National Fire Insurance Co. v. PPG Industries
X03CV024022069
SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF HART-FORD, AT HARTFORD
2006 Conn. Super. LEXIS 1360
May 8, 2006, Decided
May 8, 2006, Filed
NOTICE: [*1] THIS DECISION IS UNREPORTED AND MAY BE SUBJECT TO FURTHER APPELLATE REVIEW. COUNSEL IS CAUTIONED TO MAKE AN INDEPENDENT DETERMINATION OF THE STATUS OF THIS CASE.
JUDGES: John J. Langenbach, Superior Court Judge.
OPINION BY: John J. Langenbach
OPINION
MEMORANDUM OF DECISION
The plaintiff, National Fire Insurance Company of Hartford, filed a second substituted complaint on March 3, 2005 seeking to recover monies paid to North American Marketing Corporation ("NAMCO") by the plaintiff as the result of an explosion and fire that occurred on NAMCO's premises on July 26, 2001. One of the defendants, ADT Security Ser-vices, Inc. ("ADT"), moves for summary judgment as to all the counts directed to ADT: the second (negligence), fifth (breach of contract), ninth (breach of express warranty), fourteenth (breach of implied warranty), eighteenth (breach of implied warranty of fitness) and twenty-second (product liability). The plaintiff opposes the motion for summary judg-ment. Both ADT and the plaintiff have filed affidavits and other documentary evidence in support of their respective positions.
In seeking summary judgment, the movant has the burden of showing the absence of any genuine issue as to all the [*2] material facts, which, under applicable principles of substantive law, entitle the movant to a judgment as a matter of law. Martel v. Metropolitan District Commission, 275 Conn. 38, 46, 881 A.2d 194 (2005). "[T]he movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under [*3] Practice Book § [17-45]." Id., 46-47.
ADT argues that it is entitled to summary judgment on all counts against it based upon the language of a January 3, 1990 alarm installation and monitoring contract between NAMCO and ADT's predecessor in interest, Wells Fargo, which contains a valid and enforceable limitation of liability clause that limits ADT's liability to $ 10,000 or the annual contract price, whichever is less. In opposition to the motion, the plaintiff argues that material issues of fact exist for a number of reasons: the contract that ADT attached to its motion for summary judgment is not the applicable contract, ADT breached a condition precedent to the contract, the contract term expired, the parties never intended the limitation of liability provision to apply to the chemical rooms at NAMCO's premises, the provision is contrary to public policy, and the provision does not apply to the plaintiff's non-property damage claims. For all of the following reasons, the court finds that the documents attached to the plaintiff's second substituted complaint constitute the applicable contract, and the limitation of liability clause [*4] contained in the contract is valid and enforceable and ADT's motion for sum-mary judgment is granted as to all counts against ADT except the twenty-second count.
ADT attached to its motion for summary judgment a copy of the January 3, 1990 "central station protective signal-ing service agreement" ("service agreement") between NAMCO and Wells Fargo, which contains a clause that provides, inter alia, "SUBSCRIBER AGREES THAT WELLS FARGO ALARM SHALL NOT BE LIABLE FOR ANY OF SUBSCRIBER'S LOSSES OR DAMAGES, IRRESPECTIVE OF ORIGIN, TO PERSON OR TO PROPERTY, WHETHER DIRECTLY OR INDIRECTLY CAUSED BY PERFORMANCE OR NONPERFORMANCE OF ANY OBLIGATION IMPOSED BY THIS AGREEMENT OR BY NEGLIGENT ACTS OR OMISSIONS OF WELLS FARGO ALARM, ITS AGENTS OR EMPLOYEES. IT IS AGREED THAT IF WELLS FARGO ALARM SHOULD BE FOUND LIABLE FOR ANY LOSSES OR DAMAGES ATTRIBUTABLE TO A FAILURE OF SYSTEMS OR SERVICES IN ANY RESPECT, ITS LIABILITY SHALL BE LIMITED TO THE ANNUAL CHARGE HERE-UNDER, OR $ 10,000.00, WHICHEVER IS LESS." The plaintiff argues that this agreement is not the applicable con-tract; the applicable contract is either the sales and installation agreement or a 1995 letter from NAMCO to ADT pro-posing a new/additional [*5] alarm system. The plaintiff claims that neither of these documents contain a limitation of liability clause. ADT submitted a reply memorandum in which it argues that it is also entitled to summary judgment based on the sales and installation agreement, which also contains a limitation of liability provision.
As to the plaintiff's argument that the contract containing the limitation of liability provision referenced by ADT in its motion is not the applicable contract, the court finds that the plaintiff itself attached documents to its second substi-tuted complaint as exhibit 2, which the plaintiff itself references as the "contract" between NAMCO and Wells Fargo. (See Second Substituted Complaint, second count, P10, which is incorporated into all counts against ADT.) Exhibit 2 consists of five pages: a "sales and installation agreement" ("installation agreement"), with a "schedule of protection" attached, and the service agreement, with a "schedule of protection" attached, and a diagram captioned "NAMCO - Chlorine Storage Fire Protection Layout." While the plaintiff claims that the installation agreement does not contain a limitation of liability provision, a reading of the installation [*6] agreement attached to the plaintiff's second substituted complaint shows that this agreement does indeed contain such a clause: "5. NEITHER WELLS FARGO ALARM NOR ITS REPRESENTATIVES SHALL BE LIABLE TO PURCHASER OR ANYONE ELSE FOR ANY LIABILITY, CLAIM, LOSS, DAMAGE OR EXPENSE OF ANY KIND, OR FOR ANY DIRECT, CONSEQUENTIAL, COL-LATERAL OR INCIDENTAL DAMAGES, RELATIVE TO OR ARISING FROM OR CAUSED DIRECTLY OR INDIRECTLY BY THE EQUIPMENT, ITS INSTALLATION OR THE USE THEREOF OR ANY DEFICIENCY, DEFECT OR INADEQUACY OF THE EQUIPMENT. IT IS EXPRESSLY AGREED THAT PURCHASER'S EX-CLUSIVE REMEDY FOR ANY CAUSE OF ACTION RELATING TO THE PURCHASE, INSTALLATION AND/OR USE OF EQUIPMENT SHALL BE FOR DAMAGES AND WELLS FARGO ALARM'S LIABILITY FOR ANY AND ALL LOSSES OR DAMAGES RESULTING FROM ANY CAUSE WHATSOEVER, INCLUDING NEGLIGENCE, SHALL IN NO EVENT EXCEED THE PURCHASE PRICE OF THE EQUIPMENT IN RESPECT TO WHICH THE CLAIM IS MADE OR AT THE ELECTION OF WELLS FARGO ALARM, THE RESTORATION OR REPLACEMENT OR REPAIR OF SUCH EQUIPMENT."
In opposition to the motion for summary judgment, the plaintiff submitted the affidavit of William Atkins, Jr., who was director of security and safety at NAMCO from 1987 through [*7] 2005. In his affidavit, Atkins states that he dis-cussed with ADT the installation of a new or additional alarm system, and on June 19, 1995, "ADT sent a letter to me with a proposal for the new/additional Alarm System. See Exhibit 10. I understood this letter to constitute a new agree-ment between ADT and NAMCO." (Atkins Affidavit, PP17, 18.) Attached as Exhibit 10 to the plaintiff's memorandum in opposition are copies of documents that are not signed by any NAMCO representative and appear to be cut off at the bottom. Atkins does not state in his affidavit that a new or additional system was actually installed by ADT, and the plaintiff submitted no additional documentation that would indicate that NAMCO agreed to this proposal or that ADT performed any installation of a new or additional alarm system, other than a statement in the plaintiff's memorandum in opposition that "ADT issued a proposal which was accepted by NAMCO and a new/additional Alarm System was in-stalled." (Plaintiff's Memorandum in Opposition, p. 13.) The plaintiff submitted no evidence in support of this state-ment. The only contract referenced in the plaintiff's second substituted complaint is the January 3, 1990 documents [*8] attached as exhibit 2. The court cannot find that the plaintiff has raised an issue of material fact as to the applicable con-tract based on the affidavit and 1995 proposal, when the second substituted complaint itself only references the January 3, 1990 documents as the contract between the parties and the plaintiff has submitted no evidence that shows that the 1995 proposal was ever accepted by NAMCO or that a new or additional alarm system was installed pursuant to that proposal.
The plaintiff also argues that ADT breached a condition precedent to the contract in that "Wells Fargo agreed to connect its Alarm System to the Overhead Doors and ensure that the Alarm System would shut-down the Overhead Doors in an alarm condition." (Plaintiff's Memorandum in Opposition, p. 11.) The January 3, 1990 documents attached to the plaintiff's second substituted complaint show that the installation and monitoring of the alarm system were the purpose of the January 3, 1990 agreements. (Second Substituted Complaint, Exhibit 2.) The plaintiff does not explain or present evidence that shows how the connection of the alarm system and ensuring the shut down of the overhead doors can be a condition [*9] precedent to a contract that has been entered into for the very purpose of installing and monitor-ing the alarm system. Any failures regarding the installation or monitoring, which are the subject of the January 3, 1990 agreements, would be covered by the terms of the limitation of liability provisions of those agreements quoted above.
The plaintiff also argues that the service agreement contract term expired and the 1995 communications between Atkins and ADT served as notice to end the terms of the 1990 documents. The terms of the January 3, 1990 service agreement provides for a five-year term, and at the end of the term, "the agreement is terminable by either party upon the giving of 30 days prior written notice to that effect to the other party . . . Lacking such notice, this agreement will automatically renew itself for successive periods of one year until such notice is given." (Second Substituted Complaint, Exhibit 2, service agreement.) For the reasons stated above, the court has found that no material issue of fact exists that the applicable contract consists of the January 3, 1990 documents attached to the plaintiff's second substituted com-plaint. The plaintiff has submitted [*10] no evidence that shows that any written notice was given by NAMCO termi-nating the service agreement as required by that agreement. The plaintiff has not raised any genuine issue of material fact as to the applicability of the service agreement based upon the claim that the contract had expired.
The plaintiff argues that the limitation of liability provision in the service agreement is unenforceable because it is ambiguous and contrary to public policy under the circumstances of this case. The plaintiff argues that the installation agreement, service agreement and 1995 documents all contradict each other, and any ambiguity must be construed against ADT so that the motion for summary judgment must be denied. The court has already found that the 1995 documents submitted by the plaintiff do not constitute a contract and the relevant documents are the January 3, 1990 agreements attached to the second substituted complaint. Each of those agreements contain a limitation of liability pro-vision limiting the plaintiff to an amount not to exceed the purchase price of the equipment under the installation agreement, and to the annual charge or $ 10,000, whichever is less, under the service agreement. [*11] Because each of these agreements pertains to a different aspect of the January 3, 1990 "contract" between the parties, the installation of the alarm system and the monitoring of the alarm system, the limitation of liability provisions do not contradict each other and both may be applied, based upon the plaintiff's allegations regarding the failure to both properly install and monitor the alarm system. The most the plaintiff is entitled to is the amounts contained in both of the limitation of liabil-ity provisions: $ 8,089.20 under the installation agreement, and $ 960 under the service agreement, for a total of $ 9,049.20.
The plaintiff argues that enforcement of the limitation of liability provisions would be against public policy. For the reasons stated in Leon's Bakery, Inc. v. Grinnell Corporation, 990 F.2d 44 (2d Cir. 1993) and Forster v. Advanced Elec-tronic Services, Inc., Superior Court, Complex Litigation Docket at New Britain, docket no. X03 CV01 0510854 (Octo-ber 9, 2002, Aurigemma, J.), 2002 Conn. Super. LEXIS 3342 (33 Conn. L. Rptr. 314), and all the cases cited therein, the court finds that the limitation of liability provisions at issue in this case are valid and enforceable with [*12] respect to the plaintiff's claims in the second, fifth, ninth, fourteenth and eighteenth counts.
With respect to the twenty-second count, based upon product liability, the plaintiff has included allegations that ADT engaged in intentional, willful, wanton and reckless conduct. (Second Substituted Complaint, twenty-second count, PP32, 33.) In general, courts have held that public policy prevents a party from limiting damages for gross negli-gence or willful or wanton misconduct. See New Light Company v. Wells Fargo Alarm Services, 247 Neb. 57, 525 N.W.2d 25 (1994); Sommer v. Federal Signal Corporation, 79 N.Y.2d 540, 593 N.E.2d 1365, 583 N.Y.S.2d 957 (1992); Wolf v. Ford, 335 Md. 525, 644 A.2d 522 (1994); Restatement, Second, Contracts § 195(1). The plaintiff argues that it is "imputed to Wells Fargo/ADT that any activities related to the hazardous and dangerous products and/or high hazard Chemical Room B were ultra-hazardous activities." (Plaintiff's Memorandum in Opposition, p. 16.) The plaintiff further states that "Wells Fargo/ADT's duty and conduct which it owed to NAMCO was at a much higher [*13] level than its ordinary flower store customer and/or residential home." (Plaintiff's Memorandum in Opposition, p. 17.) The plaintiff also claims that ADT violated certain "NFPA" code requirements that required ADT to test the alarm system. Neither ADT nor the plaintiff has submitted any evidence, however, regarding the substance of the plaintiff's claims of reckless or intentional conduct or the effect of the limitation of liability provisions as to these allegations. 1 Since ADT bears the burden of showing the nonexistence of any material issue of fact and the court must view any evidence in the light most favorable to the plaintiff, the court cannot grant summary judgment at this time with respect to the allegations of inten-tional, willful, wanton and reckless conduct contained in the twenty-second count.
1 In support of its claim that ADT violated certain code provisions, the plaintiff submitted excerpts from the deposition transcript of its expert witness, Lawrence Wenzel. In his deposition, however, Wenzel testified that "[t]he owner is responsible for maintaining and testing the fire alarm system." (Plaintiff's Memorandum in Op-position, Exhibit B, Wenzel deposition transcript, p. 20.) The plaintiff also argued that ADT violated a record keeping code provision. The plaintiff did not provide copies of the code provisions that it claims ADT violated. The Wenzel deposition excerpts do not raise a material issue of fact with respect to the application of the limita-tion of liability provisions to all of the plaintiff's claims other than the allegations of intentional, willful, wanton and reckless conduct. As stated above, the court will not make a determination at this time regarding the sub-stance of the plaintiff's claims regarding intentional, willful, wanton and reckless conduct because neither party has submitted evidence on this issue from which the court could conclude that no material issue of fact exists.
[*14] Citing B&D Associates, Inc. v. Russell, 73 Conn. App. 66, 807 A.2d 1001 (2002), the plaintiff argues that the limitation of liability provisions do not apply to the plaintiff's recovery for loss of business profits or other nonproperty damage claims. The limitation of liability provisions in B&D Associates, however, contained a qualifying phrase that does not appear in the provisions at issue in this case, and the court in B&D Associates found that the provision did not encompass intangible losses such as lost business profits "[b]ecause of the restrictive language employed" in that provi-sion. Id., 74. The limitation of liability provision in the service agreement provides that Wells Fargo shall not be liable for any losses or damages "to person or property." The provision in the installation agreement is very broad, providing that Wells Fargo shall not be liable "for any liability, claim, loss, damage or expense of any kind, or for any direct, con-sequential, collateral or incidental damages." (Second Substituted Complaint, Exhibit 2, Installation Agreement.) The court finds that this provision encompasses loss of business profits and other [*15] nonproperty damage claims.
The plaintiff also claims that the limitation of liability provisions should not be applied in this case because the par-ties never intended that the limitation of liability provision in the service contract would apply to the chemical rooms, and also makes reference to "unclean hands" on the part of ADT. The plaintiff has offered nothing to substantiate its arguments that the limitation of liability provisions should not be applied on these grounds.
Finally, ADT argues that it did not have any duty to maintain, repair, service, replace, operate or assure the opera-tion of the overhead door in Chemical Room B. The schedules of protection attached to both the installation agreement and the service agreement state: "System will shut down doors and HVAC." To the extent that this statement created any duty on the part of ADT with respect to the overhead doors, the recovery by the plaintiff for any liability is covered by the limitation of liability provisions, except as to the allegations of intentional, wanton, willful or reckless conduct alleged in the twenty-second count as discussed above.
Accordingly, ADT's motion for summary judgment is granted as to the [*16] second, fifth, ninth, fourteenth and eighteenth counts, and denied as to the allegations of intentional, willful, wanton and reckless conduct contained in the twenty-second count. Judgment shall enter in favor of the plaintiff in the amount of $ 9,049.20 on the second, fifth, ninth, fourteenth and eighteenth counts. 2 The motion for summary judgment is denied as to the twenty-second count.
2 ADT has moved for summary judgment on the ground that the plaintiff's recovery is limited to no more than the amounts contained in the limitation of liability provisions. While ADT has not explicitly admitted liability, ADT did not present any evidence regarding liability. Since ADT is seeking a judgment on the ground that the plaintiff's recovery is limited, the court assumes that ADT is conceding, for purposes of its motion, that it is li-able to the plaintiff for no more than the amounts contained in those provisions. Accordingly, the granting of ADT's motion as to certain counts based upon ADT's argument does not result in a judgment in favor of ADT, but requires the court to enter judgment in favor of the plaintiff for the amounts stated in the limitation of liabil-ity provisions. See Forster v. Advanced Electronic Services, Inc., Docket no. X03 CV 01 0510854, 2002 Conn. Super. LEXIS 3342 (on defendant's motion for summary judgment, court entered summary judgment in favor of the plaintiff as to certain counts for the amount stated in the limitation of liability provision).
[*17] John J. Langenbach
Superior Court Judge