Hanover Ins. Co. v. D & W Cent. Station Alarm Co., Inc., 164 A.D.2d 112, 560 N.Y.S.2d 293 (N.Y.A.D. 1 Dept., Oct 04, 1990) (NO. 40732)

Supreme Court, Appellate Division, First Department, New York.
The HANOVER INSURANCE COMPANY, as subrogee and/or assignee of NBK CompanyManufacturing Jewelers and Albert Bratt, Plaintiffs-Respondents,v.D & W CENTRAL STATION ALARM CO., INC., Defendant-Appellant,Phillips International Holding Corp., Inc., et al., Defendants.

Oct. 4, 1990.

 Subscriber to central station alarm service sued contractor providing service, following a burglary loss.   The Supreme Court, New York County, Baer, J., denied contractor's motion for summary judgment.   Subscriber appealed.   The Supreme Court, Appellate Division, Kassal, J., held that:  (1) clause of central station alarm contract, purporting to limit contractor's liability for negligence, did not apply to acts of gross negligence, and (2) material issues of fact, precluding summary judgment, existed as to whether contractor's response to alarm signals constituted gross negligence.
 Affirmed.

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Limitation of liability provision in central station alarm contract, limiting contractor's losses from any liability whether or not caused or contributed to by contractor's negligent performance or failure to perform any obligation under agreement, did not apply to gross negligence.
[2] Judgment  185.3(21)228k185.3(21) Most Cited Cases
Material issues of fact, precluding summary judgment, existed as to whether central station alarm company had been negligent in responding to burglar alarm;  there was evidence company had failed to notify police upon receipt of three alarm signals in span of four hours, and dispatcher had informed guard who had responded by going to site to "forget the assignment" after guard reported difficulty in entering customer's building. **294 *113 Kenneth Kirschenbaum, of counsel (Ira Levine with him, on the brief;  Kirschenbaum & Kirschenbaum, Garden City, attorneys), for defendant-appellant.
 Arthur N. Lambert, of counsel (Marc R. Lepelstat with him, on the brief;  Lambert & Weiss, New York City, attorneys), for plaintiffs-respondents.

 Before ROSS, J.P., and KASSAL, ELLERIN and WALLACH, JJ.


 KASSAL, Justice.
 This appeal calls upon the Court to clarify the law with respect to limitation of liability clauses in contracts for theprovision of burglary alarm services and related protection.   For the reasons that follow, defendant-appellant may not rely upon such a contractual provision to limit its liability for acts of alleged gross negligence, and the IAS part properly denied its motion for summary judgment.
 Plaintiff, Hanover Insurance Company ("Hanover"), brings this action as subrogee and/or assignee of NBK Company Manufacturing Jewelers ("NBK") which, on February 18, 1986, entered into a written agreement with defendant-appellant D & W Central Station Alarm Co., Inc. ("D & W"), pursuant to which D & W agreed to install, service, and monitor a burglary alarm system at NBK's premises. Included in the services to be provided under the contract was "guard response".
 Subsequent to D & W's installation of the burglary alarm equipment in NBK's premises, and at some point between the evening of December 26 and the morning of December 27, 1986, NBK's premises was burglarized.   The record establishes that D & W received an alarm signal from the subject premises on December 26, 1986 at 10:47 p.m., and that a second alarm signal was received at 12:38 a.m. on December 27.   The record further establishes that a guard dispatched from D & W's central office in response to the alarm signals arrived at NBK's premises at 1:54 a.m. and departed therefrom at 2:15 a.m. on December 27.   In a handwritten and signed report, that guard stated that the reason he left without investigating the alarm condition or otherwise acting upon it *114 was that he could not gain entry into the building and, when he called D & W to so inform them, he was told to "forget that assignment and go on another guard run".
 The earliest report of police notification was recorded by Sergeant Jeffrey Miller who received a call at 5:02 a.m. on December 27, 1986.   Also contained in the record is a report prepared by North Atlantic Security Alarm, Inc. ("NASA"), which monitored NBK's premises on television equipment, stating that the burglars were viewed on camera at approximately 4:44 a.m. on the morning of the 27th, and that NASA notified the police.   By the time that Sergeant Miller arrived at the premises at approximately 5:03 a.m., the burglars had escaped, and they have not been apprehended to date.   NBK, plaintiff Hanover's subrogor, sustained losses totalling $243,000.
 [1] The contract governing D & W's provision of burglary alarm services to **295 NBK contained a limitation of liability clause stating as follows: THE PARTIES AGREE THAT THE ALARM SYSTEM IS NOT DESIGNED OR GUARANTEED TO PREVENT LOSS BY BURGLARY, THEFT, AND OTHER ILLEGAL ACTS OF THIRD PARTIES, OR LOSS BY FIRE.   IF, NOTWITHSTANDING THE TERMS OF THIS AGREEMENT, THERE SHOULD ARISE ANY LIABILITY ON THE PART OF THE LESSOR, AS A RESULT OF BURGLARY, THEFT, HOLD-UP, EQUIPMENT FAILURE, FIRE, SMOKE, OR ANY CAUSE WHATSOEVER, REGARDLESS OF WHETHER OR NOT SUCH LOSS, DAMAGE OR PERSONAL INJURY WAS CAUSED BY OR CONTRIBUTED TO BY LESSOR'S NEGLIGENT PERFORMANCE OR FAILURE TO PERFORM ANY OBLIGATION UNDER THIS AGREEMENT, SUCH LIABILITY SHALL BE LIMITED TO AN AMOUNT EQUAL TO SIX (6) TIMES THE MONTHLY PAYMENT BY LESSEE AT THE TIME SUCH LIABILITY IS FIXED, OR TO THE SUM OF $250.00, WHICHEVER IS GREATER.
 Pursuant to this provision, D & W moved, on January 22, 1988, for summary judgment.   The denial of its motion, filed in the IAS part on April 15, 1988, was affirmed without opinion by order of this Court entered October 20, 1988.  (Hanover Ins. Co. v. Full Range Sec. Protection, 143 A.D.2d 1074, 533 N.Y.S.2d 356).
 Following this Court's memorandum decision in Koos Van Den Akker Atelier Ltd. v. Honeywell Protection Services, 148 A.D.2d 359, 539 N.Y.S.2d 7, D & W moved before the IAS part to reargue its motion for summary judgment on the ground that the law had been changed.   The motion to reargue having been granted, and the IAS part having adhered to its prior ruling, D & W now appeals from that most recent denial of summary judgment *115 relief.   In light of the appearance of a change or conflict in the law, occasioned by Koos Van Den Akker Atelier Ltd. v. Honeywell, supra, the IAS part's grant of reargument was proper.   See Foley v. Roche, 86 A.D.2d 887, 447 N.Y.S.2d 528.   Also proper was that court's adherence, upon reargument, to the denial of summary judgment.
 It is well settled that exculpatory clauses in security alarm contracts "have been repeatedly enforced by the courts of this State, and claims for breach of these contracts have been dismissed, where the plaintiff has sought to recover damages for losses sustained as a result of crimes such as burglaries [citation omitted]".  Nuri Farhardi Inc. v. Albany Insurance Co., 137 A.D.2d 429, 431, 524 N.Y.S.2d 445.   However, to the extent that such agreements "purport to grant exemption for liability for willful or grossly negligent acts[,] they have been viewed as wholly void".  Id. [quoting from Gross v. Sweet, 49 N.Y.2d 102, 106, 424 N.Y.S.2d 365, 400 N.E.2d 306].  See also, Idone v. Pioneer Savings and Loan Association, 159 A.D.2d 560, 552 N.Y.S.2d 424; Alter v. Advance Alarm Co., 131 A.D.2d 406, 516 N.Y.S.2d 75;  Arell's Fine Jewelers, Inc. v. Honeywell, Inc., 147 A.D.2d 922, 923, 537 N.Y.S.2d 365.
 In Koos Van Den Akker Atelier Ltd. v. Honeywell, supra, this Court, relying upon dictum in Feldman Furs, Inc. v. Jewelers Protection Services, Ltd., 134 A.D.2d 171, 520 N.Y.S.2d 760, held that gross negligence could properly be the subject of a limitation of liability clause.   Further reflection compels us to abandon this course in favor of sound public policy grounds which preclude exemption from liability for grossly negligent acts.   See Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377, 384-85, 461 N.Y.S.2d 746, 448 N.E.2d 413;  Gentile v. Garden City Alarm, 147 A.D.2d 124, 131, 541 N.Y.S.2d 505.
 [2] In contrast to Feldman Furs, Inc. v. Jewelers Protection Services, Ltd., supra, the record before us establishes that triable issues of fact exist regarding whether D & W was grossly negligent in its response or failure to respond to alarm signals transmitted from NBK's premises.   Among the matters to be considered in this regard are D & W's failure to notify the police upon receipt of three alarm signals in the span of four hours, and the decision by a member of the D & W staff to direct the guard who responded to "forget the **296 assignment" because he encountered difficulty in entering the building.
 Accordingly, the order, Supreme Court, New York County (Harold Baer, J.), entered October 22, 1989, which granted defendant's motion to reargue and, upon reargument, adhered to its prior determination denying defendant's motion for summary judgment, should be affirmed, without costs.
 *116 Order, Supreme Court, New York County (Harold Baer, Jr., J.), entered on October 22, 1989, unanimously affirmed, without costs and without disbursements.

 All concur.
560 N.Y.S.2d 293, 164 A.D.2d 112
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