{ "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-2026-10-11", "fingerprint": "ewai:us:e0b409", "proof": "sha256:e1b88d6d9010ab7865f867fa54dc650d214ec43f0fc29817b92b3cb0387f639f", "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. Conclusion", "paragraph_id": "para_278" }, { "text": "For the foregoing reasons, we affirm the district court.", "paragraph_id": "para_279" }, { "text": "______________________________", "paragraph_id": "para_280" } ], "word_count": 3032, "cites": [ "79 F.4th 949", "9 F.4th 663" ], "cited_by": [], "sha256": "b2bee7ca683e766770d7d1789449af33c74b2186e60b19f9646e6e8222e9b5c5", "source_url": "https://ecf.ca8.uscourts.gov/opndir/25/08/233502P.pdf", "fetched_at": "2026-10-02T02:27:55.371+00:00", "canonical": "https://legal.exploreworldai.com/ai/judgments/us/ca8-23-3502-2025-08-29", "risk_graph": "https://legal.exploreworldai.com/api/public/v1/risk?id=us:ca8-23-3502-2025-08-29", "relations_graph": "https://legal.exploreworldai.com/api/public/v1/relations?id=us:ca8-23-3502-2025-08-29", "changes": "https://legal.exploreworldai.com/api/public/v1/us-praxis/changes", "agent": "https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:ca8-23-3502-2025-08-29" }, "hash": "sha256:e1b88d6d9010ab7865f867fa54dc650d214ec43f0fc29817b92b3cb0387f639f", "version": "legal-2026-10-11", "expires": "2026-10-12T00:00:00.000Z", "dependency": { "index_version": "legal-2026-10-11+legal-2026-10-11+2026-10-11T19:48:35", "content_hash": "sha256:e1b88d6d9010ab7865f867fa54dc650d214ec43f0fc29817b92b3cb0387f639f", "revalidate_after": "2026-10-11T21:00:26.747Z", "max_copy_age_seconds": 3600, "policy": "revalidate-required; attribution-preferred", "changelog": "https://legal.exploreworldai.com/api/public/v1/dependency", "verify": "https://legal.exploreworldai.com/api/public/v1/verify", "stale_copy_invalid": true }, "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca8-23-3502-2025-08-29", "follow": [ { "rel": "risk", "href": "https://legal.exploreworldai.com/api/public/v1/risk?id=us:ca8-23-3502-2025-08-29" }, { "rel": "relations", "href": "https://legal.exploreworldai.com/api/public/v1/relations?id=us:ca8-23-3502-2025-08-29" }, { "rel": "agent", "href": "https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:ca8-23-3502-2025-08-29" }, { "rel": "obligations", "href": "https://legal.exploreworldai.com/api/public/v1/obligation-chain" }, { "rel": "changes", "href": "https://legal.exploreworldai.com/api/public/v1/whats-new?jurisdiction=us" } ], "disclaimer": "Source reference with official identifier. 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