M E M O R A N D U M O P I N I O N

BASSLER, District Judge:

In this breach of contract action, Defendant RSG Systems, LLC ("RSG") moves for Partial Summary Judgment on its Tenth Affirmative Defense, which seeks to bar Plaintiff Blue Sky MLS, Inc., ("MLS"), from recovering damages in excess of $50,000 pursuant to a purportedly valid limitation provision. Plaintiff opposes Defendant's motion, and cross-moves for Partial Summary Judgment, seeking to dismiss Defendant's quantum meruit counterclaim in its entirety. Defendant opposes Plaintiff's cross-motion. For the following reasons, Defendant's motion is denied, and Plaintiff's motion is granted in part.

I. BACKGROUND

Plaintiff MLS is a New Jersey corporation, engaged in the business of providing internet-based compliance automation for customers needing assistance in complying with state securities laws ("Blue Sky" laws). Defendant RSG is a Connecticut company, primarily engaged in the business of writing computer software. From sometime in 1998 until approximately August, 2000, RSG endeavored to develop an internet-based software package for MLS, and also provided MLS with web-hosting and consulting services.

It is undisputed that during the course of their business relationship, the parties entered into a written agreement ("The Contract"), signed by RSG on February 2, 2000, and by MLS on February 3, 2000. (Contract, Boccher Cert. Ex. D.) The Contract memorialized the parties' agreement with respect to the services being rendered by RSG to MLS.

The Contract provided that MLS agreed to pay RSG $300,000 for its services. Because previous payments had been made by MLS to RSG, the balance due under the Contract was $250,000. Rather than requiring MLS to pay RSG the $250,000 in one lump sum, the Contract provided for a series of payments to be made at different times. An initial payment of $100,000 would be made by MLS within 10 days of the signing of the Contract. MLS was then obligated to pay RSG a series of fixed amounts whenever RSG achieved specified goals in developing the software.

These goals were set forth in Attachment A to the Contract, and were grouped into sets of tasks labeled "Release 1," "Release 2," and "Release 3." The Contract provided that MLS would pay $75,000 when RSG completed and delivered Attachment A Release 1, and another $75,000 "paid within 45 days of Attachment A Release 1 after the successful verification of the source code and the elimination of any bugs found by MLS or other system users." (Contract ¶ 1(c).) The Contract expressly indicated that Release 2 and Release 3 were not included within the scope of the agreement.

Pursuant to the Contract, RSG was obligated to "make every effort to successfully complete Attachment A Release 1 by February 28, 2000." (Contract ¶ 3.) MLS alleges that RSG failed to meet the requirements of Release 1 by February 28, 2000, or by any time thereafter. As a result of the breach, MLS claims that it suffered damages in excess of $1,200,000.00.

RSG's counterclaim asserts that it delivered software to MLS by February 28, 2000 that complied with Release 1, but that MLS failed to make the required payments due under the Contract. In addition to its breach of contract claims and its conversion claim, RSG further contends that MLS failed to make payment for other services provided by RSG both before and after February 28, 2000, and hopes to recover $1,971,250.00 for its services on quantum meruit grounds.

II. DISCUSSION Summary Judgment Standard

The standard for granting summary judgment pursuant to Federal Rule of Civil Procedure 56 is a stringent one. Summary judgment is appropriate only if all the probative materials in the record "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). An issue involving a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Healy v. New York Life Ins. Co., 860 F.2d 1209, 1219 n. 3 (3d Cir. 1988).

The court must resolve all reasonable doubts in favor of the nonmoving party when determining whether any genuine issues of material fact exist.Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir. 1983);Smith v. Pittsburgh Gage Supply Co., 464 F.2d 870, 874 (3d Cir. 1972). Even though a court must resolve reasonable doubts in favor of the nonmoving party, because a motion for summary judgment is designed to go beyond the pleadings, factual specificity is required of a party who opposes such a motion. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

Accordingly, in order to defeat a properly supported motion for summary judgment, a party may not merely restate the allegations of its pleadings, or rely upon self-serving conclusions, unsupported by specific facts in the record. Celotex, 477 U.S. at 322-23; Farmer v. Carlson, 685 F. Supp. 1335, 1339 (M.D.Pa. 1988). A non-moving party must point to concrete evidence in the record which supports each essential element of its case. Id. If the party fails to provide such evidence, then it is not entitled to a trial and the moving party is entitled to summary judgment as a matter of law. Fed.R.Civ.P. 56(e).

B. The Contract's "Valid Damage Limitation Provision"

Defendant RSG's Tenth Affirmative Defense states that "Plaintiff is barred from recovery against RSG in any amount in excess of $50,000 because its damages, if any, are subject to a valid limitation provision." RSG now seeks Partial Summary Judgment on its Tenth Affirmative Defense, because it claims that no material question of fact exists as to the provision's validity or applicability. The provision relied on by RSG reads in its entirety:

RSG agrees to make every effort to successfully complete Attachment A Release 1 by February 28, 2000. This includes making full use of any resource necessary. Should a "bug" re-occur, RSG will be responsible for correcting same until resolved within a reasonable amount of time (1 month unless otherwise requested and agreed by MLS). Should Attachment A Release 1 not be completed and available to MLS on February 28, 2000, MLS will bill RSG with a penalty of $500 per day for every business day that Attachment A Release 1 is not delivered subject to a maximum amount of $50,000.

(Contract ¶ 3) (emphasis added). Defendant asserts that this is a clear limitation of liability provision, which was intended by the parties to cap all damages flowing from late or non-delivery of the software at $50,000. _____

In support of its contention that the disputed provision should be found to limit the sum of Plaintiff's damages to $50,000, Defendant relies on the well settled principle that "when the terms of a . . . contract are clear, it is the function of a court to enforce it as written and not make a better contract for either of the parties."Marbro, Inc. v. Borough of Tinton Falls, 297 N.J. Super. 411, 417 (1996). Further, Defendant has reminded the Court that it is a general rule of construction that "parties to a contract may agree to limit their liability as long as the limitation is not violative of public policy."Id.

Defendant also cites to the Third Circuit's decision in Valhal Corp. v. Sullivan Assoc., Inc., (upon which Marbro primarily relied), for the proposition that limitation of liability clauses are routinely enforced when contained in contracts negotiated between sophisticated parties and when no personal injury or property damage is involved. 44 F.3d 195, 203 (3d Cir. 1995). In Valhal, the Third Circuit found that limitations provisions are "a way of allocating `unknown or undeterminable risk,' and are a fact of every-day business and commercial life." 44 F.3d at 203.

Given the preceding legal standards, RSG contends that because the limitation of liability provision between RSG and MLS is clear and unambiguous, MLS's damages should be limited to $50,000. In Defendant's estimation, the clause was entered into by two sophisticated parties, dealing directly and bargaining at arm's length, and provided a means for the parties to address an unknown risk. Accordingly, RSG now argues that no reason exists for the Court to rewrite or otherwise change the terms of the Contract between the parties, and asks the Court to award it summary judgment.

In response, Plaintiff argues that the provision must be strictly construed against Defendant, and that a reasonable alternative explanation is that the provision was intended to act as a capped series of per diem payments that would provide Defendant with an incentive to avoid delay, and not act as a cap on damages flowing from non-delivery. In essence, Plaintiff argues that the provision is a penalty clause and not a liability limitation provision.

Plaintiff cites to a string of cases for the proposition that limitation of liability clauses are to be strictly construed against the party seeking to avoid liability. See Chemical Bank of New Jersey National Association v. Bailey, 296 N.J. Super. 515, 528 (App.Div. 1997); Port Chester Electrical Construction Corp. v. HBE Corp., 894 F.2d 47, 48 (2d Cir. 1990); Gross v. Sweet, 400 N.E.2d 306 (1979); Abel Holding Co., Inc. v. American District Telegraph Co., 147 N.J. Super. 263, 269 (App. Div. 1977); Midland Carpet Corp. v. Franklin Associated Properties, 90 N.J. Super. 42, 46 (App.Div. 1966). Plaintiff asserts that because the disputed provision does not "clearly and explicitly" provide that RSG's total liability is limited (instead providing that the total penalty imposed is limited), the provision must be strictly construed against RSG, rendering a grant of summary judgment inappropriate.

In the alternative, MLS contends that because the Contract language is ambiguous, the Court must look to parol evidence to determine whether there is a reasonable alternative interpretation of the Contract language. MLS has provided evidence that purportly shows it intended the clause "to apply only as an incentive for RSG to complete the work outlined in Attachment A, Release 1 in a timely manner by imposing a per diem penalty in the event RSG failed to do so." (MLS Opo. Brief, p. 14.) MLS notes that the language of the provision itself links the "penalty" directly to timely performance, and is devoid of any language normally found in a general limitation provision, such as "limitation," "liability," or even "damages."

It is axiomatic that the resolution of any contract dispute requires the Court to first determine whether the contract is clear or ambiguous.Sumitomo Machinery Corp. v. AlliedSignal, Inc., 81 F.3d 328, 332 (3d Cir. 1996). A contract is ambiguous "where the contract is susceptible of more than one meaning." Id. In determining whether the contract is susceptible to more than one meaning, a Court may look to parol evidence to determine the bargained for intent of the parties. Id.

Based on a reading of the entire Contract, it does appear to the Court that the disputed provision is ambiguous. Regardless, because there is only one reading of the provision that would not render it invalid on policy grounds, the Court need not look to parol evidence to determine the intent of the parties. Instead, mindful of the fact that a Court must interpret a Contract so as to lend effect to all of its provisions,Carter v. Exxon, 177 F.3d 197, 206 (3d Cir. 1999), the Court will look to the language of the provision itself, and to the legal ramifications of the parties' proposed interpretations of it.

If the Court were to accept RSG's theory about the provision, the Court would initially be required to read into the Contract many absent provisions. Given the sophisticated nature of the parties to this dispute, it is implausible that the parties would draft an absolute limitation of liability provision that contained no mention of critical concepts such as "all claims," "all liability," or even "damages." Because of the complete absence of express language expanding the applicability of the "maximum amount of $50,000" to anything more than late delivery, the Court finds that it would unduly torture the language of the provision to extend it beyond damages stemming from delay.

Even if the preceding were not the case, and even if the Court were to assume that the provision was drafted as Defendant argues, the Court would still be unable to lend effect to Defendant's proposed interpretation. If the provision were intended to limit RSG's liability for all potential injury to $50,000, it would be unreasonable as a matter of policy. The Court reaches the foregoing conclusion because a provision limiting the entirety of RSG's liability to $50,000 would limit RSG's total risk of loss to a mere 16.7% of its expected contractual gain (i.e. of its $300,000 fee for the project).

Such a small percentage of total liability relative to anticipated benefit is unreasonable given the standard articulated by Valhal andMarbro, the very cases at the heart of Defendant's argument. In both cases, the relevant inquiry was held to be "whether the cap is so minimal compared to [Defendant's] expected compensation as to negate or drastically minimize [Defendant's] concern for the consequences of a breach of its contractual obligations." Marbro, 297 N.J. Super. at 416,quoting Valhal 44 F.3d at 204.

In Marbro, a damage cap was found not to be minimal when it allowed Plaintiff to recover damages equal to the amount of Defendant's fee. 298 N.J. Super. at 418. In Valhal, the cap found to be reasonable was seven times greater than the amount of Defendant's fee. Mindful of those standards, a damage cap that limits Defendant's liability to 16.7% of its expected gain would "negate or drastically minimize [Defendant's] concern for the consequences of a breach of its contractual obligations." Accordingly, the Court cannot adopt Defendant's proposed interpretation of the limitation provision.

Similarly, if the Court were to accept Plaintiff's theory that the provision is merely a penalty clause, the provision would be unenforceable as a matter of law. In Wasserman's Inc. v. Township of Middletown, the New Jersey Supreme Court explained at length that although stipulated damage provisions are enforceable, penalty clauses are not. 137 N.J. 238, 248-49 (1994). After explaining why penalty clauses have traditionally been disapproved of, the Court explained the distinction between a penalty clause and a stipulated damage provision:

Liquidated damages is the sum a party to a contract agrees to pay if he breaks some promise, and which, having been arrived at by a good faith effort to estimate in advance the actual damages that will probably ensue from the breach, is legally recoverable as agreed damages if the breach occurs. A penalty is the sum a party agrees to pay in the event of a breach, but which is fixed, not as a pre-estimate of probable actual damages, but as a punishment, the threat of which is designed to prevent the breach.

Although Plaintiff implies that the disputed provision was reasonably enacted so as to place negative incentives on RSG (to ensure that RSG would complete the project on time), such incentives are impermissible as a matter of law. Recognizing the clear prohibition on enforcement of penalty clauses, the Court can not adopt Plaintiff's proposed interpretation of the provision.

Having concluded that neither parties' proposed interpretation of the provision is appropriate, the Court must determine whether there is some other reasonable way to lend effect to the disputed portion of the Contract. In addition to the Court "reading every contract provision so as to give it meaning," "an agreement . . . must be accorded a rational meaning in keeping with [its] express general purpose." Carter, 177 F.3d at 206, quoting Tessmar v. Grosner, 23 N.J. 193 (1957). Even though the Court can not adopt the parties' proposed interpretations of the provision, there is a readily apparent reading of the Contract that allows the Court to accomplish both of the objectives set forth in Carter.

As previously discussed, liquidated damages provisions are routinely enforced, to the extent that they are reasonable. The only possible way to lend effect to the disputed damage provision (and its integral $50,000 limitation) is to find that it attempts to quantify MLS's damages fordelayed receipt of Release 1, by assigning a liquidated value of $500 per day. The provision then further limits RSG's total liability for delayed delivery to a maximum of $50,000.

In practice, if RSG delivered the bargained for software but delivered it late, MLS would be obligated to pay RSG $300,000 for the software, but could recoup from RSG $500 per day to reflect any delay, up to $50,000. Assuming MLS ultimately received the product it bargained for, such a capped damage provision would reasonably compensate MLS for RSG's tardiness, and insulate RSG from more extensive liability stemming from the delayed delivery of a product that otherwise conformed to MLS's specifications. That said, the provision would not be reasonable if it were applicable either to circumstances where RSG completely failed to deliver the product bargained for, or circumstances where RSG delivered a product that, while timely, contained performance problems of a type that would force MLS to expend substantial time and effort to repair them. In both of those circumstances, MLS's anticipated injury would not be reflected by either the $500 per day or $50,000 maximum damage figure, especially in light of the $300,000 Contract price of the software.

As articulated in the Marbro and Valhal decisions, the Court cannot construe the disputed provision in a manner that would allow RSG to breach a contract for which it had already received $150,000 in exchange for the return of a mere $50,000 to MLS. For all of the foregoing reasons, RSG's Motion for Partial Summary Judgment on its Tenth Affirmative Defense must be denied. Should MLS ultimately recover against RSG, MLS's recovery will only be limited by the disputed provision in the event a jury finds that 1) RSG delivered the contemplated product to MLS, but finds that 2) RSG delivered the product in an untimely manner. In all other circumstances, including a complete failure by RSG to deliver the bargained for product, the facts of the dispute will render the provision inapplicable.

C. Defendant's Quantum Meruit _Counterclaim

Distinct from Defendant's Motion for Partial Summary Judgment, Plaintiff has cross-moved for Partial Summary Judgment. Plaintiff seeks to dismiss Defendant's quantum meruit counterclaim in its entirety. Plaintiff's argument is premised on the well settled rule that recovery under quantum meruit may not be had when a valid, unrescinded contract governs the rights of the parties. See, e.g., Van Orman v. American Insurance Co., 680 F.3d 301, [ 680 F.2d 301,] 311 (3d Cir. 1984). Where an express contract governs the relationship of the parties, recovery is limited to the amounts provided for in the express contract.See, e.g., New Paradigm Software Corp. v. New Era of Networks, Inc. 107 F. Supp.2d 325, 328-29 (S.D.N.Y. 2000). Because a contract that is undisputedly valid governs the relationship of the parties in this matter, Plaintiff now seeks to dismiss Defendant's quantum meruit claim.

Defendant opposes MLS's motion on two grounds. RSG states that its quantum meruit claim should be allowed to proceed because, 1) the claim includes a demand for damages based on substantial services rendered by RSG that are beyond the scope of the Contract, and 2) In the alternative, if the Contract is ultimately invalidated RSG's quantum meruit claim for services rendered under the Contract would become viable.

RSG's second argument is easily resolved. Where, as here, recision of the contract is not sought, quantum meruit may not be pled as an alternative theory of relief. See, e.g., New Paradigm, 107 F. Supp.2d at 329 ("Because both parties agree that a valid and enforceable contract exists between them, Plaintiff may not plead the quasi-contractual theory of unjust enrichment."); Moser v. Milner Hotels, 6 N.J. 278 (1951). Because RSG and MLS have both conceded the validity of the Contract and its applicability to this dispute, and because neither party has pled a claim or defense that might lead to the Contract being rendered invalid, RSG's quantum meruit claim must be dismissed to the extent it seeks to recover for work performed by RSG that was contemplated by either the Contract or by any previous agreement that may have been expressly superceded by the Contract.

Whether particular work performed by RSG fell within the scope of the Contract or outside the scope of the Contract is a factual issue for the jury to resolve. The issue is important because of RSG's other argument in opposition to MLS's motion, namely that RSG is entitled to recover on a quantum meruit theory for work it performed beyond the scope of the Contract. Having reviewed the relevant case law, the Court agrees with RSG that even in a breach of contract action where the Contract is not in dispute, a quantum meruit claim may be pursued for work performed beyond the scope of the Contract. See, e.g., Violette v. Armonk Assocs., L.P., 872 F. Supp. 1279, 1282 (S.D.N.Y. 1995).

The Court notes that Plaintiff does not challenge RSG's legal position, but instead challenges the sufficiency of the evidence submitted by RSG. MLS contends that RSG has failed to submit even a "mere scintilla" of evidence to demonstrate that it performed work not contemplated by the Contract. Having reviewed the record, the Court finds that in a light most favorable to RSG there is sufficient evidence for a reasonable trier of fact to find in favor of RSG. The record demonstrates that RSG performed 1,077 hours of labor between March, 2000 and August 4, 2000. As the contract contemplated delivery of Release 1 by February 28, 2000 and the ironing out of all bugs within one month thereafter, a reasonable juror could find that at least some portion of the substantial effort rendered by RSG between March and August, 2000 was beyond the scope of the Contract.

Because there is evidence in the record of work performed by RSG that may have been beyond the scope of the Contract, and because the jury must resolve the question of whether particular work was either contemplated by the Contract or was beyond its scope, a grant of summary judgment in favor of Plaintiff on this narrow issue would not be appropriate.

IV. CONCLUSION

For all of the foregoing reasons, Defendant's Motion for Partial Summary Judgment is denied. Plaintiff's Cross-Motion for Partial Summary Judgment is granted in part; Defendant's quantum meruit claim is dismissed to the extent that Defendant seeks to recover for services rendered pursuant to the Contract between the parties. Additionally, Plaintiff's Cross-Motion for Partial Summary Judgment is denied in part; the Court will not dismiss Defendant's quantum meruit counterclaim to the extent that Defendant seeks to recover for services rendered that were not contemplated by the Contract.

An Appropriate Order Follows.