GRSM Partner Eric Rosenberg, Partner Mara Cohen Jackel, and Associate John MacGowan, in collaboration with Atlanta Partner Chad Shultz, secured a significant victory for their client in a commercial construction arbitration, with a AAA panel granting their motion to enforce a consequential damages waiver governed by Pennsylvania law. This decision struck down a substantial seven-figure demand, which represented nearly a third of the claimant’s total damages.
The panel initially granted GRSM’s request to bifurcate motion practice on consequential and remedial damages, ordering the parties to conduct limited discovery and submit briefing on the enforceability of limitation of liability provisions in the construction contract before any substantive discovery on the merits. After several rounds of briefing and oral argument, the panel agreed with GRSM and upheld the validity of consequential damage waivers in Pennsylvania. The panel not only struck the demand for consequential damages but went a step further and cautioned the claimant that it would also strike any remaining damages “nested within broader descriptions” after merits discovery.
Parties frequently attempt to reframe consequential losses in an effort to circumvent limitation of damages provisions in commercial construction contracts. This case serves as a prime illustration of how strategic framing of damages can profoundly impact the economics of a construction dispute. GRSM’s ability to navigate this challenge also underscores the importance of understanding how Pennsylvania courts and arbitration panels, when interpreting Pennsylvania law, will look past labels and strike “remedial” damages if they function as consequential damages in substance.