Owner of building [WelshCo] contracted with sprinkler company [Viking] to inspect sprinkler system, and a fire alarm company [Checkpoint] to inspect and monitoring a sprinkler alarm system.  Building owner leased premises out to several tenants.  Here are the facts directly from the court decision:

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    "   The entire building is equipped with a fire-suppression system consisting of numerous sprinkler heads monitored by a fire-alarm system. If water moves in the sprinkler pipes, a water-flow switch sends a signal to a phone dialer, which automatically phones the fire-monitoring company, which in turn contacts the local fire department.

   WelshCo hired Viking to inspect and maintain the sprinkler system and

Checkpoint to inspect and maintain the fire-alarm system. Viking conducted

annual inspections of the sprinkler system and Checkpoint conducted twice yearly inspections of the monitoring system. WelshCo signed contracts with both Viking and Checkpoint, but Viking and Checkpoint had no actual or contractual relationship with appellants.

   In 2005 and 2006, both Checkpoint and Viking inspected the sprinkler and fire-alarm system and notified WelshCo that the water-flow switch was not working properly and needed to be replaced.

   On or about July 10, 2006, a sprinkler head in the building's hallway, a

common area, malfunctioned for an unknown reason. Water flowed from the sprinkler for an unknown period of time, flooding appellants' rental space and other tenants' spaces. Checkpoint was not notified of water flow by the dialer and therefore did not notify the fire department. Water continued to flow from the sprinkler head until another building tenant discovered the flooding and contacted the fire department. Fraley was at home at the time of the flooding and did not suffer direct physical injuries from the flooding. The fire marshal's report indicates that "it was determined that the sprinkler head malfunctioned," and that a "Checkpoint technician determined that the control board in the dialer box was faulty."

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    A tenant in the building, Scoreboard Sportsware, suffered extensive water damage to its inventory.  Scoreboard's owner, Fraley, claimed that he suffered mental distress and other physical ailments as a result of his businesses losses.

    The tenant sued the building owner, sprinkler company and the alarm company, all of whom moved for summary judgment.  The lower court granted the motion and the tenant appealed.  The appellate court affirmed.

    There is much discussion regarding the working and enforcement of the exculpatory clause.  Since the courts in MN won't enforce the clause if it includes willful and wonton acts, the tenant argued that the use of the word "otherwise" in the exculpatory clause rendered the clause unenforceable.  This clause was in the lease between the Owner and the tenant.  The court determined that the word did not render the clause defective.  Reading the case - which you read on my web site under the MN leading cases http://www.kirschenbaumesq.com/casesbystate.htm the case is Scoreboard Sportswear, Inc., et al., Appellants, vs. WelshCo, LLC, Respondent, Checkpoint Security Systems Group, Inc., Respondent, Viking Automatic Sprinkler Co., -

illustrates why the wording in alarm contracts is so important.  The legal right to enter into contracts permitting a party to contract away liability for its own negligence will be enforced, but reluctantly, and any defect in working will render the clause unenforceable.

    The decision goes on to explain that the sprinkler company and the alarm company had no contract with the tenant, and thus owed no duty to the tenant.  This finding is consistent with holdings in other states where the courts have found that alarm companies owe no duty to non contracting parties.  But again, be careful because there are arguments that a duty can be owed, especially in a fire alarm situation, without a contract.  Here that was not an issue however.  Regarding the alarm company liability, the court held:

    "The district court held that Viking and Checkpoint owed no duty, contractual or otherwise, to appellants. Appellants claim that Viking and Checkpoint "owe a general duty not to commit any act or create any omission that results in damages to another." Appellants cite no authority for this proposition. A person "generally has no duty to act for the protection of another person, even if he realizes or should realize that action on his part is necessary." Donaldson v. Young Women's Christian Assoc., 539 N.W.2d 789, 792 (Minn. 1995). "The existence of a legal duty depends on the relationship of the parties and the foreseeability of the risk involved." Id. "Usually, a special relationship giving rise to a duty to protect is found only on the part of common carriers, innkeepers, possessors of land who hold it open to the public, and persons who have custody of another person under circumstances in which that other person is deprived of normal opportunities of self-protection." Id. Here, there was no contractual relationship between Viking and appellants or Checkpoint and

appellants, and nothing in the record indicates that appellants were deprived of the normal opportunities of self protection so that Viking and Checkpoint foresaw a risk if they did not act to protect appellants. No special duty existed between appellants and Viking or Checkpoint, and thus, appellants failed to establish a prima facie case of negligence against Viking and Checkpoint. The district court did not err in granting Viking and Checkpoint's motions for summary judgment."

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    The court dismissed the complaint against the alarm company because it owed no duty to the plaintiffs.

    The court then went on to consider the tenant's owner's claim of emotional distress.  I won't spend time here on the arguments - go read the case if interested - but will let you know that the court found that Fraley was not in the zone of danger - note the facts above stated he was home when the water damage occurred, so that he cannot claim emotional distress.  Looks like that argument could have gone other way if Fraley was in the premises when the damage occurred.

    This case does not indicate if the alarm company's contract with the building owner had an indemnity clause, because if it did, the owner would be picking up the alarm company's defense of this action.  Make sure your contracts have all of the necessary and appropriate up to date clauses - get new contracts at www.alarmcontracts.com