BPG Inspection, LLC v. Omstead: A Victory for Contractual Limitations on Liability
By: Justin Averett
On January 31, 2023, the Court of Appeals of Georgia reversed the Gwinnett County Superior Court’s decision to grant partial summary judgment to the plaintiff in her wrongful death action against a home inspection company by concluding that a one-year limitation period in a contract between the decedent and the home inspection company was applicable, valid and enforceable. In BPG Inspection, LLC v. Omstead, 367 Ga. App. 128, 883 S.E.2d 593 (2023), Jessique Omstead sued BPG Inspection, LLC, and its employee, James Golden, after Ms. Omstead’s husband hired BPG to inspect a home that the couple would subsequently purchase. Mr. Omstead and BPG signed an agreement that the inspection would be “an impartial, noninvasive, visual examination of specific systems, structures, and components of buildings located on the subject property, as they exist at the time of the inspection and further specified that the inspection will be limited to those specific installed systems, structures and components that are readily accessible and visually observable.” Golden inspected a retaining wall in February 2020 and returned for a follow-up inspection in March 2020.
The “Limitations on Liability” section of the agreement contained several exculpatory provisions, including notice provisions and a shortened limitations period, which prohibited Mr. Omstead from suing BPG or its employees more than one year after the inspection, even if the defect was not discovered during that time. On July 26, 2020, the Omsteads discovered water was leaking into the garage through the drywall running parallel to the retaining wall. While Ms. Omstead posted on social media about the issues with the retaining wall, the Omsteads did not notify BPG of these problems. On July 19, 2021, more than a year after the home inspection, the Omsteads placed a plastic tarp and a piece of particle board on top of the retaining wall during a rainstorm to divert water away from the garage. As Ms. Omstead stood on the embankment behind the wall and Mr. Omstead stood on the driveway near the garage, the wall collapsed onto Mr. Omstead. He died as a result of his injuries. In September 2021, the plaintiff gave notice of the collapse to BPG and filed a wrongful death action, alleging negligence, fraud, breach of contract and breach of warranty.
BPG and Golden moved for summary judgment to enforce the agreement’s one-year limitation provision and its cap on damages. Ms. Omstead filed a cross-motion asking that the trial court declare these provisions of the agreement inapplicable to this case and void as against public policy. The trial court denied BPG and Golden’s motion and granted Ms. Omstead’s motion, holding that neither of the provisions were applicable, and to the extent they did apply, both provisions were exculpatory clauses and void as against public policy.
The Court of Appeals reversed the trial court’s decision. As an initial matter, the court concluded that, even though the agreement was between BPG and Mr. Omstead, its provisions, if applicable and enforceable, would apply with equal force to Ms. Omstead’s wrongful death claims as they would have applied to claims brought by Mr. Omstead himself. In its analysis of the agreement’s provisions, the court’s ruling focused on two questions:
(1) Whether the contract’s one-year limitation provision applied, and, if so;
(2) Whether it is valid and enforceable.
As to the provision’s applicability, the court found the provisions to be clear and unambiguous. The court reasoned that the contract expressly stated Mr. Omstead was barred from filing any legal action BPG or its employees if more than one year after the date of the inspection, even if the defect was discovered after that time.
Because the one-year limitation provision was applicable, the court next analyzed whether it was valid and enforceable. Ms. Omstead argued that the provision was void under O.C.G.A. § 13-8-2 (b), which contains a list of specified contracts that the Georgia legislature has declared to be void as against public policy. The court held that statute did not apply in this case because the agreement with BPG did not promise to indemnify a party for that party’s own sole negligence. The Court of Appeals further reasoned there is no statute that prohibits shortened limitation provisions as void against public policy, noting that “one-year and six-month contractual limitation periods have long been held reasonable as a matter of law.” Notably, the court relied on cases that deemed similar provisions in insurance policies to be valid.
BPG Inspection, LLC v. Omstead reinforced the validity of shortening limitations periods by contract. The Georgia Court of Appeals’ analysis provides a clear roadmap for arguing that a shortened limitation period, or other similar contractual limitations on liability, should apply in other types of contracts outside of home inspections.
Attorney Contact Info
Justin Averett
justin.averett@swiftcurrie.com
404.888.6255