},{"text":"country’s largest banks.2 EWS owns and operates a digital payment network known","paragraph_id":"para_32"},{"text":"as Zelle.3 In 2016, BHMI and EWS entered into a lease agreement (Lease","paragraph_id":"para_33"},{"text":"Agreement) in which BHMI would lease its Concourse Financial Software Suite","paragraph_id":"para_34"},{"text":"(Software) that facilitates electronic transactions to EWS for use in its business.4 The","paragraph_id":"para_35"},{"text":"Lease Agreement was on BHMI’s letterhead and had EWS marked as the","paragraph_id":"para_36"},{"text":"“Customer.” R. Doc. 11-1, at 1 (bold omitted). According to the Lease Agreement,","paragraph_id":"para_37"},{"text":"once the Software was installed, a 90-day acceptance period was triggered, and the","paragraph_id":"para_38"},{"text":"3-year term commenced upon acceptance. “[U]pon [a]cceptance[,] EWS was","paragraph_id":"para_39"},{"text":"obligated to pay BHMI $540,500 per year for [3] years for lease fees ($1,621,500","paragraph_id":"para_40"},{"text":"total), a one-time cost of $90,000, and annual recurring costs of $57,500 for","paragraph_id":"para_41"},{"text":"maintenance services for [3] years ($172,500 total), for a total amount of $1,884,000","paragraph_id":"para_42"},{"text":". . . .” R. Doc. 11, at 3.","paragraph_id":"para_43"},{"text":"The installation of the Software required EWS’s assistance in making it","paragraph_id":"para_44"},{"text":"operable for EWS’s systems because the Software was “not a plug and play","paragraph_id":"para_45"},{"text":"1The Honorable Brian C. Buescher, United States District Judge for the","paragraph_id":"para_46"},{"text":"District of Nebraska.","paragraph_id":"para_47"},{"text":"2Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, U.S.","paragraph_id":"para_48"},{"text":"Bank, and Wells Fargo.","paragraph_id":"para_49"},{"text":"3“Zelle is a digital payments network that allows parties to electronically","paragraph_id":"para_50"},{"text":"transfer money between bank accounts.” Appellant’s Br. at 3.","paragraph_id":"para_51"},{"text":"4“One of the primary purposes of the [c]ontract was for EWS to use [the","paragraph_id":"para_52"},{"text":"Software] with Zelle.” Id.","paragraph_id":"para_53"},{"text":"-3-","paragraph_id":"para_54"},{"text":"product.” Id. at 4. EWS and BHMI entered into a separate Vendor Services","paragraph_id":"para_55"},{"text":"Agreement (VSA) under which EWS paid BHMI for preinstallation services. EWS","paragraph_id":"para_56"},{"text":"paid BHMI approximately $1.6 million under the VSA. In September 2020, EWS","paragraph_id":"para_57"},{"text":"notified BHMI that it was indefinitely putting the “project on hold” because of the","paragraph_id":"para_58"},{"text":"COVID-19 pandemic and EWS’s shift in priorities. R. Doc. 11-2, at 1. In October","paragraph_id":"para_59"},{"text":"2020, BHMI advised EWS that it did not have the right to unilaterally terminate the","paragraph_id":"para_60"},{"text":"Lease Agreement and sought assurances that EWS would perform its obligations","paragraph_id":"para_61"},{"text":"under the Lease Agreement. EWS agreed to resume work on the project and","paragraph_id":"para_62"},{"text":"appointed a new EWS employee to manage the installation. However, in October","paragraph_id":"para_63"},{"text":"2021, EWS suspended the project indefinitely. When BHMI sought clarification,","paragraph_id":"para_64"},{"text":"EWS sent a termination notice in which it solidified its intent to permanently","paragraph_id":"para_65"},{"text":"suspend the project because the Software was “not compatible with EWS’s","paragraph_id":"para_66"},{"text":"infrastructure and technology requirements” and consequently was not “workable","paragraph_id":"para_67"},{"text":"for EWS’s business needs.” R. Doc. 11-3, at 1.","paragraph_id":"para_68"},{"text":"On March 3, 2023, BHMI filed a suit in Nebraska state court, alleging a claim","paragraph_id":"para_69"},{"text":"for breach of the implied covenant of good faith and fair dealing. BHMI alleged in","paragraph_id":"para_70"},{"text":"its complaint that “EWS delayed the [p]roject multiple times” and consequently","paragraph_id":"para_71"},{"text":"“prevented BHMI from completing [p]roduction [i]nstallation as contemplated by","paragraph_id":"para_72"},{"text":"the parties at the time of contracting.” R. Doc. 21, at 6 (internal quotation marks","paragraph_id":"para_73"},{"text":"omitted). EWS removed the case to federal court. BHMI filed an amended","paragraph_id":"para_74"},{"text":"complaint, adding a claim for breach of contract and seeking $1,884,000 in damages.","paragraph_id":"para_75"},{"text":"EWS filed a motion to dismiss BHMI’s amended complaint for failure to state a","paragraph_id":"para_76"},{"text":"claim pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that the","paragraph_id":"para_77"},{"text":"limitation-of-liability clause in the Lease Agreement barred BHMI from obtaining","paragraph_id":"para_78"},{"text":"the relief it sought.","paragraph_id":"para_79"},{"text":"This appeal turns on the meaning of the Lease Agreement’s limitation-of-","paragraph_id":"para_80"},{"text":"liability clause. The clause is divided into two subparts. The district court","paragraph_id":"para_81"},{"text":"characterized Subpart A as the “cap on damages,” see id. at 15 (internal quotation","paragraph_id":"para_82"},{"text":"marks omitted), and Subpart B as the “categorical limitation on damages,” see id. at","paragraph_id":"para_83"},{"text":"18 (internal quotation marks omitted). Subpart A stated the following:","paragraph_id":"para_84"},{"text":"-4-","paragraph_id":"para_85"},{"text":"EACH PARTY’S TOTAL LIABILITY UNDER THIS AGREEMENT","paragraph_id":"para_86"},{"text":"FOR ALL LOSSES, CLAIMS, SUITS, CONTROVERSIES,","paragraph_id":"para_87"},{"text":"BREACHES OR DAMAGES FOR ANY CAUSE WHATSOEVER,","paragraph_id":"para_88"},{"text":"REGARDLESS OF THE FORM OF ACTION OR LEGAL THEORY,","paragraph_id":"para_89"},{"text":"SHALL NOT EXCEED THE FEES PAID BY [EWS] TO BHMI","paragraph_id":"para_90"},{"text":"UNDER THIS AGREEMENT, EVEN IF THE ACTUAL DAMAGES","paragraph_id":"para_91"},{"text":"ARE GREATER THAN THE FEES PAID.","paragraph_id":"para_92"},{"text":"R. Doc. 11-1, at 4. The district court reasoned that “[t]he cap on damages in [Subpart","paragraph_id":"para_93"},{"text":"A] is not ‘fees owed,’ but ‘fees paid.’” R. Doc. 21, at 17 (quoting R. Doc. 11-1, at","paragraph_id":"para_94"},{"text":"4). Therefore, “unpaid fees under the Lease Agreement[ ]are unavailable as a matter","paragraph_id":"para_95"},{"text":"of law under the cap on damages in Subpart A of . . . the Lease Agreement.” Id.","paragraph_id":"para_96"},{"text":"The district court stated that it did “not need to consider the limitation in","paragraph_id":"para_97"},{"text":"Subpart B” because “the [c]ourt ha[d] already determined that Subpart A bar[red]","paragraph_id":"para_98"},{"text":"BHMI’s damages claim.” Id. at 18–19. Nevertheless, the district court held that","paragraph_id":"para_99"},{"text":"alternatively, Subpart B also independently barred BHMI’s recovery. Subpart B","paragraph_id":"para_100"},{"text":"prevented either party from recovering “lost profits, exemplary, punitive, special,","paragraph_id":"para_101"},{"text":"incidental, indirect, consequential damages or the like.” R. Doc. 11-1, at 4.","paragraph_id":"para_102"},{"text":"(capitalization altered). The district court reasoned that “lost profits are not","paragraph_id":"para_103"},{"text":"considered consequential damages when ‘profits are precisely what the non-","paragraph_id":"para_104"},{"text":"breaching party bargained for.’” R. Doc. 21, at 21–22 (quoting eCommerce Indus.,","paragraph_id":"para_105"},{"text":"Inc. v. MWA Intel., Inc., No. CV 7471–VCP, 2013 WL 5621678, at *47 (Del. Ch.","paragraph_id":"para_106"},{"text":"Sept. 30, 2013) (unpublished)). Therefore, the court held that “unpaid fees under the","paragraph_id":"para_107"},{"text":"Lease Agreement” were “unavailable lost profits damages as a matter of law under","paragraph_id":"para_108"},{"text":"the limitation on liability in [Subpart B] of the Lease Agreement.” Id. at 23–24","paragraph_id":"para_109"},{"text":"(internal quotation marks omitted). Accordingly, under Subpart A or Subpart B,","paragraph_id":"para_110"},{"text":"BHMI would be unable to recover the damages that it sought.","paragraph_id":"para_111"},{"text":"Next, the district court rejected BHMI’s contention that the limitation-of-","paragraph_id":"para_112"},{"text":"liability clause was unconscionable. The court concluded that two sophisticated","paragraph_id":"para_113"},{"text":"parties had negotiated at arm’s length to draft a clause that could benefit either party","paragraph_id":"para_114"},{"text":"-5-","paragraph_id":"para_115"},{"text":"at the time of drafting. Moreover, the district court rejected BHMI’s argument that","paragraph_id":"para_116"},{"text":"the Uniform Commercial Code (UCC) applied and that the contract failed its","paragraph_id":"para_117"},{"text":"essential purpose. BHMI appeals.","paragraph_id":"para_118"},{"text":"II. Discussion","paragraph_id":"para_119"},{"text":"On appeal, BHMI argues that the district court erred in interpreting the","paragraph_id":"para_120"},{"text":"limitation-of-liability clause of the Lease Agreement to bar BHMI’s claims. BHMI","paragraph_id":"para_121"},{"text":"argues that the district court’s interpretation creates an absurd and unconscionable","paragraph_id":"para_122"},{"text":"result. Moreover, BHMI argues that the district court erred in holding that the UCC","paragraph_id":"para_123"},{"text":"did not apply to the Lease Agreement. We affirm.","paragraph_id":"para_124"},{"text":"A. Plain Language Interpretation","paragraph_id":"para_125"},{"text":"“We review de novo a district court’s decision granting a motion to dismiss","paragraph_id":"para_126"},{"text":"for failure to state a claim, accepting as true all factual allegations and viewing them","paragraph_id":"para_127"},{"text":"in the light most favorable to the non-moving party.” Yang v. Robert Half Int’l, Inc.,","paragraph_id":"para_128"},{"text":"79 F.4th 949, 961–62 (8th Cir. 2023) (emphasis omitted). We will apply Delaware","paragraph_id":"para_129"},{"text":"substantive law in this appeal consistent with the parties’ agreement.","paragraph_id":"para_130"},{"text":"Under Delaware law, the court’s “goal is to give effect to the intent of the","paragraph_id":"para_131"},{"text":"parties.” Weinberg v. Waystar, Inc., 294 A.3d 1039, 1044 (Del. 2023). Accordingly,","paragraph_id":"para_132"},{"text":"the court “read[s] the contract as a whole and ‘enforce[s] the plain meaning of clear","paragraph_id":"para_133"},{"text":"and unambiguous language.’” Id. (quoting Manti Holdings, LLC v. Authentix","paragraph_id":"para_134"},{"text":"Acquisition Co., 261 A.3d 1199, 1208 (Del. 2021)). “In doing so, [the court]","paragraph_id":"para_135"},{"text":"endeavor[s] to give each provision and term effect and not render any terms","paragraph_id":"para_136"},{"text":"meaningless or illusory.” Id. (internal quotation marks omitted). “Where an","paragraph_id":"para_137"},{"text":"agreement is unambiguous, it should be ‘read in full and situated in the commercial","paragraph_id":"para_138"},{"text":"context between the parties.’” Merck & Co., Inc. v. Bayer AG, No. 2021-0838-NAC,","paragraph_id":"para_139"},{"text":"2023 WL 2751590, at *6 (Del. Ch. Apr. 3, 2023) (unpublished) (quoting Chi. Bridge","paragraph_id":"para_140"},{"text":"& Iron Co. N.V. v. Westinghouse Elec. Co., 166 A.3d 912, 926–27 (Del. 2017)).","paragraph_id":"para_141"},{"text":"“[I]nterpretations that are commercially unreasonable or that produce absurd results","paragraph_id":"para_142"},{"text":"must be rejected.” Id. (quoting Manti Holdings, 261 A.3d at 1211).","paragraph_id":"para_143"},{"text":"-6-","paragraph_id":"para_144"},{"text":"“Delaware has a strong presumption in favor of freedom of contract.”","paragraph_id":"para_145"},{"text":"eCommerce, 2013 WL 5621678, at *45 n.319. The “freedom of contract would","paragraph_id":"para_146"},{"text":"suggest that parties to a contract should be entitled to draft agreements so as to avoid","paragraph_id":"para_147"},{"text":"certain . . . duties and liabilities that are normally part of a contractual relationship.”","paragraph_id":"para_148"},{"text":"Id. at *45. Accordingly, “[u]nder Delaware law, limitation[-]on[-]liability clauses","paragraph_id":"para_149"},{"text":"that preclude various types of damages . . . are typically enforceable.” Accountable","paragraph_id":"para_150"},{"text":"Health Sols., LLC v. Wellness Corp. Sols., LLC, 333 F. Supp. 3d 1133, 1156 (D.","paragraph_id":"para_151"},{"text":"Kan. 2018) (quoting eCommerce, 2013 WL 5621678, at *45).","paragraph_id":"para_152"},{"text":"BHMI argues that the district court’s interpretation renders a fundamental","paragraph_id":"para_153"},{"text":"term of the contract “illusory or meaningless.” See Sonitrol Holding Co. v. Marceau","paragraph_id":"para_154"},{"text":"Investissements, 607 A.2d 1177, 1183 (Del. 1992). BHMI argues that EWS’s rental","paragraph_id":"para_155"},{"text":"payments to BHMI for use of the Software is a fundamental term of the Lease","paragraph_id":"para_156"},{"text":"Agreement. BHMI contends that the district court’s interpretation enables EWS to","paragraph_id":"para_157"},{"text":"use the limitation-of-liability clause as a “get out of jail free card” and “never be","paragraph_id":"para_158"},{"text":"liable for breach of contract for non-payment.” Appellant’s Br. at 20 (internal","paragraph_id":"para_159"},{"text":"quotation marks omitted). BHMI contends that “[t]his would be an absurd and","paragraph_id":"para_160"},{"text":"unreasonable result that no commercially reasonable person would have accepted","paragraph_id":"para_161"},{"text":"when entering into the contract.” Id. at 27. We disagree.","paragraph_id":"para_162"},{"text":"When drafted and executed, both BHMI and EWS stood to benefit from the","paragraph_id":"para_163"},{"text":"limitation-of-liability clause depending upon how contract performance unfolded.","paragraph_id":"para_164"},{"text":"BHMI, at the time, believed that it was in its best interest to enter into the agreement","paragraph_id":"para_165"},{"text":"as written. During oral argument, counsel for BHMI explained that the limitation-","paragraph_id":"para_166"},{"text":"of-liability clause was “a boilerplate provision in software contracts” that was","paragraph_id":"para_167"},{"text":"included because “a 50-person software firm in Omaha, Nebraska isn’t going to be","paragraph_id":"para_168"},{"text":"able to handle a 500-billion-dollar lawsuit if the system goes down.” Oral Arg. at","paragraph_id":"para_169"},{"text":"5:20–34. In other words, the limitation-of-liability clause would operate as BHMI’s","paragraph_id":"para_170"},{"text":"“get out of jail free card” if it was sued for nonperformance. Appellant’s Br. at 20","paragraph_id":"para_171"},{"text":"(internal quotation marks omitted). If the Software malfunctioned, EWS’s damages","paragraph_id":"para_172"},{"text":"would be limited to recovering the lease fees paid. This is not an absurd result; rather,","paragraph_id":"para_173"},{"text":"it is the result that the parties contemplated when they entered the Lease Agreement.","paragraph_id":"para_174"},{"text":"-7-","paragraph_id":"para_175"},{"text":"See Yatra Online, Inc. v. Ebix, Inc., No. CV 2020-0444-JRS, 2021 WL 3855514, at","paragraph_id":"para_176"},{"text":"*9 (Del. Ch. Aug. 30, 2021) (unpublished) (“[W]hen parties include a provision","paragraph_id":"para_177"},{"text":"stating that there shall be no liability on the part of either party upon termination,","paragraph_id":"para_178"},{"text":"they alter the common law rule and broadly waive contractual liability and all","paragraph_id":"para_179"},{"text":"contractual remedies.” (cleaned up)), aff’d, 276 A.3d 476 (Del. 2022); see also R.","paragraph_id":"para_180"},{"text":"Doc. 11-1, at 4 (“Each party’s total liability under this agreement . . . shall not exceed","paragraph_id":"para_181"},{"text":"the fees paid by [EWS] to BHMI . . . even if the actual damages are greater than the","paragraph_id":"para_182"},{"text":"fees paid.” (capitalization altered and emphasis added)).","paragraph_id":"para_183"},{"text":"Therefore, BHMI has not shown that the district court’s interpretation of the","paragraph_id":"para_184"},{"text":"limitation-of-liability clause was a commercially unreasonable result that no party","paragraph_id":"para_185"},{"text":"would have agreed to. Instead, BHMI and EWS were two sophisticated parties who","paragraph_id":"para_186"},{"text":"agreed to limit their liability in a commercially reasonable manner. See Nemec v.","paragraph_id":"para_187"},{"text":"Shrader, 991 A.2d 1120, 1126 (Del. 2010) (en banc) (explaining that a court may","paragraph_id":"para_188"},{"text":"“not rewrite the contract to appease a party who later wishes to rewrite a contract [it]","paragraph_id":"para_189"},{"text":"now believes to have been a bad deal”); see also DeLucca v. KKAT Mgmt., L.L.C.,","paragraph_id":"para_190"},{"text":"No. CIV.A. 1384-N, 2006 WL 224058, at *2 (Del. Ch. Jan. 23, 2006) (unpublished)","paragraph_id":"para_191"},{"text":"(“[I]t is not the job of a court to relieve sophisticated parties of the burdens of","paragraph_id":"para_192"},{"text":"contracts they wish they had drafted differently but in fact did not. Rather, it is the","paragraph_id":"para_193"},{"text":"court’s job to enforce the clear terms of contracts.”).","paragraph_id":"para_194"},{"text":"B. Unconscionability","paragraph_id":"para_195"},{"text":"The doctrine of unconscionability is a “countervailing principle[]” to the","paragraph_id":"para_196"},{"text":"freedom of contract. See James v. Nat’l Fin., LLC, 132 A.3d 799, 813 (Del. Ch.","paragraph_id":"para_197"},{"text":"2016). “Unconscionability is a concept that is used sparingly.” Id. at 814 (internal","paragraph_id":"para_198"},{"text":"quotation marks omitted). “A finding of unconscionability generally requires ‘the","paragraph_id":"para_199"},{"text":"taking of an unfair advantage by one party over the other.’” Id. (quoting Tulowitzki","paragraph_id":"para_200"},{"text":"v. Atl. Richfield Co., 396 A.2d 956, 960 (Del. 1978)). In other words, “the party with","paragraph_id":"para_201"},{"text":"superior bargaining power used it to take unfair advantage of his weaker","paragraph_id":"para_202"},{"text":"counterpart.” Id. (quoting Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908,","paragraph_id":"para_203"},{"text":"912 (Del. 1989)). “For a contract clause to be unconscionable, its term must be so","paragraph_id":"para_204"},{"text":"one-sided as to be oppressive.” Graham, 565 A.2d at 912 (internal quotation marks","paragraph_id":"para_205"},{"text":"-8-","paragraph_id":"para_206"},{"text":"omitted). Importantly, the determination of “[w]hether a contract is unconscionable","paragraph_id":"para_207"},{"text":"is determined at the time it was made.” James, 132 A.3d at 814. “Because contractual","paragraph_id":"para_208"},{"text":"limitations upon remedies are generally to be enforced unless unconscionable, the","paragraph_id":"para_209"},{"text":"party claiming unconscionability has the burden of proof.” Pig Improvement Co. v.","paragraph_id":"para_210"},{"text":"Middle States Holding Co., 943 F. Supp. 392, 401 (D. Del. 1996) (citation omitted).","paragraph_id":"para_211"},{"text":"BHMI has not carried its burden to show that enforcement of the plain","paragraph_id":"para_212"},{"text":"language of the limitation-of-liability clause would be unconscionable. Here, BHMI","paragraph_id":"para_213"},{"text":"drafted a Lease Agreement that two sophisticated parties negotiated at arm’s length","paragraph_id":"para_214"},{"text":"and ultimately signed. BHMI, as the drafter, had at least equal bargaining position","paragraph_id":"para_215"},{"text":"and inserted an unambiguous limitation-of-liability clause. The limitation-of-","paragraph_id":"para_216"},{"text":"liability clause was plainly set out in the Lease Agreement with a conspicuous title","paragraph_id":"para_217"},{"text":"and the language in all caps. Moreover, BHMI admitted that the limitation-of-","paragraph_id":"para_218"},{"text":"liability clause, at the time it was drafted, was a boilerplate provision that served to","paragraph_id":"para_219"},{"text":"protect them against liability if the Software failed or malfunctioned in any way that","paragraph_id":"para_220"},{"text":"caused damage to EWS. At the time it was drafted, the clause contemplated that","paragraph_id":"para_221"},{"text":"either side would benefit from it, with the breaching party potentially benefiting","paragraph_id":"para_222"},{"text":"more. The limitation-of-liability clause, at the time it was drafted, was not","paragraph_id":"para_223"},{"text":"unconscionable. The district court did not err in finding that the cap on damages was","paragraph_id":"para_224"},{"text":"enforceable.5","paragraph_id":"para_225"},{"text":"C. Failure of Essential Purpose","paragraph_id":"para_226"},{"text":"“Delaware law provides that limitation[-]of[-]liability provisions will not be","paragraph_id":"para_227"},{"text":"enforced where circumstances cause the limited remedy to ‘fail of its essential","paragraph_id":"para_228"},{"text":"purpose.’” OC Tint Shop, Inc. v. CPFilms, Inc., No. CV 17-1677-RGA, 2018 WL","paragraph_id":"para_229"},{"text":"5The district court found that the cap on damages would independently bar","paragraph_id":"para_230"},{"text":"BHMI’s claim. BHMI does not challenge that determination on appeal. Therefore,","paragraph_id":"para_231"},{"text":"we need not reach the district court’s secondary analysis of the categorical limitation","paragraph_id":"para_232"},{"text":"upon our finding that the cap on damages is enforceable and bars BHMI’s claim for","paragraph_id":"para_233"},{"text":"damages. See J.B. Hunt Transp., Inc. v. BNSF Ry. Co., 9 F.4th 663, 667 (8th Cir.","paragraph_id":"para_234"},{"text":"2021) (“We may affirm on any ground supported by the record.” (internal quotation","paragraph_id":"para_235"},{"text":"marks omitted)).","paragraph_id":"para_236"},{"text":"-9-","paragraph_id":"para_237"},{"text":"4658211, at *4 (D. Del. Sept. 27, 2018) (unpublished) (quoting Del. Code Ann. tit.","paragraph_id":"para_238"},{"text":"6 § 2-719(2)). “The ‘fails of its essential purpose’ standard applies in cases decided","paragraph_id":"para_239"},{"text":"under Section 2–719 of Title 5A of the Delaware Code, Delaware’s version of the","paragraph_id":"para_240"},{"text":"Uniform Commercial Code.” eCommerce, 2013 WL 5621678, at *46. This provision","paragraph_id":"para_241"},{"text":"imposes a “test of reasonableness” for limitation-of-liability provisions to ensure that","paragraph_id":"para_242"},{"text":"a party may receive damages when it “does not get the benefit of the bargain.” OC","paragraph_id":"para_243"},{"text":"Tint Shop, 2018 WL 4658211, at *4 n.1.","paragraph_id":"para_244"},{"text":"The district court determined that the Lease Agreement was not a contract for","paragraph_id":"para_245"},{"text":"the sale of goods under the UCC, and therefore the “fails of its essential purpose","paragraph_id":"para_246"},{"text":"standard” did not apply. R. Doc. 21, at 31 (internal quotation marks omitted). BHMI","paragraph_id":"para_247"},{"text":"argues that determining whether a contract falls under the UCC is a factually","paragraph_id":"para_248"},{"text":"intensive inquiry, and therefore, the district court erred by deciding the question at","paragraph_id":"para_249"},{"text":"the motion-to-dismiss stage. However, we need not decide whether the district court","paragraph_id":"para_250"},{"text":"did so because BHMI’s underlying argument under § 2-719 fails regardless.","paragraph_id":"para_251"},{"text":"Assuming without deciding that the UCC would apply to this contract, the","paragraph_id":"para_252"},{"text":"limitation-of-liability clause does not cause the Lease Agreement to fail of its","paragraph_id":"para_253"},{"text":"essential purpose.","paragraph_id":"para_254"},{"text":"In determining whether the contract limitation fails of its essential","paragraph_id":"para_255"},{"text":"purpose, the facts and circumstances surrounding the contract, the","paragraph_id":"para_256"},{"text":"nature of the basic obligations of the party, the nature of the goods","paragraph_id":"para_257"},{"text":"involved, the uniqueness or experimental nature of the items, the","paragraph_id":"para_258"},{"text":"general availability of the items, and the good faith and reasonableness","paragraph_id":"para_259"},{"text":"of the provision are factors which should be considered.","paragraph_id":"para_260"},{"text":"J. A. Jones Constr. Co. v. City of Dover, 372 A.2d 540, 549 (Del. Super. Ct. 1977).","paragraph_id":"para_261"},{"text":"Here, from BHMI’s perspective, the Lease Agreement served to provide","paragraph_id":"para_262"},{"text":"rental payments to BHMI for EWS’s acceptance and use of the Software. BHMI did","paragraph_id":"para_263"},{"text":"not ultimately install the Software and therefore did not trigger the Acceptance","paragraph_id":"para_264"},{"text":"Period and EWS’s ensuing obligation to make rental payments. See R. Doc. 11, at","paragraph_id":"para_265"},{"text":"3–4. BHMI’s Software customization and configuration work was fully","paragraph_id":"para_266"},{"text":"-10-","paragraph_id":"para_267"},{"text":"compensated under the terms of the VSA. Id. at 3. Therefore, BHMI received the","paragraph_id":"para_268"},{"text":"benefit of the bargain under the Lease Agreement for the work it completed. We","paragraph_id":"para_269"},{"text":"reject BHMI’s contention that it did not receive the benefit of its bargain (rental","paragraph_id":"para_270"},{"text":"payments) for performance it did not render (installation of the Software) under the","paragraph_id":"para_271"},{"text":"Lease Agreement. Accordingly, the Lease Agreement did not “fail of its essential","paragraph_id":"para_272"},{"text":"purpose.” Here, applying the limitation-of-liability provision was reasonable. See J.","paragraph_id":"para_273"},{"text":"A. Jones Constr., 372 A.2d at 552 (holding that application of § 2-719 requires that","paragraph_id":"para_274"},{"text":"the “limitation of liability provisions must meet the test of reasonableness if it is to","paragraph_id":"para_275"},{"text":"be given effect”). We discern no error in the district court’s rejection of BHMI’s","paragraph_id":"para_276"},{"text":"argument under § 2-719.","paragraph_id":"para_277"},{"text":"III. 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