Supreme Court, Appellate Division, Second Department, New York. Jack ADLER, et al., respondents-appellants,
v.
COLUMBIA SAVINGS & LOAN ASSOCIATION, etc., respondent,
Wells Fargo Alarm Services, etc., et al., appellants-respondents.
  Feb. 14, 2006.

 

Background: Renters of safe deposit boxes at financial institution brought action for breach of contract and negligence against institution and burglar alarm companies that installed, tested, and monitored institution's alarm system. Institution asserted cross-claims against companies for indemnification and contribution. The Supreme Court, Queens County, Polizzi, J., granted companies' motion for summary judgment on renters' claims against them, but denied summary judgment for companies on cross-claims. Renters and companies cross-appealed.

Holdings: The Supreme Court, Appellate Division, held that:
(1) factual issues precluded summary judgment for companies on institution's cross-claims, and
(2) companies owed no duty to renters.

Affirmed.
[1] KeyCite Notes

372 Telecommunications
A burglar alarm agreement which contains an exculpatory clause shields the burglar alarm company from liability only for ordinary negligence, not for gross negligence, and, in this context, "gross negligence" is conduct which smacks of intentional wrongdoing or evinces a reckless indifference to the rights of others.

[2] KeyCite Notes

228 Judgment
Material issues of fact existed as to whether burglar alarm companies retained to install, test, and monitor financial institution's alarm system were grossly negligent and whether institution was independently negligent, precluding summary judgment for companies on institution's cross-claims for indemnification and contribution in action brought against institution for breach of contract and negligence by renters of institution's safe deposit boxes.

[3] KeyCite Notes

96 Contribution
Financial institution could recover from burglar alarm companies retained to install, test, and monitor institution's alarm system under contribution theory, to the extent that companies were grossly negligent, in action for negligence and breach of contract brought against institution by renters of its safe deposit boxes.

[4] KeyCite Notes

208 Indemnity
In indemnity, the party legally liable shifts the entire loss to another.

[5] KeyCite Notes

208 Indemnity
Financial institution was not entitled to indemnification for its own negligence, in action for breach of contract and negligence brought by renters of institution's safe deposit boxes, even if burglar alarm companies retained to install, test, and monitor institution's alarm system were grossly negligent.

[6] KeyCite Notes

272 Negligence
Burglar alarm companies retained to install, test, and monitor financial institution's alarm system owed no duty to renters of institution's safe deposit boxes, who were third-party beneficiaries of contract between institution and companies, given that contract negated institution's assertion that its intent in entering into contract was to benefit renters.

[7] KeyCite Notes

372 Telecommunications
Public policy considerations protect alarm companies for injuries to non-contracting plaintiffs, particularly when the contract explicitly states that the sums payable were calculated with the understanding that the risk of loss, at least for ordinary negligence, remains with the subscriber.

McLaughlin & Stern, LLP, New York, N.Y. (Jon Paul Robbins of counsel), for appellants-respondents.
Phillips Nizer, LLP, New York, N.Y. (Stuart A. Summit of counsel), for respondents-appellants.
Pattison & Flannery, New York, N.Y. (Thomas R. Pattison and Paul C. Fonseca of counsel), for respondent.

STEPHEN G. CRANE, J.P., REINALDO E. RIVERA, PETER B. SKELOS, and ROBERT A. LIFSON, JJ.

*1 In a consolidated action, inter alia, to recover damages for breach of contract and negligence, (1) the defendants Wells Fargo Alarm Services and Baker Protective Services, Inc., appeal from so much of an order of the Supreme Court, Queens County (Polizzi, J.), dated September 26, 2003, as denied those branches of their motion which were for summary judgment dismissing all cross claims asserted against them by the defendant Columbia Savings & Loan Association, and (2) the plaintiffs cross-appeal from so much of the same order as granted that branch of the motion of the defendants Wells Fargo Alarm Services and Baker Protective Services, Inc., which was for summary judgment dismissing the complaint insofar as asserted against them.
ORDERED that the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.
The plaintiffs, renters of safe deposit boxes at the Forest Hills branch of the Columbia Savings & Loan Association, a/k/a Columbia Savings (hereinafter Columbia), seek to recover damages, inter alia, for breach of contract and negligence against Columbia and the defendants Wells Fargo Alarm Services, Inc., and Baker Protective Services, Inc. (hereinafter collectively the appellants), the burglar alarm company with whom Columbia contracted to install, test, and monitor the alarm system. Columbia asserted cross claims against the appellants for contribution and indemnification. The appellants moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against them. The Supreme Court granted those branches of the appellants' motion which were for summary judgment dismissing the complaint insofar as asserted against them and denied those branches of the motion which were for summary judgment dismissing all cross claims against them.
[1] A burglar alarm agreement which contains an exculpatory clause shields the burglar alarm company from liability only for ordinary negligence, not for gross negligence ( see Colnaghi, U.S.A. v. Jewelers Protection Servs., 81 N.Y.2d 821, 823-824, 595 N.Y.S.2d 381, 611 N.E.2d 282; Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 553-554, 583 N.Y.S.2d 957, 593 N.E.2d 1365; Federal Ins. Co. v. Honeywell, Inc., 243 A.D.2d 605, 606, 663 N.Y.S.2d 247; Federal Ins. Co. v. Automatic Burglar Corp., 208 A.D.2d 495, 496, 617 N.Y.S.2d 53). In this context, gross negligence is conduct which "smacks" of intentional wrongdoing or evinces a reckless indifference to the rights of others ( Colnaghi, U.S.A. v. Jewelers Protection Servs., supra at 823-824, 595 N.Y.S.2d 381, 611 N.E.2d 282; see Sommer v. Federal Signal Corp., supra at 554, 583 N.Y.S.2d 957, 593 N.E.2d 1365; Federal Ins. Co. v. Automatic Burglar Corp., supra ).
[2] [3] The Supreme Court properly denied those branches of the appellants' motion which were for summary judgment dismissing all cross claims for contribution and indemnification insofar as asserted against them. With respect to the cross claims for both contribution and indemnification, triable issues of fact exist as to whether the appellants were grossly negligent. Columbia may recover from the appellants under a contribution theory to the extent that the appellants are found to be grossly negligent ( see Sommer v. Federal Signal Corp., supra at 559-560, 583 N.Y.S.2d 957,
*2 [4] [5] With respect to the cross claim for indemnification, an issue of fact exists as to whether Columbia was independently negligent. In indemnity, the party legally liable shifts the entire loss to another ( see Rosado v. Proctor & Schwartz, 66 N.Y.2d 21, 23-24, 494 N.Y.S.2d 851, 484 N.E.2d 1354). Even if the appellants are found to be grossly negligent, Columbia is not entitled to indemnification for its own
[6] We reject the plaintiffs' contention that the Supreme Court erred in granting that branch of the appellants' motion which was for summary judgment dismissing the complaint insofar as asserted against them because they are third-party beneficiaries of the contract between the appellants and Columbia. No duty stems from the plaintiffs' claimed status as intended third-party beneficiaries ( see Eaves Brooks Costume Co. v. Y.B.H. Realty Corp., 76 N.Y.2d 220, 225-227, 557 N.Y.S.2d 286, 556 N.E.2d 1093; Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 337, 464 N.Y.S.2d 712, 451 N.E.2d 459; compare Key Intl. Mfg. v. Morse/Diesel, Inc., 142 A.D.2d 448, 455-456, 536 N.Y.S.2d 792, and Goodman-Marks Assoc. v. Westbury Post Assoc., 70 A.D.2d 145, 147-148, 420 N.Y.S.2d 26, with Port Chester Elec. Constr. Corp. v. Atlas, 40 N.Y.2d 652, 656, 389 N.Y.S.2d 327, 357 N.E.2d 983). While Columbia asserted that its intent in entering into the contract with the appellants was to benefit renters of safe deposit boxes such as the plaintiffs, the contract itself negates this intent.
Moreover, the plaintiffs' contention that the appellants owed a duty to them arising under the second exception to independent-contractor liability to third parties as set forth in Espinal v. Melville Snow Contrs. (98 N.Y.2d 136, 140, 746 N.Y.S.2d 120, 773 N.E.2d 485), is without merit. The record is insufficient to qualify the plaintiffs for this exception.
[7] Public policy considerations protect alarm companies for injuries to non-contracting plaintiffs, particularly where, as here, the contract explicitly states that the sums payable were calculated with the understanding that the risk of loss, at least for ordinary negligence, remains with the subscriber ( see Eaves Brooks Costume Co. v. Y.B.H. Realty Corp., supra at 227, 557 N.Y.S.2d 286, 556 N.E.2d 1093; Merchants Mut. Ins. Co. v. Saxon Indus., 170 A.D.2d 654, 655, 566 N.Y.S.2d 933).

 

N.Y.A.D. 2 Dept.,2006.
Adler v. Columbia Sav. & Loan Ass'n
--- N.Y.S.2d ----, 2006 WL 335677 (N.Y.A.D. 2 Dept.), 2006 N.Y. Slip Op. 01136