Time-Limited Liability: Georgia’s Highest Court OK’s Parties Contracting for Shortened Liability Windows
By: Austin Albertson
On June 11, 2024, the Supreme Court of Georgia upheld the court of appeals’ reversal of a Gwinnett County Superior Court’s granting of partial summary judgment to the plaintiff, Jessique Omstead, in her wrongful death action against a home inspection company.
The plaintiff brought suit on behalf of her husband, Albert Omstead, who entered into an agreement with a home inspection company, BPG Inspection, to inspect a home and property the Omsteads were looking to buy. In the contract, various provisions for limitations on liability were included. One such provision limited BPG’s liability down to one year from the date of the inspection, reading:
You may not file a legal action, whether sounding in tort (even if due to our negligence or other fault), contract, arbitration or otherwise, against us or our employees more than one year after the inspection, even if you do not discover a defect until after that.
The contract was signed, two inspections were performed and the Omsteads then purchased the home. Over a year later Mr. Omstead died following the collapse of a retaining wall. The BPG inspection report did not identify any defects with the retaining wall at the time of the inspection. Mrs. Omstead subsequently brought a wrongful death suit against BPG.
At the trial court level, cross-motions for summary judgment were filed, with BPG requesting enforcement of the liability limitation provision of the contract and the plaintiff seeking the provision voided as against public policy. The trial court granted the plaintiff’s motion, finding the limitation did not apply to the plaintiff’s personal injury and wrongful death claims and, to the extent they did, were void as against public policy. The court of appeals reversed the trial court finding the agreement did not violate public policy.
On review, the Supreme Court focused on two key issues:
(1) whether the court of appeals erred in enforcing the one-year liability provision; and
(2) whether the provision is void against public policy.
Turning first to the provision’s applicability, the court underlined its prior ruling in Milliken & Co. v. Georgia Power Co., 306 Ga. 6, 8 (1), 829 S.E.2d 111 (2019), stating parties “may contract away liability to the other party for the consequences of his own negligence without contravening public policy, except when such agreement is prohibited by statute.” The plaintiff had argued that because wrongful death actions do not begin to accrue until a death occurs, the one-year provision could not be enforced. The court disagreed, outlining that the plaintiff had “offer[ed] no case where we have rejected a contractual provision like the one-year limitation in this case” on grounds the subject period prevented the timely filing of an action.
The court found that, while not having case law directly on point with the manner of this particular liability provision, “we have long enforced contractual provisions setting a time period in which a party can file an action, even when that period is shorter than the one, if any set by statute – that is, even when the period functions to deprive a party of the chance to file suit where the law would otherwise permit suit.”
The court also analyzed a brief argument from the plaintiff which argued the one-year limitation should not be valid because of Porubiansky v. Emory University, 156 Ga. App. 602 (1980). In Porubiansky, the court held a dentist could not contract away his statutory duty of care as a dentist. Citing Porubiansky, the plaintiff argued that the liability limitation was a contractual avoidance of professional standards of conduct, with O.C.GA. §§ 8-3-331 and 8-3-332 placing duties on home inspectors to provide written reports and make recommendations for repairs. The court rejected this argument, however, distinguishing dentists operate in a profession licensed and controlled by the state, whereas home inspectors have no statutory standard of care similar to medical professionals. As such, the court held the enforcement of the provision was warranted on its face and the court of appeals did not err in approving the provision.
The court then turned to the analysis of whether the provision violated public policy under O.C.G.A. § 13-8-2(a). The plaintiff asserted the contract was governed by O.C.G.A § 13-8-2(a) as it functioned as a contract “relative to the construction, alteration, repair, or maintenance” of property. The court decided that O.C.G.A. § 13-8-2 did not apply, but rather assumed application, finding even if it applied, the provision did not contain reimbursement or “hold harmless” language. It further held the one-year limitation did not improperly “shift” or “absolve” liability from BPG to plaintiff and is therefore not void as against public policy.
The decision settled the question of shortening limitation periods in favor of contractors and gave strong language that could support liability limitation language across a wide array of contractual agreements, given the rational of the court.
Attorney Contact Info
Austin Albertson
austin.albertson@swiftcurrie.com
404.888.6289