49 F.3d 1470
United States Court of Appeals,
Tenth Circuit.
Jimmie ELSKEN, Administrator of the Estate of Patricia Ann Elsken,
Plaintiff-
Appellant,
v.
NETWORK MULTI-FAMILY SECURITY CORPORATION, a foreign corporation, Defendant-
Appellee.
No. 94-5063.
March 6, 1995.
Administrator of estate of client who died when alarm services company
allegedly failed to properly respond to alarm at client's apartment brought
action against company, alleging breach of contract, breach of warranties,
negligence, and deceptive trade practices. The United States District Court
for the Northern District of Oklahoma, James O. Ellison, Chief Judge,
dismissed action, and appeal was taken. The Court of Appeals, Brorby,
Circuit Judge, held that: (1) client's failure to initial limitation of
liability provision on reverse side of residential alarm services contract
did not render agreement void under Oklahoma law; (2) client's failure to
read residential alarm services contract prior to signing it did not render
contract unenforceable under Oklahoma law; and (3) limitation of liability
provision in residential alarm services contract applied to claims of breach
of contract, breach of warranty and deceptive trade practices, in addition
to claim of negligence.
Affirmed.
West Headnotes
[1] KeyCite Notes
372 Telecommunications
372IV Special Services or Activities
372k463 k. Alarm Systems. Most Cited Cases
Client's failure to initial limitation of liability provision on reverse
side of residential alarm services contract did not render agreement void
under Oklahoma law, where client signed front of agreement, directly below
statement of acceptance of contract that explicitly incorporated provisions
on reverse side of page. 15 Okl.St.Ann. § 154.
[2] KeyCite Notes
372 Telecommunications
372IV Special Services or Activities
372k463 k. Alarm Systems. Most Cited Cases
Client's failure to read residential alarm services contract prior to
signing it did not render contract unenforceable under Oklahoma law, absent
allegation that client's signature was induced by duress or
misrepresentation.
[3] KeyCite Notes
95 Contracts
95I Requisites and Validity
95I(E) Validity of Assent
95k93 Mistake
95k93(2) k. Signing in Ignorance of Contents in General. Most Cited
Cases
Under Oklahoma law, party who signs contract without reading it cannot avoid
its legal effect on ground that it did not read contract or that contents of
contract were not known to party.
[4] KeyCite Notes
372 Telecommunications
372IV Special Services or Activities
372k463 k. Alarm Systems. Most Cited Cases
Evidence that residential alarm services contract was presented to client on
take it or leave it basis and that residents at apartment complex were not
permitted to make changes to contract was insufficient to establish that
client was in unequal bargaining position, so as to render contract
unenforceable under Oklahoma law.
KeyCite Notes
[5]
372 Telecommunications
372IV Special Services or Activities
372k463 k. Alarm Systems. Most Cited Cases
Limitation of liability provision in residential alarm services contract
applied to claims of breach of contract, breach of warranty and deceptive
trade practices, in addition to claim of negligence; limitation of liability
provision was not restricted to claims of negligence, and contract contained
indemnity clause requiring third parties to agreement to hold alarm service
harmless from all claims for damages.
[6] KeyCite Notes
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)1 In General
170Bk768 Interlocutory, Collateral and Supplementary Proceedings and
Questions
170Bk768.1 k. In General. Most Cited Cases
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)4 Discretion of Lower Court
170Bk825 New Trial or Rehearing
170Bk825.1 k. In General. Most Cited Cases
Appeal of district court's denial of motion to reconsider raises for review
only district court's order of denial and not underlying judgment itself;
therefore, Court of Appeals reviews denial of motion to reconsider only for
abuse of discretion. Fed.Rules Civ.Proc.Rules 59(e), 60(b), 28 U.S.C.A.
Renee Williams, Tulsa, OK, for plaintiff-appellant.
John R. Woodard III (Jody R. Nathan, with him on the brief) of Feldman,
Hall, Franden, Woodard & Farris, Tulsa, OK, for defendant-appellee.
Before MOORE and BRORBY, Circuit Judges, and ALSOP, [FN*] District Judge.
FN* The Honorable Donald D. Alsop, Senior United States District Court Judge
for the District of Minnesota, sitting by designation.
BRORBY, Circuit Judge.
Jimmie Elsken, the administrator of the estate of her daughter Patricia
Elsken, filed this diversity action against Network Multi-Family Security
Corporation alleging breach of contract, breach of warranties, negligence,
and deceptive trade practices. The district court dismissed the case, and
the plaintiff appealed. We exercise jurisdiction pursuant to 28 U.S.C. §
1291 and affirm.
Facts
Patricia Elsken rented an apartment from the Windsail Apartment Community in
an attempt to find a safe place to live. Windsail Apartment Community
offered a twenty-four hour alarm system from the Network Multi-Family
Security Corporation ("Network"). Along with her rental lease, Patricia
Elsken signed a Resident Alarm Services Agreement. The Services Agreement
contained an indemnity clause and a limitation of Network's liability.
Although Patricia Elsken signed the contract, she did not initial the
reverse side of the Services Agreement, and it is alleged that she failed to
read the contract.
Patricia Elsken was found dead in her apartment on the morning of April 11,
1988, an apparent murder victim. Earlier that morning, at 10:33 a.m., her
intrusion security alarm was activated. In response to the alarm, Network
tried unsuccessfully to contact Patricia Elsken by telephone. Unable to
reach Patricia Elsken by phone, Network contacted the apartment manager's
office and advised the manager of the alarm. The apartment manager did not
immediately check Patricia Elsken's apartment, and by the time the apartment
personnel went to investigate the apartment, police and emergency vehicles
had already arrived.
When Patricia Elsken had failed to report to work as expected that morning,
a co-worker called her mother. Jimmie Elsken went to the apartment to check
on her daughter. She arrived at the apartment before the apartment personnel
came to investigate. She found the apartment in disarray and her daughter
lying facedown, dead. Patricia Elsken had been stabbed repeatedly and died
from a loss of blood.
Procedural History
Jimmie Elsken, a resident of Paris, Arkansas, acting as administrator of the
estate of Patricia Elsken sued Network in federal court in Oklahoma for
breach of contract, negligence, and breach of warranties in its failure to
respond properly to the alarm. She also claimed Network engaged in deceptive
trade practices.
The United States District Court for the Northern District of Oklahoma
certified three questions to the Oklahoma Supreme Court. The three questions
were (1) whether, under Oklahoma law, a contractual limitation of liability
for personal injury is valid and enforceable, (2) whether, under Oklahoma
law, the limitation of liability clause contained in the Residential Alarm
Services Agreement is valid and enforceable, and (3) whether, under Oklahoma
law, the indemnification and hold-harmless clause is valid and enforceable.
Elsken v. Network Multi-Family Sec. Corp., 838 P.2d 1007 (Okla.1992). The
Oklahoma Supreme Court answered by holding "[a] contractual limitation of
liability for personal injury in a burglar alarm service contract may be
valid and enforceable ... [i]f the Residential Alarm Services Agreement
submitted was properly executed by both parties, and if the parties dealt at
arms length." Id. at 1008. The Oklahoma Supreme Court also held "where the
intention to indemnify is unequivocally clear from an examination of the
contract, such agreement is enforceable," and therefore, the indemnification
and hold-harmless clause of the Services Agreement was valid and
enforceable. Id. at 1011.
On the basis of the answers to these certified questions, the federal
district court granted Network's motion to dismiss the claims and denied
Jimmie Elsken's motion to reconsider. Ms. Elsken appeals, alleging error in
the district court's conclusions that the Services Agreement was properly
executed and that the parties made the agreement at arms length. Ms. Elsken
also claims the district court erred in applying the limitation of liability
provision to causes of action based upon theories other than negligence.
Finally, Ms. Elsken challenges the district court's denial of her motion to
reconsider.
Discussion
Although styled as a motion to dismiss, the motion was evaluated on
materials outside of the pleadings and therefore was treated as a motion for
summary judgment in accordance with Fed.R.Civ.P. 12(b) and 56. We review the
grant of summary judgment de novo, applying the same legal standard used by
the district court under Fed.R.Civ.P. 56. Applied Genetics Int'l, Inc., v.
First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990).
I. Limitation of Liability Clause
The Resident Alarm Services Agreement between Patricia Elsken and Network
contained a limitation of liability provision. The contract referred to
Patricia Elsken as "Resident," the apartment complex as "Client," and
Network as "Network." Specifically the agreement stated
3.0 LIMITATION OF LIABILITY
3.1 It is understood and agreed that NEITHER CLIENT NOR NETWORK ARE INSURERS
AND THAT INSURANCE, IF ANY, FOR ANY TYPE OF LOSS, SHALL BE OBTAINED BY
RESIDENT....
....
3.4 Resident understands and agrees that if either Client or Network should
be found liable for loss or damage due to the failure of the System in any
respect whatsoever, including, but not limited to monitoring, Client's and
Network's collective liability shall not exceed a sum equal to Two Hundred
and Fifty Dollars ($250.00) and this liability shall be exclusive. CLIENT
AND NETWORK ARE NOT INSURERS AND RESIDENT ASSUMES ALL RESPONSIBILITY FOR
OBTAINING INSURANCE TO COVER LOSSES OF ALL TYPES. The provisions of this
section shall apply if death, loss or damage, irrespective of cause or
origin, results directly or indirectly, to persons or property, from
performance or nonperformance of the obligations imposed by this Agreement,
or from negligence, active or otherwise, of Client, Network, their agents,
employees, legal representatives or assigns.
(Emphasis in original.) Ms. Elsken asserts the district court erred in
dismissing the case when there existed factual questions as to whether the
Services Agreement was properly executed and whether the parties were in
unequal bargaining positions.
A. Execution of the Agreement
Ms. Elsken argues the contract was not properly executed because the
limitation of liability was on the reverse side of the Services Agreement
and Patricia Elsken did not initial the bottom of the reverse side where
there was a space for initials. Ms. Elsken also submitted, from the
apartment complex manager, an affidavit stating Patricia Elsken did not even
read the Services Agreement. This affidavit was submitted with Ms. Elsken's
motion to reconsider. Jimmie Elsken relies on this allegation to support her
claim that the document was not properly executed.
The district court noted Patricia Elsken signed the first page of the
Services Agreement below a provision articulating a presumption that the
agreement was properly executed, a fact Ms. Elsken does not contest. This
provision stated:
RESIDENT ACKNOWLEDGES THAT RESIDENT HAS READ AND UNDERSTANDS ALL OF THIS
RESIDENT AGREEMENT INCLUDING THE TERMS AND CONDITIONS ON THIS SIDE AND THE
REVERSE SIDE, PARTICULARLY PARAGRAPH 3.0 LIMITATION OF LIABILITY AND AGREES
TO THE AMOUNTS SET FORTH THEREIN.
(Emphasis in original.) Ms. Elsken contends the district court erred because
the trier of fact should decide whether or not Patricia Elsken read the
Services Agreement and whether or not it was, in fact, properly executed.
She avers it was inappropriate for the court to resolve the question of the
effect, if any, of the absence of evidence to rebut the textual presumption.
1. Failure to initial a provision in a contract.
[1] It is undisputed that Patricia Elsken signed the front page of the
Services Agreement. On the back of the page, there was a limitation of
liability clause. Although the side of the paper displaying the limitation
of liability clause contained a space for initials, Patricia Elsken did not
initial that page. Ms. Elsken argues that, due to this omission, the
limitation of liability clause was not in effect because Patricia Elsken did
not agree to the provision. However, Ms. Elsken has cited no law to support
her contention that the failure to initial a provision renders it void and
ineffective when the front of the document was signed.
Based upon a plain reading of the contract, Patricia Elsken agreed to the
contract in its entirety as written. She signed directly below a statement
in conspicuous, bold capital letters declaring the signing party was
agreeing to the entire Services Contract. This statement further emphasized
the limitation of liability clause on the back of the page. Under Oklahoma
law, "[t]he language of a contract is to govern its interpretation, if the
language is clear and explicit, and does not involve an absurdity."
Okla.Stat.Ann.tit. 15, § 154 (West 1993).
The district court found the language of the Services Agreement was clear
and explicit: "Resident acknowledges that resident has read and understands
all of this resident agreement including the terms and conditions on this
side and the reverse side, particularly paragraph 3.0 limitation of
liability." (Emphasis omitted.) Ms. Elsken cannot avoid the application of
the limitation of liability when her daughter signed directly below a
statement of acceptance of the contract that explicitly incorporates the
provisions on the reverse side of the page. See Vails v. Southwestern Bell
Tel. Co., 504 F.Supp. 740, 745 (W.D.Okla.1980) (quoting N & D Fashions, Inc.
v. DHJ Indus., Inc., 548 F.2d 722, 727 (8th Cir.1976)). Patricia Elsken's
failure to initial the reverse side of the Services Agreement does not
preclude summary judgment. The contract itself advised her of the terms on
the back of the page.
2. Failure to read the contract.
[2] Ms. Elsken next argues the contract cannot be enforced because Patricia
Elsken did not read it. However, Patricia Elsken did sign the contract, and
under Oklahoma law, " '[w]here a party signs a written agreement, in the
absence of false representation or fraud, he is bound by it, although
ignorant of its contents.' " Hicks v. State Farm Mut. Auto Ins. Co., 568
P.2d 629, 633 (Okla.1977) (quoting All American Bus Lines, Inc. v. Schuster,
199 Okla. 628, 189 P.2d 412, 414 (1948)).
There is no evidence presented showing Patricia Elsken was not given the
opportunity to examine and read the contract. The affidavit from the
apartment manager states only that Patricia Elsken "did not read her
[Resident Alarm Services Agreement] and she did not sign the back of it
either."
[3] Furthermore, Ms. Elsken has not claimed Patricia Elsken signed the
contract without reading it due to fraud, misrepresentation, or deceit.
Under Oklahoma law, a party who signs a contract without reading it cannot
avoid its legal effect on the ground that it did not read the contract or
that the contents of the contract were not known to the party. See Darby
Petroleum Co. v. Bowers, 185 Okla. 285, 91 P.2d 663, 666 (1937) (releases);
First Nat'l Bank & Trust Co. of El Reno v. Stinchcomb, 734 P.2d 852, 854
(Okla.Ct.App.1987). Therefore, Patricia Elsken's failure to read the
Services Agreement does not preclude summary judgment. Regardless of whether
she read the document, it is binding on her because she signed it and there
is no allegation that her signature was induced by duress or
misrepresentation. The contract was therefore properly executed.
B. Bargaining Positions
[4] In answering the certified questions, the Oklahoma Supreme Court noted,
"We do not know whether the parties were in an unequal bargaining position."
Elsken, 838 P.2d at 1010. Ms. Elsken argues that if the Oklahoma Supreme
Court could not determine the parties' respective bargaining power, then
neither could the district court. She contends the district court had
insufficient evidence to make such a finding and therefore dismissal was
improper.
However, Ms. Elsken fails to highlight law and sufficient facts showing the
existence of unequal bargaining power between Network and Patricia Elsken.
She simply notes for the court that the contract was presented to Patricia
Elsken "on a take-it-or-leave-it basis" and residents were not permitted to
make changes to the Services Agreement. From these assertions alone a fact
finder would be unable to determine that Patricia Elsken was in a bargaining
position that would render the Services Agreement unenforceable. [FN1]
Because no facts or law have been presented to create a genuine issue of
fact that the parties were in unequal bargaining positions sufficient to
render the contract unenforceable, we affirm the district court's dismissal
of the claims.
FN1. The Services Agreement reveals that Patricia Elsken could have
bargained for a higher limit on liability. This undercuts Ms. Elsken's
argument that the contract was absolutely unnegotiable.
C. Non-negligence Claims
[5] On appeal, Ms. Elsken also asserts the district court erred by applying
the limitation of liability clause to causes of action other than
negligence. In answering the certified questions, the Oklahoma Supreme Court
stated the "limitation of liability would be binding and enforceable as to
defendant's actions constituting ordinary negligence." Elsken, 838 P.2d at
1010. Ms. Elsken's complaint, however, included claims for breach of
contract, breach of warranties, and deceptive trade practices in addition to
a claim of negligence. She argues if the limitation of liability is
enforceable, it can only be applied to her claim of negligence due to the
narrow and clear language of the Oklahoma Supreme Court. Thus, she asserts,
without citing any law to support her position, the district court erred in
dismissing her other claims.
The Oklahoma Supreme Court, in its analysis of the limitation of liability
clause, stated a contract may not exempt anyone from liability, but may
limit their liability. Id. at 1008-09. The court also noted that other
jurisdictions have held the limitation of liability is consistent with
public policy as long as it does not limit liability where the defendant's
conduct constituted gross negligence. Id. at 1009. From this, Ms. Elsken
asserts the district court erred in dismissing her claims of breach of
contract, breach of warranty, and deceptive trade practices. However, the
Oklahoma Supreme Court also noted " '[i]t reasonably follows that since the
contract established the duty, any lawful limitations in the contract may
also limit the liability of the tortfeasor.' " Id. (quoting Fretwell v.
Protection Alarm Co., 764 P.2d 149, 151 (Okla.1988)).
The Oklahoma Supreme Court was not addressing claims other than negligence
in answering the certified questions; therefore, its language applied the
limitation of liability clause only to negligence cases. There was no reason
for the Oklahoma Supreme Court to rule on non-negligence claims; therefore,
we have no reason to assume the court restricted the application of the
clause to negligence claims alone. The clause itself states the limitation
applies "if death, loss or damage, irrespective of cause or origin, results
directly or indirectly, to persons or property, from performance or
nonperformance of the obligations imposed by this Agreement, or from
negligence, active or otherwise." (Emphasis added.) From the plain language
of the contract the limitation is not restricted to claims of negligence.
Ms. Elsken also ignores the indemnity clause of the Services Agreement,
which states:
In the event any person not a party to this agreement shall make any claim
or file any lawsuit against Client or Network for any reason relating to the
duties and obligations of Client or Network pursuant to this agreement
including, but not limited to, the design, installation, maintenance,
operation or non-operation of the System, or the providing of monitoring,
patrol or extended maintenance services, Resident agrees to indemnify,
defend and hold Client and Network harmless from any and all such claims and
lawsuits, including the payment of all damages, expenses, costs and
attorney's fees, whether such claims be based upon alleged intentional
conduct, active or passive negligence, or strict or product liability on the
part of Client, Network, their agents, employees, legal representatives or
assigns.
The Oklahoma Supreme Court held the indemnification clause of the Services
Agreement valid and enforceable. Elsken, 838 P.2d at 1011. Since Ms. Elsken
is a third party to the Services Agreement, the indemnification clause
requires Patricia Elsken to indemnify and hold Network harmless from all of
Ms. Elsken's claims for damages. This would include the breach of contract,
breach of warranty, negligence, and deceptive trade practices [FN2] claims.
Because Ms. Elsken has not established a basis to sue as a successor, the
district court did not err in dismissing each of Ms. Elsken's claims against
Network.
FN2. The district court correctly dismissed the deceptive trade practices
claim because Ms. Elsken sought only damages and made no claim for
injunctive relief. The Oklahoma Deceptive Trade Practice Act provides for
aggrieved parties to receive injunctive relief. Okla.Stat. tit. 78, § 54
(1991). If a party seeks an injunction and proves actual damages then the
party can obtain damages. However, since Ms. Elsken was not seeking
injunctive relief, the claim was not properly before the court.
II. Denial of Motion to Reconsider
Ms. Elsken's final argument on appeal is the district court erred in denying
her motion to reconsider. She asserts her motion to reconsider presented the
court with evidence to establish genuine issues of material fact as to
whether or not the Services Agreement was properly executed and whether or
not the parties dealt from equal bargaining positions.
[6] Although not formally addressed in the Federal Rules of Civil
Procedure, a motion to reconsider is often treated as a Rule 60(b) motion.
See Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir.1991) (if the
motion is served within ten days of the rendition of judgment, it is treated
under Rule 59(e); otherwise the motion is treated under Rule 60(b)), cert.
denied, 506 U.S. 828, 113 S.Ct. 89, 121 L.Ed.2d 51 (1992). An appeal of a
district court's denial of a motion to reconsider "raises for review only
the district court's order of denial and not the underlying judgment
itself." Id. Therefore, we review a denial of a motion to reconsider only
for an abuse of discretion. See, e.g., Cox v. Sandia Corp., 941 F.2d 1124,
1125 (10th Cir.1991).
Even considering the additional evidence presented with the motion to
reconsider, the apartment manager's affidavit, we have already determined
the district court did not err in dismissing the suit. Therefore, the
district court did not abuse its discretion in denying the motion to
reconsider.
Conclusion
We have found no error in the district court's dismissal of this case. The
contract was properly executed and there was insufficient evidence to show
unequal bargaining positions. Conclusory allegations that are
unsubstantiated do not create an issue of fact and are insufficient to
oppose summary judgment, and accordingly, we AFFIRM.
C.A.10 (Okl.),1995.
Elsken v. Network Multi-Family Sec. Corp.
49 F.3d 1470