JUDGES:
Stengel, J.
OPINIONBY: STENGEL
OPINION: MEMORANDUM OF DECISION
I
The above case has been assigned for trial. Counsel have agreed that there
is a legal issue pertaining to the validity of a limitation of liability
clause in the
contract dated June 8, 1977, and that the court should
initially render a determination of the validity of said clause. Toward that
end counsel have submitted briefs of law.
The case is therefore initially submitted to the court on the question of
whether the exculpatory clause, which limits liability, is valid.
The
contract in question, dated June 8, 1977, is one where the
defendant, an
alarm company, is to provide security services. This
was done by the defendant providing for the installation and maintenance of
a security
alarm system at Pierce's Pharmacy (the plaintiff's
insured).
The clause in issue states as follows:
It is understood that the contractor is not an insurer, that insurance,
if any, shall be obtained by the subscriber and that the amounts payable
to the contractor hereunder are [*2]
based upon the value of the services and the scope of liability as
herein set forth and are unrelated to the value of the subscriber's
property or others located in subscriber's premises. The contractor
makes no guaranty or warranty, including any implied warranty of
merchantability or fitness, that the system or services supplied, will
avert or prevent occurrences or the consequences therefrom, which the
system or service designed to detect. It is impractical and extremely
difficult to fix the actual damages, if any, which may proximately
result from failure on the part of the contractor to perform any of its
obligations hereunder. The subscriber does not desire this contract
to provide for full liability of the contractor and agrees that the
contractor shall be exempt from liability for loss or damage due
directly or indirectly to occurrences, or consequences therefrom, which
the service or system is designed to detect or avert; that if the
contractor should be found liable for loss or damage due to a failure of
service or equipment in any respect, its liability shall be limited to a
sum equal to ten percent of the annual service charge or $ 250.,
whichever is the greater, as [*3]
liquidated damages and not as a penalty, as the exclusive remedy, and
that the provisions of this paragraph shall apply if loss or damage,
irrespective of cause or origin, results directly or indirectly to
person or property from performance or nonperformance of obligations
imposed by this contract or from negligence, active or otherwise,
of the contractor, its agents or employees. If the subscriber desires
the contractor to assume a greater liability, contractor will amend this
agreement to allow the subscriber to pay an additional annual amount
necessary to purchase an insurance policy for such greater liability. No
such amendment shall be effective unless signed by the subscriber,
contractor and insurance carrier which will be insuring the additional
liability.
II
In its revised complaint dated March 28, 1989, the plaintiff asserts that
its insured's loss was incurred by a negligent error in which the defendant
notified the wrong police department. The plaintiff claims that the losses
were caused by the negligence of the defendant.
The defendant in a responsive pleading dated April 18, 1989 interposes a
special defense that the plaintiff's exclusive remedy against the
[*4]
defendant is by way of the liquidated damage provisions in the
contract.
The plaintiff denies the allegations of the special defense and alleges that
the contractual provision, limiting the defendant's liability, is
unconscionable and unenforceable.
III
The defendant argues in its Brief of Law that provisions in burglar
alarm
systems
contracts limiting liability have been uniformly upheld
against challenges of unconscionability or violation of public policy,
citing cases from other jurisdictions.
The defendant also refers to Berger v. Shanahan, 142 Conn. 726, 732 (1955),
whereby our Supreme Court has set forth the following test for such a
contractual provision as is present in the instant case. The court in
Berger, supra, stated:
Accordingly, such
HN1
a
provision is ordinarily to be construed as one for liquidated damages if
three conditions are satisfied: (1) the damage which was to be expected
as a result of the breach of the contract was uncertain in amount
or difficult to prove; (2) there was an intent on the part of the
parties to liquidate damages in advance; and (3) the amount stipulated
was reasonable in the sense that it was not [*5]
greatly disproportionate to the amount of the damage which, as the
parties looked forward, seemed to be the presumable loss which would be
sustained by the contractee in the event of a breach of the contract.
The pleadings in the instant case do not appear to claim that the
contract clause in question is violative of the conditions which will
justify an agreement for a limitation of liability.
IV
The plaintiff in its brief of law contends that a contractual limitation of
liability clause does not limit a party's liability for its gross negligence
if it is not so intended by the parties. However, the plaintiff has not
alleged gross negligence in its revised complaint. Therefore the issue of
gross negligence is not raised in the pleadings and cannot be asserted for
the first time in the plaintiff's brief of law to defeat the
contract
clause.
The plaintiff also asserts that the clause in question is packed with excess
language, unreadable and that the key language is buried in the ninth line.
A review of the
contract clause shows it to be on the first page of
the
contract and in boldface type. The court finds the expulcatory
clause to be readable, and in clear and unequivocal
[*6]
language.
V
The plaintiff, in its pleading, has contended that the
contract
clause is unconscionable and unenforceable. The plaintiff's brief does not
establish how the concept of unconscionability applies in the instant case.
The goal of the theory of unconscionability is to avoid oppression and
unfair surprise. Neither oppression nor unfair surprise appears to be
present in the case at bar.
Accordingly the court finds that the plaintiff has not established, based on
the current pleadings, that the limitation of liability clause is invalid
and unenforceable. Therefore the court concludes that the clause in question
is valid and enforceable.