I previously reported on a Vermont case where the lower court granted summary judgment enforcing the exculpatory clause in a contract.  [ jewelry and coin dealers leased booth space in mall that had cctv cameras]  The appellate court found that the clause would not be enforced if there was fraud and negligent misrepresentations and remanded the case for further proceedings.  You can read the appellate case at http://kirschenbaumesq.com/vermont1.htm

    The case has now been concluded at the lower court level.  You can read the new decision at http://kirschenbaumesq.com/vermont2.htm

    The exculpatory clause was upheld and the case dismissed.

    Here are a few quotes from the case:

    "At that time, the security system at the Antiques Mall included a system of

video cameras. There were four cameras--including three on the ground floor of

the Antiques Mall where the break-in occurred--that recorded the events within

their range. They were overwritten every seven days. They recorded during the

hours of business operation. There were also 16 additional cameras that

monitored the premises during business hours, but they did not record. Those

cameras surveyed the entire Antiques Mall facility. There were also "dummy"

cameras here and there within the premises. The security system at the Antiques

Mall also included a burglar-alarm system on all of the doors, and infrared

motion detectors throughout the building. In the event of a break-in, a loud

siren would immediately sound."

    "When the break-in occurred, the security system did what it was designed to

do. However, when the break-in occurred, the store was closed, and the cameras

were not operating. The security system failed to prevent the theft from

occurring, and it also failed to yield information that could lead to the

capture of the thieves and the recovery of plaintiffs' property."

    "The key issue presented is whether the alleged causes of action are precluded

by the exculpatory clause in the signed contract. We assume, without deciding,

that defendant's representative made material misrepresentations beyond mere

"puffing." Viewing the evidence in a light favorable to the plaintiffs, Mr.

Leathe told them that the security system was "state-of-the-art," that there

were video cameras "everywhere," and that the booths were "covered by cameras at

all times." These statements differ from commercial puffery in that the truth or

falsity can be objectively determined. Compare Heath v. Palmer, 2006 VT 125, P

14, 17 Vt.L.W. 426 (explaining that terms such as "high quality" or "exceptional

value" cannot form the basis for a claim, because their truth or falsity cannot

be precisely determined). Mr. Leathe may have been stating his opinions, but

there were no cameras positioned to record the view outside the back door, and

the booths were not "covered by cameras" during the off hours. These

discrepancies could be viewed as material misrepresentations based on incomplete

disclosure. See Sarvis v. Vermont State Colleges, 172 Vt. 76, 82-83 (2001)

(citing Crompton v. Beedle, 83 Vt. 287, 298 (1910))."

    "Exculpatory clauses are "traditionally disfavored," and they are subject to

"more exacting judicial scrutiny." "[A] greater degree of clarity is necessary

to make the exculpatory clause effective than would be required for other types

of contract provisions," and exculpatory clauses "must be construed strictly

against the party relying on them." Fairchild Square Co. v. Green Mountain Bagel

Bakery, Inc., 163 Vt. 433, 436-37 (1995) (quoting from Colgan v. Agway, Inc.,

150 Vt. 373, 375 (1988)). In Fairchild Square, the Court upheld an exculpatory

clause which clearly and reasonably allocated the respective responsibilities of

landlord and tenant for the purchase of fire insurance."

    "As applied to the claims in this case, the intent behind the exculpatory

clause is crystal clear. "Neil Enterprises, Inc. . . . shall not be held liable

for any damages to or loss of property from any cause whatsoever including but

not limited to fire or theft." The focus is on precluding a lawsuit against Neil

Enterprises for dealer losses due to fire or theft, even if the dealer succeeds

in showing that Neil Enterprises was negligent, and that its negligence played a

role in allowing the losses to occur. See Thompson v. Hi Tech Motor Sports, Inc

., 2008 VT 15, P 17, 19 Vt.L.W. 45 (where the language is clear, we must

implement the intent and understanding of the parties).

 

   Moreover, the scope of the clause is broad enough to cover the plaintiffs'

claims that Neil Enterprises induced them to sign the agreements by over-stating

the extent of the existing security measures. The clause itself flatly

contradicts any suggestion that Neil Enterprises intended to take on a legal

duty to protect items in the booths, or to otherwise insure against the risk of

loss due to third-party theft. Reasonable dealers who are asked to sign this

contract might ask more questions about the security, or they might decide to

purchase insurance. It would be unreasonable to sign the contract, but to

nevertheless assume that Neil Enterprises would cover losses due to third-party

theft. See Sugarline Associates v. Alpen Associates, 155 Vt. 437, 445 (1990) (it

was not reasonable to rely upon information conveyed, when it was coupled with

an express disclaimer). The effect of the exculpatory clause differs from that

of an "as is" term, which merely indicates that there are no implied warranties.

Compare Silva v. Stevens, 156 Vt. 94, 112-13 (1991) ("as is" clause does not

address tort liability). Here, the language of the exculpatory clause is clear

enough, and broad enough, to exclude tort liability by Neil Enterprises,

especially where the primary fault lies with unknown third-party criminals.

 

   The exculpatory clause is broad enough to preclude liability on all of the

plaintiffs' claims. Neil Enterprises is entitled to summary judgment as a matter

of law."