PIER 1 CRUISE EXPERTS, a Brazil corporation, Plaintiff-Appellee-Cross-Appellant,
REVELEX CORPORATION, a Florida corporation, Defendant-Appellant-Cross-Appellee.
Appeals from the United States District Court for the
Southern District of Florida D.C. Docket No.
WILLIAM PRYOR and NEWSOM, Circuit Judges, and VRATIL,
NEWSOM, CIRCUIT JUDGE
Florida Supreme Court: We need your help. Among other much
simpler issues, this case presents a knotty and important
state-law contract question that is more appropriately
answered by you than by us. Accordingly, after clearing away
some underbrush, we will respectfully certify to you the
Is a contractual "exculpatory clause" that purports
to insulate one of the signatories from "any …
damages regardless of kind or type … whether in
contract, tort (including negligence), or otherwise"
enforceable? Or, alternatively, does the clause confer such
sweeping immunity that it renders the entire contract in
which it appears illusory? Or, finally, might the clause
plausibly be construed so as to bar some but not all claims
and thus save the contract from invalidation?
possibility finds at least some support in Florida law, each
comes with its own equitable pros and cons, and each has
dramatically different implications for the case before us.
Cruise Experts is a Brazilian travel agency that specializes
in cruises and cruise packages. Pier 1 sells both through
sub-agencies-approximately 300 individual travel agencies
located around Brazil-and directly to customers. Hoping to
grow its business, Pier 1 wanted a first-of-its-kind website
with an online distribution channel for booking options in
Portuguese and payment in Brazilian reais.
build the website, Pier 1 hired Revelex Corporation, a
Florida-based company that provides customized software to
travel companies. Revelex promised to deliver on each of Pier
1's requirements-content in Portuguese, prices in reais,
and sub-agent booking capabilities-and indicated that, once
work started, the website software could be completed in
approximately six months.
a year later, following multiple rounds of negotiations, the
two companies executed a Service Agreement. The Service
Agreement was dated August 6, 2013-for reasons we'll
explain, the date could turn out to matter-and in general, it
stated that Revelex would provide Pier 1 access to a
proprietary booking engine in exchange for licensing fees.
Section 12 of the Service Agreement, titled "Limitation
of Liability," is at the heart of this litigation, so
we'll pause to take a closer look at its three
constituent provisions. First, and most importantly here,
§ 12.1 sets forth an unusually broad exculpatory clause.
In relevant part, that clause reads as follows:
Revelex shall not be liable … for any direct, special,
indirect, incidental, consequential, punitive, exemplary or
any other damages regardless of kind or type (whether in
contract, tort (including negligence), or otherwise),
including but not limited to loss of profits, data, or
goodwill, regardless of whether Revelex knew or should have
known of the possibility of such damages …. Customer
waives any and all claims, now known or later discovered,
that it may have against Revelex and its licensors and
vendors arising out of this agreement and the services.
§ 12.2 provides that "[i]n any event, Revelex's
total cumulative liability to customer or any third party for
all damages, losses, and causes of action (whether in
contract, tort (including negligence), or otherwise) relating
in any way to this agreement exceed one hundred dollars
($100.00)." If § 12.2 seems a little clunky,
that's because it is. No matter how you read it, the
grammar just doesn't work, and the parties here dispute
whether the provision is missing a "shall not"
between the words "agreement" and
"exceed." Finally, § 12.3 states, in relevant
part, that "[t]he limitations of liability and
disclaimers of warranties provided in this agreement form an
essential basis of the bargain between the parties."
(but alongside) the Service Agreement, the parties also
negotiated and executed a Scope of Work, which we'll
(inelegantly) call the "SOW." The SOW memorialized
the necessary customizations for the website and indicated
that the total cost of the software was $100, 097. It
explained that the website would entail two primary
components-a business-to-business feature that would allow
travel agents to book and manage cruise reservations, and a
direct-to-consumer feature that would enable customers to
book and pay for cruises online. Notably- and potentially
importantly, for reasons we'll explain-the Service
Agreement and the SOW included reciprocal cross-references.
Section 5.1 of the Service Agreement contemplated that the
parties would "enter into written Statement(s) of Work
… for the performance of certain professional services
by Revelex." Section 7 of the SOW, in turn, stated that
it was "issued pursuant to the terms and conditions of
the Contract"-i.e., the Service Agreement-and
that "the services set forth within this [SOW] are
within the scope of the services authorized in the
Contract." Also notably-again, for reasons that will
become clear-discussions concerning the SOW overlapped the
negotiations and execution of the Service Agreement; the
parties began conferring about the SOW on April 22, 2013,
executed the Service Agreement on August 6, 2013, and then
finalized the SOW on January 15, 2014.
December 2015, the software still wasn't complete. Pier 1
ceased making its ongoing licensing payments, and Revelex
terminated Pier 1's access to the software.
sued Revelex in the Southern District of Florida, raising
four claims: breach of contract, fraudulent
misrepresentation, negligent misrepresentation, and unjust
enrichment. Pier 1 eventually dropped its
fraudulent-misrepresentation and unjust-enrichment claims, so
we focus here on breach of contract and negligent
parties filed dueling motions for summary judgment, each
contending that § 12.1 of the Service Agreement should
be read in its favor. For its part, Revelex argued that the
exculpatory clause-which, again, purported to shield it from
"any … damages regardless of kind or type
… whether in contract, tort (including negligence), or
otherwise"-barred Pier 1's claims. The breadth of
the clause's language, Revelex's president explained
in his deposition, was intentional: "Revelex is priced
in the manner with which we cannot afford to take on any
liability. It is a pay-as-you-go service. So the customers
that use our service benefit from paying less. What that
means is that we are not going to be financially liable. Your
remedy with us is to not do business with us."
Alternatively, Revelex asked the district court to correct a
scrivener's error in § 12.2-so as to insert the
phantom "shall not"-and cap its exposure at $100,
or, as a last resort, to construe the exculpatory clause to
limit its liability to direct damages only. Finally, Revelex
asserted that the SOW couldn't stand independently of the
Service Agreement and, therefore, that Pier 1's SOW-based
claims provided no stand-alone basis for relief.
by contrast, principally asserted that the Service
Agreement's broad exculpatory clause rendered the
contract unenforceable against Revelex and thus illusory.
Separately, and in response to Revelex, Pier 1's managing
director testified that he believed § 12.1 merely
shielded Revelex from liability to third parties for damages
caused by Pier 1 or its sub-agencies. As for § 12.2, he
testified that it actually limited Pier 1 to seeking damages
in excess of $100-which, he said, "seemed
reasonable" because "any problems less than $100
would not be worth pursuing."
district court granted partial summary judgment for Pier 1
and held that, as a matter of law, the exculpatory clause
rendered the entire Service Agreement illusory. As the court
explained it, "the Service Agreement binds [Pier 1] to
perform certain duties," but Revelex "is free to
breach the contract because there will never be recourse for
the breach"; accordingly, the court concluded, the
"arrangement does not create a binding contract."
Without mutuality of obligation, the court reasoned,
"there is no valid contract and neither side may be
bound." The court refused to reform or sever §
12.1, because it said that it could not "re-write or
sever th[e] provision in a way that would achieve the intent
of the parties."
parties sought clarification with respect to whether the SOW
was part and parcel of the (now nonexistent) Service
Agreement or, instead, survived independently. The district
court issued a supplemental order reiterating that the entire
Service Agreement was unenforceable both (1) because §
12.1 rendered the contract illusory, and (2) in the
alternative, because it was "an unenforceable agreement
to agree." The court clarified, though, that its earlier
order "didn't speak to the claim for breach of
contract related to the SOW," which the court explained
survived as a separate contract independent of the Service
case then proceeded to trial on a SOW-related
breach-of-contract claim and a negligent-misrepresentation
claim. At trial, Pier 1 presented a live demonstration of the
software, which revealed that key functionalities were never
completed. For example, Pier 1 showed that although the
website logged more than 10, 000 visits, not a single
potential customer was able to purchase a cruise. Revelex
nonetheless asserted that it had satisfied its contractual
obligations- pointing, for instance, to an email from Pier
1's principal stating that "I'm hereby to
confirm that all services described on SOW were done."
Pier 1 countered that it sent the email because Revelex had
requested it for its auditors-not because Pier 1 actually
believed that Revelex had fulfilled its contractual duties.
its financial manager, Mariana Peres, Pier 1 presented
damages evidence pertaining to alleged lost profits. Using
Pier 1's financial reports and general economic
conditions, Peres determined that Pier 1's expected
revenue during the damages period was $12.7 million. She
estimated that total expenses would have increased by 10%
annually over the same timeframe, and then compared that to
the inflation rate in Brazil. Peres calculated that, on
average, each cruise that Pier 1 sold generated $1, 000 in
revenue. Pier 1 was selling 50 cruises per month before the
advent of online booking capabilities, Peres said, and she
estimated that a properly functioning website would have
increased sales by at least 100 cruises per month, to a total
heard Peres's testimony, the district court asked her to
clarify her methodology. When Peres explained that her
estimates were based, in part, on the e-commerce market in
Brazil, Revelex objected that she, as a lay witness, was
impermissibly offering expert testimony. The court held that
although Peres could "give an opinion as to what her
company is worth, or what the expenses were," it was
"too speculative" for her to "pick a number
out of thin air" and determine that sales would double
"based on looking on the internet and looking at
e-commerce." Because Pier 1 introduced no additional
evidence pertaining to lost profits, the court granted
judgment as a matter of law for Revelex with respect to Pier
1's lost-profits claim.
1's SOW-based breach-of-contract claim and its
negligent-misrepresentation claim were submitted to the jury.
The jury found that Revelex (1) breached the SOW and (2) made
negligent misrepresentations to Pier 1. It awarded Pier 1
$100, 097 in damages-the software cost as specified in the
SOW. Because the district court had concluded that the
Service Agreement was void- and because there was therefore
no valid contract clause on which to predicate attorneys'
fees-it denied Pier 1's request for $485, 779.50 in fees.
appealed the district court's entry of judgment against
it, and Pier 1 cross-appealed the court's rejection of
its lost-profits claim and its fee request.
a lot going on here. We have an appeal and a cross appeal,
and together the parties have presented a series of
interconnecting issues. Three of those issues are pretty
straightforward, and we feel well-equipped to decide them.
The fourth issue, however-in candor, the biggest and hardest
one-is better resolved by the Florida Supreme Court than by
us, and so we will certify it.
make relatively quick work of three issues: (1) Revelex's
contention that the district court erred in concluding that
the SOW is independent of, and therefore survived that
court's invalidation of, the Service Agreement; (2) Pier
1's contention that the district court erred in rejecting
its claim for lost profits; and (3) Pier 1's ...