New England Variety Distributors, Inc. v. Alarm Security Protection Company, Inc. et al.
CV 950545381
SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF HARTFORD - NEW BRITAIN, AT HARTFORD
1998 Conn. Super. LEXIS 2785
 
September 25, 1998, Decided  
September 25, 1998, 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.

DISPOSITION: Motion for summary judgment denied.

CASE SUMMARY

PROCEDURAL POSTURE: Plaintiff client filed a complaint against defendants, security protection company and its president (company), to recover damages sustained as the result of a burglary. The company filed motions for summary judgment to dismiss the client's claims, which included negligence, fraud and misrepresentation, and product liability pursuant to Conn. Gen. Stat. § 52 - 572m et seq.

14. It is understood and agreed by and between the parties hereto that the CONTRACTOR [ASP] is not an insurer. Insurance, if any, will be obtained by the SUBSCRIBER [the plaintiff]. Charges are based solely upon the value of the services provided for and are unrelated to the value of SUBSCRIBER'S property or the property of others located in SUBSCRIBER'S premises. The amounts payable by the SUBSCRIBER are not sufficient to warrant the CONTRACTOR assuming any risk of consequential or other damages to the SUBSCRIBER due to the CONTRACTOR'S negligence or failure to perform, including but not limited to loss or damage which may be occasioned by or caused by the improper working of any equipment or connecting circuit or by or because of the failure of an alarm to be received at the Central Station, or by or because [*6]  of the failure to notify the police or fire department pursuant to instruction of or agreement with the SUBSCRIBER or by or because of any delay in or failure to dispatch an agent to the premises to investigate an alarm.

The SUBSCRIBER does not desire this contract to provide for liability of the CONTRACTOR and SUBSCRIBER agrees that the CONTRACTOR shall not be liable for loss or damage due directly or indirectly to any occurrence or consequences therefrom, which the service is designed to detect or avert. It is impractical and extremely difficult to fix the actual damages, if any, which may proximately result from the failure on the part of the CONTRACTOR to perform any of its obligations herein, or in the failure of the system to properly operate with a resulting loss to the SUBSCRIBER. In the event the CONTRACTOR should be found liable for loss or damage due to a failure on the part of the CONTRACTOR or its system, in any respect, this liability shall be limited to the sum of ten percent (10%) of the annual service charge or $ 250, whichever is greater, as liquidated damages, and not as a penalty, and this liability shall be exclusive. The provisions of this paragraph [*7]  shall apply in the event of loss or damage, irrespective of cause or origin, results directly or indirectly to person or property from the performance or non-performance of the obligations set forth by the terms of this Agreement or from negligence, active or otherwise. from the CONTRACTOR, its agents or employees.

 
Paragraph 14 concludes by stating that if the SUBSCRIBER wishes the CONTRACTOR to assume greater liability than the above, the SUBSCRIBER could obtain a higher limit by paying an additional amount to the CONTRACTOR.
 ^HN2
"[A] contractual provision fixing the amount of damages to be paid in the event of a breach is enforceable if it satisfies certain conditions . . . (1) The damage which was to be expected as a result of a 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 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 contracted in the event of a breach of the contract." (Citations [*8]  omitted.) Berger v. Shanahan, 142 Conn. 726, 731-32, 118 A.2d 311 (1955).
 
Connecticut Superior Courts have granted summary judgment for defendant alarm companies in similar cases, on the ground that liquidated damage provisions in fire and theft alarm installation, testing and monitoring agreements, containing language that is virtually identical to the language in the present contracts, are valid and enforceable. n1

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n1 See U.S. Fidelity & Guaranty Co. v. Sonitrol Services Corp., 1996 Conn. Super. LEXIS 1920, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. 134267 (July 29, 1996) (Arnold, J.); Benjamin v. Detect, 1996 Conn. Super. LEXIS 248, Superior Court, judicial district of Danbury, Docket No. 319789 (January 26, 1996) (Moraghan, J.) (16 Conn. L. Rptr. 107), Hunter's Consignments, Inc. v. Sonitrol of Western Connecticut, Ltd., 1994 Conn. Super. LEXIS 2903, Superior Court, judicial district of Danbury. Docket No. 08420 (November 14, 1994) (Mihalakos. J.) (12 Conn. L. Rptr. 687); Convenient Petroleum Corp. v. Sonitrol Communications Corp., 1992 Conn. Super. LEXIS 1737, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 364888 (June 4, 1992) (Wagner, J.) (6 Conn. L. Rptr. 556); Hanover Ins. Co. v. American District Telegraph Co., 1991 Conn. Super. LEXIS 2790, Superior Court, judicial district of New Haven at Meriden, Docket No. 232340 (December 4, 1991) (Stengel, J.) (5 Conn. L. Rptr. 324); but see Chehade Wehbe v. Comsec Naragansett Security, Inc., 1996 Conn. Super. LEXIS 1093, judicial district of Waterbury, Docket No. 129603 (April 25, 1996) (Fasano, J.) (denying summary judgment because material facts exist as to whether amount of liquidated damages was reasonable in terms of the presumable loss and would be sustained in the event of a breach of contract).
 

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 ^HN3
"It is not illegal for a party to a contract to limit his liability in damages for non-performance of his promises, although such a provision is not effective in case he acts fraudulently or in bad faith." 6A A. Corbin, Contracts (1962) 1472, p. 606. Cf. 5 R. Anderson, Anderson on the Uniform Commercial Code (3rd Ed. 1994) 2-721:88, p. 177 (limitation on the remedies of the buyer not binding when the contract has been induced by fraud). "Thus, the defendant cannot . . . rely on the [limitation of liability] provisions of a contract which was entered into as a result of fraudulent actions on defendant's part." American Electric Power Co. v. Westinghouse Electric Corp., 418 F. Supp. 435, 460 (S.D.N.Y. 1976).
 
In the present case, the defendants have proffered evidence demonstrating that the parties had an agreement under which they would install a local alarm system to include an "external alarm" on the side of the plaintiff's warehouse, " 'electronic contacts' on the three entrance-ways, along with motion and infrared detectors to detect intruders," and "off-premises central station monitoring via a digital communicator." In addition, the defendants agreed "to install a [*10]  cellular telephone system designed to interface with the burglar alarm system to transmit any alarms from the system when the regular telephone is out of service." The defendant asserts that the system "was installed in precise conformity with the written contracts." (Spiegel affidavit, 3, 4 and 6.)
 
The plaintiff, however, has made claims of fraudulent inducement and gross negligence in counts four and five, and has submitted an affidavit incorporating these allegations. "The defendants represented . . . that the new system installed by the defendants would include a telephone cut monitor, which would sound the alarm bell if the telephone line was cut, and would provide the appropriate signal to the monitoring service . . . The defendants further represented . . . that the system installed . . . would include a dedicated line system . . . After the plaintiff's loss, the plaintiff discovered that the representations set forth above were false and, in particular, that the monitoring system which the defendants represented had been installed on the plaintiff's premises had not, in fact, been installed and was not even available in the area of the plaintiff's business." (Count 4,  [*11]  5-7; Engelman affidavit, 13.)
 ^HN4
"Summary judgment procedure is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions." (Internal quotation marks omitted.) Suarez v. Dickmont Plastics Corp., supra, 229 Conn. 111. The foregoing contradictory affidavits create a question of material fact as to motive and intent and the nature of the representations made by the defendant. The defendant has not, therefore, met its burden of showing the absence of any genuine issue of material fact which, under applicable principles of substantive law, entitle it to judgment as a matter of law.
 
Accordingly, since there are substantial issues of material fact relating to the validity of the contract containing the liquidated damages provision, the motion for summary judgment on counts one, two, and three is denied.

B.

Count Three
 
The defendant also seeks summary judgment on count three on the alternative ground that it is not a "product seller" as defined by General Statutes 52-572m(a), n2 and therefore, not subject to liability under General Statutes 52-572m et seq. It claims that [*12]  it is in the business of designing, installing, servicing and monitoring security systems, and that these systems are not mass produced or mass marketed, each one being unique to its location. (Spiegel affidavit, 9 and 10.) It argues that these activities are properly characterized as "services" rather than "sales."

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n2 ^HN5" 'Product seller' means any person or entity, including a manufacturer, wholesaler. distributor or retailer who is engaged in the business of selling such products whether the sale is for resale or for use or consumption. The term 'product seller' also includes lessors or bailors of products who are engaged in the business of leasing or bailment of products." General Statutes 52-572m(a).
 

 

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -The plaintiff argues that the transaction was made up of both a "sales contract" and a "lease and service agreement," with the service aspects of the agreement only incidental to the sale of a product. It also argues that it is a mixed question of law and fact, and material questions of fact remain as to the [*13]  nature of the transaction.
 ^HN6
The Connecticut Product Liability Act ("CPLA") requires that a product liability claim be brought only against "product sellers." General Statutes 52-572n(a). A "product seller means any person or entity, including a manufacturer, wholesaler, distributor or retailer who is engaged in the business of selling products . . ." General Statutes 52-572n(a). A manufacturer is one who designs, assembles, fabricates, constructs, processes, packages or otherwise prepares a product prior to its sale to a user. General Statutes 52-572m(e). Whether the defendant is a "product seller" is a question of law for the court to determine. See Burkert v. Petrol Plus of Naugatuck, Inc., 216 Conn. 65, 72, 579 A.2d 26 (1990). "To maintain a product liability action under 52-572m et seq., the plaintiff must establish and prove, inter alia, that . . . the defendant was engaged in the business of selling the product . . ." (Emphasis omitted; internal quotation marks omitted.) Zichichi v. Middlesex Memorial Hospital, 204 Conn. 399, 403, 528 A.2d 805 (1987). "Once a particular transaction is labeled a 'service,' as opposed to a 'sale' of a 'product,' it is outside the purview [*14]  of our product liability statute." Id.
 
The defendant contracted with the plaintiff to install an alarm system in its warehouse. The defendants claim that this was the provision of a service rather than the sale of a product. The CPLA does not define the term "product." Courts have defined ^HN7it as "any item, thing, or commodity which, upon acquiring its physical existence and identity, through the process of manufacture or otherwise, is put in the stream of commerce either by sale, for use, consumption or resale or by lease or bailment." Bobryk v. Lincoln Amusements, Inc., 1996 Conn. Super. LEXIS 49, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 54708 (January 5, 1996) (Sheldon, J.) (15 CONN. L. RPTR. 617, 619), and as "an object possessing intrinsic value, capable of delivery either as an assembled whole or as a component part or parts, and produced for introduction into trade or commerce," the definition from the Model Uniform Product Liability Act. Dumitrie v. Fernap, Inc., 1994 Conn. Super. LEXIS 1125, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 288824 (April 25, 1994) (Pittman, J.) (11 CONN. L. RPTR. 449, 450).
 ^HN8
When distinguishing between a service and [*15]  a product, some courts focus on the object of the contract. See Paul v. McPhee Electrical Contractors, 46 Conn. App. 18, 23, 698 A.2d 354 (1997) (holding that an electrician who installed a light fixture was not a product seller under the CPLA since there was no indication that the electrician was "involved in placing light fixtures into the stream of commerce"); Gilbane Building Co. v. Stamford Towers, 1995 Conn. Super. LEXIS 2497, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. 118788 (August 31, 1995) (D'Andrea, J.) (holding that a construction manager was not a product seller of allegedly defective precast panels where sufficient facts were not alleged to demonstrate that the construction manager was in the business of selling precast panels); Ferguson v. EBI Medical Systems, 1995 Conn. Super. LEXIS 2228, Superior Court, judicial district of New London, Docket No. 527663 (August 1, 1995) (Hurley, J.) (15 CONN. L. RPTR. 94) (holding that a hospital rendered services, and was not a product seller, where the hospital ordered and installed an allegedly defective wrist fixator during surgery on the plaintiff, since the contract was basically one for the rendition of services and the materials used were [*16]  merely incidental to the main purpose of the contract); Hines v. JMJ Construction Co., 1993 Conn. Super. LEXIS 69, Superior Court. judicial district of Hartford-New Britain at Hartford, Docket No. 506329 (January 11, 1993) (Miano, J.) (8 CONN. L. RPTR. 232) (holding that a subcontractor who constructed a sidewalk performed services).
 
The defendant in this case is engaged in the leasing, maintenance and monitoring of alarm system equipment. It provides both a product and, a service. "The Product Liability Act . . . does not give clear guidance as to how this hybrid sales-service transaction is to be labeled." In re Bridgeport Asbestos Litigation v. All Cases, 1998 Conn. Super. LEXIS 1796, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. [none] (June 24, 1998) (Thim, J.) (22 CONN. L. RPTR. 391, 392). Whether the sale of a product was the object of the transaction raises factual issues.
 
Accordingly, the motion for summary judgment on count three is denied on this ground also.

C.

Proximate cause
 
The defendant raises the question of proximate cause in the alternative, seeking summary judgment on the entire complaint on the ground that the alarm system which the defendant installed was not the [*17]  proximate cause of the plaintiff's alleged damages. The defendant relies on Vastola v. Connecticut Protective Services, Inc., 133 Conn. 18, 47 A.2d 844 (1946), in which the court wrote: "The defendant's undertaking was to install a proper burglar alarm system which would, under the circumstances of this case. cause a bell over the entrance door to ring. It did not agree to afford further protection. In Nirdlinger v. American District Telegraph Co., 245 Pa. 453, 91 A. 883. a similar action for damages caused by the defendant's negligence, the defendant undertook to equip the plaintiff's house with a burglar alarm and to protect it from burglarious entry by the dispatch of guards thereto when warned by automatic signals. One of the issues discussed is whether a ringing of the alarm would have prevented the loss. The court said (p. 460): 'But this is pure speculation. Whether that would have been the result had the apparatus been in working order can never be known. It would depend upon contingencies without number, any one of which would have been sufficient to disappoint it. Certainly there is nothing in the case from which a legal inference could be derived that the loss would [*18]  have been averted had the electrical alarm been in order.' " Vastola v. Connecticut Protective Services, Inc., supra, 133 Conn. 21-22. See also Ligouri v. Quintans, 1996 Conn. Super. LEXIS 1639, Superior Court, judicial district of Fairfield, Docket No. 318583) (June 13, 1996) (Levin, J.) (17 CONN. L. RPTR. 218) (following Vastola).
 
While the rule of Vastola v. Connecticut Protective Services, Inc., supra, 133 Conn. 21-22, remains relevant, the question of proximate cause in this case raises a number of factual issues that cannot be decided at this point in the litigation. n3 See generally Lodge v. Arett Sales Corp., 246 Conn. 563, 581-82, 585, 717 A.2d 215 (1998) (holding that liability is inappropriate for the unforeseen consequences of a false alarm where imposing liability on the defendants would achieve little in preventing the type of harm suffered by the plaintiffs but leaving the door open for "a case where the harm and the negligence are less attenuated or where the benefits of imposing liability are more substantial"); Burns v. Gleason Plant Security, Inc., 10 Conn. App. 480, 485, 523 A.2d 940 (1987) (stating that proximate cause is usually a question of fact but becomes a question of law [*19]  "when the mind of a fair and reasonable man could reach only one conclusion"). Viewing the facts in the light most favorable to the plaintiff, the court rejects the defendants' argument that Vastola is dispositive on the issue of proximate cause.

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n3 As the Plaintiff points out, Vastola was a decision on appeal after trial. It was not decided on a motion for summary judgment. In addition, unlike Vastola and its progeny, the alarm system that is subject of this litigation was designed and installed after a similar previous break-in. (Engelman Affidavit, 3 and 4.) Further, the plaintiff's supplemental affidavit claims that in view of the quantity of the items stolen, it would have taken a substantial period of time for all the merchandise to be removed from the warehouse. (Engelman Supplemental Affidavit, dated May 21, 1998, 7, 8 and 9.) See generally Lodge v. Arett Sales Corp., 246 Conn. 563, 581-82 585, 717 A.2d 215 (1998).
 

 

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