ORDERS ARE SUBJECT TO ATTACHED BGT TERMS AND
CONDITIONS." 62 So. 3d at 1194. On the record there, the Flor- ida court found that language insufficient to incorporate the terms
14
24-10335 Opinion of the Court 15 and conditions. The problem, the court explained, was that BGT did not in fact attach the terms and conditions: "BGT failed to pro- vide the terms and conditions during the negotiating process," and as a result, "the sales contract was formed without Tradewinds ever having seen them." Id. at 1195. Tradewinds didn't even see the terms and conditions until the contract dispute arose. Id. So the Fourth DCA concluded that BGT did not intend to incorporate the terms and conditions because it "did not provide a specific descrip- tion of them or attach them to the quote and purchase order." Id. On the other side of the case law is Kaye v. Macari Bldg. & Design, Inc. 967 So. 2d 1112 (Fla. 4th DCA 2007). That case involved another dispute over a putatively incorporated arbitration clause. The parties agreed that the relevant contract incorporated certain construction plans and specifications by reference, but they disa- greed as to whether those plans and specifications further incorpo- rated AIA Document No. A-201, which contained an arbitration clause. Id. at 1113. The court held that it did. The plans and spec- ifications said that AIA Document No. A-201 was "a part of both the plans and specifications and the contract." Id. at 1114 (empha- ses omitted). And the AIA Document was industry standard, so the parties knew what the concrete reference entailed—or, at least, they could easily find the document that the contract's language unambiguously incorporated. See id. at 1113-14; Spicer, 149 So. 3d at 167 ("The citation to a specific document by date and edition in Kaye provided more information about the document to be in- corporated than the employment agreement in this case."). In other words, the parties knew how to easily access the referenced
15
16 Opinion of the Court 24-10335 document and could readily discover the terms to which they were agreeing.
Lastly, Avatar Properties, Inc. v. Greetham rounds out our com- parator case law. 27 So. 3d 764 (Fla. 2d DCA 2010). There, the defendants moved to arbitrate a dispute over alleged defects in a home that purportedly caused damage after a hurricane. The arbi- tration provision at issue was in a home-warranty contract, and the court concluded the purchase agreement expressly incorporated that home warranty. Id. at 766. The relevant paragraph in the pur- chase agreement referenced the extraneous warranty and advised the Greethams that they could review the warranty at the develop- ment's offices or could request that a copy of the warranty be at- tached to the purchase agreement they signed. The Greethams in- itialed that paragraph in the agreement, indicating they had read it and assented to the warranty's incorporation. Id. at 766-67. So the court concluded that "[a]ny failure on their part to avail themselves of either opportunity [to read the warranty] [was] not a basis to find that no agreement existed." Id. And the Second DCA com- pelled arbitration. Id. at 767.
From this case law, we can distill a guiding principle: a con- tract will incorporate a collateral document if the contract pro- vides clear direction on how to access the collateral document. What is clear still depends on context, of course. Sometimes, a mere reference to a collateral document is sufficient because the collateral document is well known to the parties. See, e.g., Kaye, 967 So. 2d at 1113-14. Or other times, a combination of the contract's
16
24-10335 Opinion of the Court 17 language, the parties' negotiations, and their business relationship will put the signatories on notice. See, e.g., Avatar Props., 27 So. 3d at 766-67; Calderon, 114 F.4th at 1202. Contra BGT, 62 So. 3d at 1194-95; Spicer, 149 So. 3d at 167-68.
This is one of the latter cases. Sweet Additions asserts that this case resembles BGT. Like BGT, Sweet Additions points out, the Sales Contract references general terms and conditions. And it does so with varying language—first calling them "general condi- tions" and later "General Sales conditions," App'x A, all while the collateral document is entitled, "TERMS AND CONDITIONS OF SALE," App'x B. In that sense, the Sales Contract departs from the contract at issue in Kaye, where a specific document number—iden- tifiable to those in the industry—could easily verify the terms to be included in the contract.
But two facts distinguish this contract from the one in BGT. First, here, a clear indication of an intent to be bound by the extraneous document exists, even if the parties did not directly in- clude the extraneous document in their negotiations. Sweet Addi- tions signed a single-page Sales Contract that twice explained that Meelunie was selling its product on its general terms and condi- tions, which were available for inspection upon request. The brev- ity of the Sales Contract, and the clarity of its direction on how to obtain the T&Cs, is analogous to the purchase agreement in Avatar Properties, where the Greethams initialed the paragraph that incor- porated the home warranty and that provided directions on how to review the home warranty.
17
18 Opinion of the Court 24-10335 Sweet Additions is also not in the same position as the em- ployee in Spicer, where the contract stated only that the employee could contact the "Human Resources Department" with "ques- tions" about the FTP, which was not even an independent, collat- eral document. See Spicer, 149 So. 3d at 164; see also Calderon, 114 F.4th at 1202-03. Rather, just like how the purchase agreement in- formed the Greethams in a single paragraph they initialed that they could have viewed the home warranty at the development's offices, the Sales Contract informed Sweet Additions on the sparsely pop- ulated single page it signed that it could have reviewed the T&Cs upon a request to Meelunie.
And second, Sweet Additions had the T&Cs in hand before signing the Sales Contract. Contra BGT, 62 So. 3d at 1194-95; Spicer,
149 So. 3d at 167-68. Meelunie sent Sweet Additions the T&Cs when it forwarded invoices pertaining to the line of credit that Meelunie extended Sweet Additions. And Sweet Additions paid those invoices under the T&Cs. True, as Sweet Additions points out, Meelunie did not attach the T&Cs to any negotiations about the Sales Contract. See Spicer, 149 So. 3d at 167 (identifying as an
"important fact" precluding incorporation by reference that Tenet
"failed to provide the terms and conditions during the negotiating process"). But Florida law does not adopt such a strict approach to incorporation by reference. A course of dealing4—that is, the
18
24-10335 Opinion of the Court 19
"sequence of conduct concerning previous transactions between the parties to a particular transaction"—may establish "a common basis of understanding for interpreting [the parties'] expressions and other conduct." F LA. STAT. § 671.205(2) (codifying UCC § 2- 202(b)). And unless specially negated, courses of dealing inform the meaning of the words used in a contract. See id.; L & H Constr. Co. v. Circle Redmont, Inc., 55 So. 3d 630, 634 (Fla. 5th DCA 2011) (per curiam); cf. Rhodes v. BLP Assocs., Inc., 944 So. 2d 527, 531 (Fla. 4th DCA 2006) (explaining a prior course of dealing cannot thwart
"clear, unambiguous language"). So here, the parties' adherence to the T&Cs throughout their relationship shows Meelunie under- stood what the terms "general conditions" and "General Sales con- ditions" referred to, App'x A—the "TERMS AND CONDITIONS OF SALE," App'x B.
Ultimately, we enforce the "intent of the parties at the time of contracting," as embodied in the written instrument. OBS Co.,
558 So. 2d at 406. The Sales Contract expressly applies the T&Cs. And a Sweet Additions officer signed the one-page agreement. Sweet Additions had seen the incorporated T&Cs before it signed the Sales Contract, and it assented to the T&Cs in performing pre- vious purchase orders. So we conclude the Sales Contract incor- porates the T&Cs.
19
20 Opinion of the Court 24-10335 B. The limitation of liability does not preclude Sweet Ad- ditions from recovering lost profits and the cost of sub- stitute products if they are direct damages. Because we conclude the Sales Contract incorporates the T&Cs, we must consider Sweet Additions's second contention that the limitation of liability does not limit its ability to recover its dam- ages, particularly lost profits and the cost of substitute products. The T&Cs' limitation provides that Meelunie's "liability on any claim for loss or damage . . . shall not exceed the price allowa- ble to such goods" on the contract "or part thereof involved in the claim." App'x B § 5. This clause reasonably limits Meelunie's direct liability. But in addition, the limitation disclaims all liability for
"special consequential, incidental or exemplary damages including, but not limited to, loss of profits or revenue . . . [and the] cost of substitute products." Id.
Meelunie and the district court read these provisions to bar Sweet Additions from recovering lost profits and damages it in- curred in obtaining substitute products—or, in UCC speak, effect- ing "cover." But Sweet Additions disagrees. It argues that lost prof- its and cover costs are not necessarily consequential, incidental or exemplary damages. Rather, Sweet Additions asserts, they can be direct damages under the UCC, so the limitation of liability bars their recovery only to the extent that those damages are conse- quential, incidental, or exemplary.
20
24-10335 Opinion of the Court 21 For four reasons, we agree with Sweet Additions's interpre- tation of the T&Cs.5
First, the limitation of liability's structure supports Sweet Additions's position. The provision creates a dichotomy between general "liability on any claim for loss or damage" and specific lia- bility for "special consequential, incidental or exemplary damages."
And that dichotomy tracks the usual distinction between direct and incidental or consequential damages. Direct damages flow imme- diately from the seller's breach. By contrast, "consequential dam- ages 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 fore- seeable by the breaching party at the time of contracting." Sullivan Indus., Inc. v. Double Seal Glass Co., 480 N.W.2d 623, 631 (Mich. Ct. App. 1991) (quoting Petroleo Brasileiro, SA v. Ameropan Oil Corp., 372 F. Supp. 503, 508 (E.D.N.Y. 1974)).
Under the UCC and Michigan law, cover costs are typically direct damages. "Section 2-712 of the Code permits [a plaintiff] to 'cover' in any commercially reasonable manner in the market place to secure alternative goods or services necessitated by the breach of the contract." Mead Corp. v. McNally-Pittsburg Mfg. Corp., 654 F.2d 1197, 1207 n.14 (6th Cir. 1981). And a buyer may recover "the dif- ference between the cost of cover and the contract price together
21
22 Opinion of the Court 24-10335 with any incidental or consequential damages." M ICH. COMP. LAWS § 440.2712 (emphasis added); see Lorenz Supply Co. v. Am. Standard, Inc., 300 N.W.2d 335, 339 (Mich. Ct. App. 1980), aff'd, 358 N.W.2d 845 (Mich. 1984). So the UCC's definition of cover costs separately identifies direct damages from consequential damages that may result from a breach of a contract for a sale of goods. And the UCC goes further than just identifying that distinc- tion between direct and incidental or consequential damages. Not only does the UCC separately define incidental and consequential damages, see, e.g., M ICH. COMP. LAWS § 440.2715 (defining conse- quential and incidental damages that buyers may recover), it also separately defines forms of incidental and consequential damages with respect to cover. The UCC defines "[i]ncidental damages" to in- clude (among other things) "expenses or commissions in connec- tion with effecting cover," and it defines "consequential damages"
as losses "resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover." Id. In other words, the UCC, as adopted by Michigan law, enables buy- ers to recover both direct damages associated with obtaining sub- stitute products and other indirect and consequential damages fore- seeably associated with effecting cover.
The dichotomy holds for lost profits, too. Indeed, "courts regularly conclude that in the business service context, some lost revenues or lost profits are well within the ambit of direct dam- ages." Reid Hosp. & Health Care Servs., Inc. v. Conifer Revenue Cycle
22
24-10335 Opinion of the Court 23 Sols., LLC, 8 F.4th 642, 649 (7th Cir. 2021) (interpreting a similar lim- itation of liability provision); see, e.g., Energy Cap. Corp. v. United States, 302 F.3d 1314, 1328-29 (Fed. Cir. 2002) (affirming an award of lost-profit damages and rejecting an argument that profits on anticipated loans were "consequential" because the profits would have accrued "as the direct and immediate results" of fulfilling the contract (quoting Wells Fargo Bank N.A. v. United States, 88 F.3d 1012, 1021, 1023 (Fed. Cir. 1996))). Perhaps in this context, Sweet Addi- tions's lost profits are consequential damages because they are not within "the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the nonbreaching party in its dealings." Sullivan Indus., 480 N.W.2d at 631 (quoting Petroleo Bra- sileiro, 372 F. Supp. at 508). But perhaps not. That's an issue that the parties did not litigate before us and that we're not positioned to resolve.
What we can confirm, though, is that it would not make sense to interpret the T&Cs to collapse a clear statutory and prac- tical distinction in the roundabout way Meelunie suggests that the T&Cs do—by implicitly redefining what may be direct damages as always consequential, indirect, or special damages. Rather, the most reasonable interpretation of the limitation of liability is that a plaintiff may not recover lost profits and the costs of substitute goods to the extent that they are special consequential, incidental or ex- emplary damages.
Second, canons of interpretation confirm what we glean from the limitation of liability's structure and Michigan's statutes.
23
24 Opinion of the Court 24-10335 We must interpret "a word or phrase . . . by its context or setting."
Bloomfield Ests. Improvement Ass'n, Inc. v. City of Birmingham, 737 N.W.2d 670, 675 (Mich. 2007) (quoting Koontz v. Ameritech Servs., Inc., 645 N.W.2d 34, 42 (Mich. 2002)) (applying the doctrine of nosci- tur a sociis). And here, the contextual clues suggest the limitation of liability does not bar recovery of all cover costs. For one thing, the provision lists "loss of profits" and "costs of substitute goods" in a nonrestrictive subordinate clause that, ac- cording to the laws of grammar, typically gives only "supple- mental, nondefining information." B RYAN A. GARNER, GARNER'S DICTIONARY OF LEGAL USAGE 888 (3d ed. 2011). We know that to be the case because we can omit "including . . ." from the limitation of liability "without changing the essential meaning" of the provi- sion and without undoing the "grammatical and logical complete- ness of a sentence." Id. (differentiating restrictive and nonrestric- tive clauses).
And "loss of profits" and "costs of substitute goods" follow the word "including," which means "to place, list, or rate as a part or component of a whole or of a larger group, class, or aggregate."
W EBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1143 (Philip Babcock Gove ed., 1993) [hereinafter W EBSTER'S] (defining "in- clude"). Based on that definition, "[t]he more general term informs the subsequently listed examples, not the other way around, and so" "loss of profits" or "costs of substitute goods" "here refer only to those that are 'a part or component' of the larger group or class of " consequential, incidental, or exemplary damages. Penncro
24
24-10335 Opinion of the Court 25 Assocs., Inc. v. Sprint Spectrum, L.P., 499 F.3d 1151, 1156 (10th Cir. 2007) (Gorsuch, J.) (quoting W EBSTER'S, supra, at 1143). In turn, the plain meaning of "consequential, incidental or exemplary dam- ages" controls our interpretation of the limitation of liability. Plus, practically every other example in the nonrestrictive subordinate clause—loss of use of the product or any associated product, cost of capital, facilities, or service, downtime costs, and claims of the buyer's customers for damages—is a prototypical in- cidental or consequential damage that adds little to the clause it supplements. And we ought to treat "loss of profits" and "cost of substitute products" just as we would any other term in that list: as an example, not a definition. See Powers v. Bone, No. 367748, 2025 WL 466349, at *4 (Mich. Ct. App. Feb. 11, 2025) (per curiam) (ex- plaining "the principle of noscitur a sociis asserts that the meaning of an unclear word or phrase, especially one in a list, should be de- termined by the words immediately surrounding it" (internal quo- tation marks omitted)). So both grammatical and interpretational canons warrant permitting Sweet Additions to recover lost profits and the costs of substitute products if they are direct damages. Third, Meelunie's interpretation of the limitation of liability would undermine the purpose of a fixed-price contract for a sale of goods and threaten the potential consideration necessary for the existence of the Sales Contract in the first place. The purpose of a fixed-price contract is to protect the buyer from increases in the market price and the seller from decreases in the market price. See Kyocera Corp. v. Hemlock Semiconductor, LLC, 886 N.W.2d 445, 453
25
26 Opinion of the Court 24-10335 (Mich. Ct. App. 2015). If a seller breaches, the only way for the buyer to obtain the benefit of its bargain on the original fixed-price contract is to mitigate damages by finding an alternative supplier and to sue the original seller for the difference in the contract price. To adopt Meelunie's reading of the limitation of liability would foreclose the primary, if not the only, avenue for a nonbreaching buyer to fully benefit from its bargain.
But Michigan law directs us to "liberally administer[]" the UCC's remedies so that "the aggrieved party may be put in as good a position as if the other party had fully performed." M ICH. COMP. LAWS § 440.1305(1). As a result, courts must sometimes reject in- terpretations of contractual provisions that would award windfalls to a wrongfully breaching party. See, e.g., Kyocera Corp., 886 N.W.2d at 453 (refusing to interpret a force-majeure clause to "relieve plain- tiff from the very risk it contracted to assume"); Latimer v. William Mueller & Son, Inc., 386 N.W.2d 618, 625 (Mich. Ct. App. 1986) (re- fusing to apply a limitation of liability because "the remedy pre- scribed in" it was "an illusory one which represents no remedy at all"); see also Citizens Ins. Co. of Am. v. Proctor & Schwartz, Inc., 802 F. Supp. 133, 143 (W.D. Mich. 1992) ("[W]here the remedy prescribed in a limitation of liability clause is necessarily illusory, failing of its essential purpose, the clause may be held unconscionable."), aff'd,
15 F.3d 558 (6th Cir. 1994). True, "parties are generally free to agree to whatever they like [in a contract], and, in most circumstances, it is beyond the au- thority of the courts to interfere with the parties' agreement."
26
24-10335 Opinion of the Court 27 Wilkie v. Auto-Owners Ins. Co., 664 N.W.2d 776, 787-88 (Mich. 2003) (footnote omitted). But that principle means only that we should enforce a contract's unambiguous language. It does not require us to adopt inequitable readings of a contract when, as we've already discussed, the plain language does not require it, much less suggest it. Plus, Meelunie, the contract's drafter, could have written a far clearer provision. See Lichnovsky v. Ziebart Int'l Corp., 324 N.W.2d 732, 738 (Mich. 1982) (construing a contract against the drafter); Penncro Assocs., 499 F.3d at 1157-58 (explaining Sprint could have
"easily . . . preclude[d] lost profits" by "singl[ing]" them "out as a separate and distinct category of forbidden damages" rather than
"plac[ing]" them "in an illustrative list of the sorts of consequential damages excluded").
Adopting Meelunie's urged construction may also nullify the existence of any contract by rendering it illusory. See M&G Poly- mers USA, LLC v. Tackett, 574 U.S. 427, 440 (2015) (explaining the
"illusory promises doctrine . . . instructs courts to avoid construc- tions of contracts that would render promises illusory because such promises cannot serve as consideration for a contract"). "An illusory contract is defined as an agreement in which one party gives as consideration a promise that is so insubstantial as to im- pose no obligation," rendering "the agreement unenforceable."
Emps. Mut. Cas Co. v Helicon Assocs., Inc., 880 N.W.2d 839, 843 (Mich. Ct. App. 2015) (cleaned up) (quoting Ile v. Foremost Ins. Co., 809 N.W.2d 617, 622 (Mich. Ct. App. 2011), rev'd on other grounds sub nom. Ile ex rel. Ile v. Foremost Ins. Co., 823 N.W.2d 426 (Mich. 2012)), rev'd on other grounds, 894 N.W.2d 545 (Mich. 2017). In context, that
27
28 Opinion of the Court 24-10335 means a contract is illusory if the seller has the sole discretion to walk away from the sale. See Tobel v. AXA Equitable Life Ins. Co., No. 298129, 2012 WL 555801, at *4 (Mich. Ct. App. Feb. 21, 2012) (per curiam) (explaining "a contract that is cancellable at will by one party can create an illusory obligation" (citing Lichnovsky, 324 N.W.2d at 740 n.25)). And Meelunie's interpretation of the T&Cs would enable it to deny any sale at its discretion. Under the UCC, nonbreaching buyers may cancel a contract (§ 2-711), "cover" by purchasing substitute goods in the market without unreasonable delay (§ 2-712), recover damages for non-de- livery or repudiation (§ 2-713), recover damages for breach of con- tract because of defective or non-conforming goods (§ 2-714), re- cover incidental and consequential damages (§ 2-715), request spe- cific performance or replevin if unique goods are involved (§ 2-716), or deduct damages from any balance still outstanding (§ 2-717). See Mead Corp., 654 F.2d at 1207 n.14.
If we excluded lost profits and cover costs from this list of remedies, no monetary remedies would remain. Plaintiffs do not recover damages when they cancel a contract. Not only that, but one is entitled to both cancel a contract and recover monetary dam- ages in response to a material breach. See Blazer Foods, Inc. v Restau- rant Props., Inc., 673 N.W.2d 805, 812 n.7 (Mich. Ct. App. 2003). Sec- tion 2-714 also would not apply because there are no nonconform- ing goods that may form the basis of Sweet Additions's damages calculation. Nor could Sweet Additions request specific perfor- mance: tapioca starch is a non-unique good. And to the extent that
28
24-10335 Opinion of the Court 29 Sweet Additions could deduct damages from its outstanding bal- ance, that damages calculation would just be the cost of cover or lost profits; Section 2-717 isn't an independent monetary remedy. In short, Meelunie could walk away from the Sales Contract under its reading, and there would not be a viable benefit-of-the-bargain remedy for Sweet Additions to pursue. In fact, it is unclear that Sweet Additions could press any monetary remedy. Even so, Meelunie suggests that its contract is not illusory because "[h]ad Meelunie refused to deliver Product just because it did not want to," Sweet Additions could "enforce the Contract or breach of Contract" and recover damages that "would 'not exceed the price allowable to such goods or part thereof involved in the claim.'"6Appellee's Br. at 54-55 (quoting App'x B § 5). That
29
30 Opinion of the Court 24-10335 response, though, seems to be a non-answer, or, at a minimum, a concession from Meelunie that its legal position is incorrect. If Meelunie contends that, upon a breach, Sweet Additions could re- cover damages consistent with the T&Cs' generic damages limita- tion, we fail to see how Meelunie interprets the limitation of lia- blity any differently than Sweet Additions does. Had Meelunie de- clined to perform simply because it did not want to, and Sweet Ad- ditions tried to mitigate the damage Meelunie caused by effecting cover, under Meelunie's theory of non-illusoriness, Sweet Addi- tions should be able to recover damages so long as they do not "ex- ceed the price allowable" to the goods Meelunie originally prom- ised to ship. See App'x B § 5. Perhaps Meelunie is not objecting to the idea that Sweet Additions may recover the benefit of its bar- gain, and it contests only the specific calculation of the benefit of the bargain: lost profits and cover costs. But even then, we're left with a non-answer, for Sweet Additions would still have no other way to calculate its damages.
We also respectfully disagree with the district court's theory as to why the contract isn't illusory. The district court explained that Sweet Additions could recover any amounts paid and cancel the rest of the contract. But those remedies do not save a contract from illusoriness. The equitable remedy of rescission differs from purported illusoriness, not the performing party seeking to secure the benefit of the bargain. Cf. Tobel, 2012 WL 555801, at *6 (enforcing a contract's poten- tially illusory terms where "all parties performed under the terms of the Cash Account Agreements" and the plaintiffs attempted to "now avoid the terms of those agreements").
30
24-10335 Opinion of the Court 31 some measure of expectation, or even reliance, damages. To cancel a contract and receive monies already paid is just an attempt to place the nonbreaching party in the position it would occupy had the contract never been performed. See Bazzi v. Sentinel Ins. Co., 919 N.W.2d 20, 29 (Mich. 2018) ("Rescission abrogates a contract and restores the parties to the relative positions that they would have occupied if the contract had never been made."). That remedy is inherently backward looking and merely prevents a party from committing fraud by retaining payment after refusing to perform. Rescission does not "impose" an "obligation" on Meelunie to fulfill its promises. Emps. Mut., 880 N.W.2d at 843 (quoting Ile, 809 N.W.2d at 622). And that means the contract would be illusory. So both the UCC's preference for a liberal administration of remedies and Michigan's treatment of illusory contracts counsels against Meelunie's interpretation of the limitation of liability. Fourth, and finally, our sister circuits, as well as other courts throughout the country, have interpreted similar limitations of lia- bility as we now do—barring recovery of listed examples of dam- ages, typically lost profits, when they are indirect or consequential but permitting recovery when they are direct. See, e.g., Penncro As- socs., 499 F.3d at 1157; Conifer Revenue, 8 F.4th at 650-51, 654; see also Coremetrics, Inc. v. Atomic Park.com, LLC, No. C-04-0222, 2005 WL 3310093, at *4 (N.D. Cal. Dec. 7, 2005); Ingraham v. Planet Beach Franchising Corp., No. 07-3555, 2009 WL 1076713, at *1-2 (E.D. La. Apr. 17, 2009); Claredi Corp. v. SeeBeyond Tech. Corp., No. 04CV1304, 2010 WL 1257946, at *5-6 (E.D. Mo. Mar. 26, 2010); Cont'l AFA
31
32 Opinion of the Court 24-10335 Dispensing Co. v. AFA Polytek, B.V. (In re Indesco Int'l, Inc.), 451 B.R. 274, 315-16 (Bankr. S.D.N.Y. 2011); Optimal Interiors, LLC v. HON Co., 774 F. Supp. 2d 993, 1010-11 (S.D. Iowa 2011); EMS, Inc. v. Che, Inc., No. 11CV113, 2012 WL 5412956, at *5 (D. Neb. Nov. 6, 2012); Nielsen Co. (US) v. Success Sys., Inc., 112 F. Supp. 3d 83, 103 (S.D.N.Y. 2015); Martin v. Bimbo Foods Bakeries Distrib., Inc., No. 14-CV-17-BR, 2016 WL 5173249, at *2 (E.D.N.C. Sept. 21, 2016); City of Waco v. Kleinfelder Cent., Inc., No. 15-CV-310, 2016 WL 5854290, at *6-7 (W.D. Tex. Oct. 6, 2016); Moses H. Cone Mem'l Hosp. Operating Corp.
v. Conifer Physician Servs., Inc., No. 13CV651, 2017 WL 1378144, at *7-9 (M.D.N.C. Apr. 11, 2017).
This robust body of precedent confirms we're properly ap- plying first principles to the contract in dispute. But these cases also inform the meaning of the limitation of liability itself. Mich- igan courts "have consistently construed unambiguous language in one contract in the same way it was construed in an earlier case involving identical language." County of Bay v. Blue Cross Blue Shield, No. 307447, 2013 WL 6670894, at *3 (Mich. Ct. App. Dec. 17, 2013) (per curiam); see, e.g., Heniser v. Frankenmuth Mut. Ins., 534 N.W.2d 502, 508 (Mich. 1995) (agreeing with how the Georgia Court of Ap- peals interpreted an identical contract provision about an insured residing at property at the time of loss); Wells Fargo Bank, NA v. Cher- ryland Mall Ltd. P'ship, 812 N.W.2d 799, 815-16 (Mich. Ct. App. 2011) (per curiam) (adopting a reading of certain "standardized na- tionwide" terms consistent with those of other courts); Tenneco Inc.
v. Amerisure Mut. Ins. Co., 761 N.W.2d 846, 869 (Mich. Ct. App. 2008) (per curiam) (adopting an interpretation consistent with those of
32
24-10335 Opinion of the Court 33 other courts because they "applied principles of construction Mich- igan courts would employ when interpreting identical language in a general liability policy in a strikingly similar factual setting"). That practice makes sense because courts interpret con- tracts "in accordance with their commonly used meanings." Mori- nelli v. Provident Life & Accident Ins. Co., 617 N.W.2d 777, 781 (Mich. Ct. App. 2000). If a provision is common, and courts commonly apply it in the same way, then, when parties use that provision in a contract, we can readily presume the parties intended to adopt its usual judicial interpretation. And here, Sweet Additions's appraisal of the contract fits the common reading of similar limitations of liability.
In sum, the limitation of liability's structure, traditional can- nons of interpretation, the purpose of a fixed-price contract, and the limitation of liability's common judicial interpretation compel the conclusion that Sweet Additions may recover lost profits and the costs of substitute products to the extent that those damages are direct and otherwise satisfy the provision's total cap on recov- erable damages.
IV. CONCLUSION
For the reasons we've just explained, we vacate the judg- ment of the district court and remand for further proceedings con- sistent with this opinion.
VACATED AND REMANDED.
33
34 Opinion of the Court 24-10335
APPENDIX A
34
24-10335 Opinion of the Court 35
APPENDIX B
35