When a property owner brought a breach-of-contract action against the architectural firm it hired to serve as architect of record for a project involving design and construction of six-story hospital, it sought to recover costs of repairing multiple structural design defects. The Architect moved for summary judgment, asserting that the waiver of consequential damages clause in the contract barred recovery by the Owner. The court denied the motion because it concluded the damages were direct damages rather than consequential damages. Orlando Health Inc. v. HKS Architects v. BBM Structural E, 792 F.Supp.3d 1298 (Florida, 2025).
During construction of the hospital, various structural defects became obvious. These defects were determined to be design defects rather than construction defects. They were serious and required immediate repairs. Plaintiff filed suit against HKS which then filed a third-party complaint against BBM, alleging that BBM is the responsible party because it committed the structural design errors. The court rejected the defendants’ motion to enforce the waiver of consequential damages clause, “because at least some of the damages sought by Orlando Health flowed directly and necessarily from HKS’s breach of contract….”
Pursuant to the contract in debate in this case. HKS and Orlando Health “waive[d] consequential damages for claims, disputes, or other matters in question, arising out of or relating to th[e] Agreement.” The subcontract between HHS and the structural engineer had a similar waiver of consequential damages clause. And “BBM contractually agreed to be bound to HKS to the same extent HKS was contractually bound to” Orlando Health.”
The court stated that soon after construction began, the construction manager for the project discovered multiple structural failures due to design errors and omissions in the structural engineering plans. “Immediate action was required to correct those failures, including some demolition and rebuilding. That action was taken, at significant cost.”
“The first failure appeared on the second floor of the hospital, where the slab was cracking at each column line. The cracking occurred because a full second layer of reinforcing steel—known as “top mat rebar”—was not included in the structural engineering plans. (HKS admitted that the reason the second layer of rebar was not installed was that it was not clearly called for in the drawings. BBM agreed, and it made revisions and additions to its drawings so that the problem could be corrected, The remediation of this failure required “coring into the concrete, adding rebar through columns, and jacking of the slabs, together with the partial demolition of the elevated slab … and completely repouring the concrete for that area.” As damages arising from this defect, Orlando Health seeks $1,499,193 for the slab repair and $79,000 for expert slab-remediation peer-review services.
The second defect involved a cantilevered overhang on levels 3 and 4 of the North Tower of the hospital. As admitted by BBM, its design was inadequate to support the cantilevered overhang. (Id.). For remediation of this defect, Orlando Health seeks recovery of the $233,153 it spent to correct the cantilevered overhang and column. It also claims $37,000 for peer-review services. The third and fourth issues requiring remediation were caused by deficiently designed structural beams. The third issue, which stemmed from these deficient beams, manifested itself in the deflection (bending and deformation) of the slab at Levels 2 and 3 of the hospital’s East Tower. For this, Orlando Health seeks recovery of $895,845 it expended to repair the unevenness of the floor caused by the beam sinkage and $208,750 it paid for peer-review and survey services.
Remedying what the parties refer to as the fourth issue—the incorrect design of the concrete beams, which caused the floor deflection just discussed—involved expansion of seventeen beams and, in some cases, addition of carbon fiber reinforcement in the beams. This was necessary so that the beams they would “be structurally sound and meet the loading requirements of the building.” And by the time this defect was discovered, “framing, plumbing, electrical[,] and mechanical” work had begun. Much of that completed work had to be removed to do the necessary remediation. For this failure, Orlando Health seeks $1,152,641—the amount it paid to remediate the beams. Additionally, Orlando Health demands $1,183,090—the cost “to demolish and reinstall previous work-in-place materials that were in the way of the remediation of the … [b]eams.” And Orlando Health also seeks the $20,000 it paid for peer review services to assess this problem, visit the work site, and write a report.”
The court explained that Florida courts have defined “consequential damages” as damages that “do not arise within the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.” “ On the other hand, direct damages—sometimes also referred to as “general damages”—“are commonly defined as those damages which are the direct, natural, logical and necessary consequences of the injury.” They “naturally and necessarily flow or result from the injuries alleged” and “may be described as those damages ‘as may fairly and reasonably be considered as arising in the usual course of events from the breach of contract itself.’”
The court here concluded as follows:
Based on the definitions of the relevant terms and the facts of this case, the Court finds that Orlando Health’s costs of remediation and repair are not consequential damages that were waived in the Agreement. HKS was contractually obligated to provide plans, including structural engineering plans, for the construction of a hospital in a large project coordinated among many sophisticated parties. The costs of remediation and repair did not “result indirectly from” HKS’s plans,9 nor did they arise from “dealings with third parties” in either the more “traditional” sense (such as lost profits or loss of reputation) or the causative way described by the Keystone Airpark court. Instead, the costs to repair and remediate are the “direct, natural, logical[,] and necessary consequences of” HKS’s deficient plans.10 Thus, recovery of these damages is not barred by the consequential damages waiver in the Agreement.
Comment: The designers in this case were hoping the court would enforce a Florida court case precedent of Pipeline Contractors, Inc. v. Keystone Airpark Auth., Case No. 2010-CA-2457 (Fla. 4th Cir. Ct. May 22, 2017) where damages that might have seemed like direct damages were held to be “consequential.” The court here obviously disagreed.
Our firm likes to include a mutual waiver of consequential damages clause in contracts. Our specimen clause provides as follows:
Mutual Waiver of Consequential Damages. Consultant and Client waive all consequential or special damages, including, but not limited to, loss of use, profits, revenue, business opportunity, or production, for claims, disputes, or other matters arising out of or relating to the Contract or the services provided by Consultant, regardless of whether such claim or dispute is based upon breach of contract, willful misconduct or negligent act or omission of either of them or their employees, agents, subconsultants, or other legal theory, even if the affected party has knowledge of the possibility of such damages. This mutual waiver shall survive termination or completion of this Contract.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 27, No. 8 (December 2025).
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