AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• A general contractor, Centex, and a subcontractor, Architect, entered into a contractual relationship for the construction of a Mechanically Stabilized Earth (MSE) Wall, which later failed. Centex incurred over $6,000,000 in damages for redesign and repair costs and sought to recover these costs from Architect. Architect argued that its obligations were fulfilled by the payment of insurance proceeds it was contractually required to procure (paras 1, 3, 10).

Procedural History

• District Court of Otero County, Jerry H. Ritter, District Judge: Granted summary judgment to Architect, determining that a limitation of liability clause in a prime contract flowed down to the subcontract by virtue of a flow-down clause (para 2).

Parties' Submissions

• Plaintiff-Appellant (Centex): Argued that Architect is required to cover the redesign and repair costs of the MSE Wall and contended that genuine issues of material fact remain regarding Architect's obligations under the contract (paras 1-2).
• Defendants-Appellees (Architect): Asserted that its monetary obligations to Centex were satisfied by the payment of insurance proceeds and that the limitation of liability clause in the prime contract, incorporated into the subcontract, limited Centex’s ability to recover damages (paras 1, 11).

Legal Issues

• Whether the limitation of liability clause in the prime contract limits Architect's liability to Centex for the MSE Wall's failure to whatever sums Centex could collect from the errors and omissions insurance policy (para 14).
• Whether Architect's liability is controlled by the general liability clause in the subcontract (para 14).

Disposition

• The Court of Appeals of New Mexico reversed the district court's grant of summary judgment to Architect and remanded for further proceedings in light of the holding that the general liability clause in the subcontract controls Architect’s liability (para 26).

Reasons

• Per Roderick T. Kennedy, J. (Michael D. Bustamante, J., Jonathan B. Sutin, J., concurring):
  The court found no New Mexico authority directly on point but held that the general liability clause in the subcontract controls Architect’s liability, not the limitation of liability clause from the prime contract (para 14).
  The court reasoned that the flow-down clause's language, "except as otherwise provided herein," limits the incorporation of the prime contract into the subcontract because the subcontract specifically allocates liability between Centex and Architect (paras 19-20).
  The court further determined that the subcontract's allocation of liability prevails over the limitation of liability clause in the prime contract due to the rule that specific provisions in the subcontract control over general provisions in the prime contract (para 21).
  The court's interpretation aligns with the order of precedence clause in the subcontract, which stipulates that the subcontract governs unless the prime contract imposes a higher standard or greater requirement (para 23).
  The court concluded that the district court based its grant of summary judgment on a mistaken interpretation of the law and reversed the decision, holding that the subcontract’s terms regarding liability govern (paras 25-26).