National Fire Insurance Co. v. PPG Industries


X03CV024022069

SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF HARTFORD, 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.


CASE SUMMARY

PROCEDURAL POSTURE: Plaintiff insurer's second substituted complaint sought
to recover monies paid to an insured as the result of an explosion and fire
that occurred on the insured's premises. One defendant, a security service,
moved for summary judgment on all counts directed to it: negligence, breach
of contract, breach of express warranty, breach of implied warranty, breach
of implied warranty of fitness, and product liability.

OVERVIEW: The security service, while not explicitly admitting liability,
moved for summary judgment on the ground that the insurer's recovery was
limited to no more than the amounts contained in the limitation of liability
provisions of the insured's policy. The court found that the limitation of
liability provisions at issue were valid and enforceable with respect to the
insurer's negligence, breach of contract, breach of express warranty, breach
of implied warranty, and breach of implied warranty of fitness counts.
However, with respect to the product liability count, the insurer included
allegations that the security service engaged in intentional, willful,
wanton and reckless conduct. But neither party submitted evidence regarding
the substance of the insurer's claims of reckless or intentional conduct or
the effect of the limitation of liability provisions as to these
allegations. Since the security service had the burden of showing the
nonexistence of any material issue of fact, and the court had to view any
evidence in the light most favorable to the insurer, the court could not
grant summary judgment with respect to the product liability count.

OUTCOME: The motion for summary judgment was granted on all counts except
the product liability count. Judgment was entered for the insurer in the
amount of $9049.20, based on the amount stated in the policy limitation of
liability provisions, on the negligence, breach of contract, breach of
express warranty, breach of implied warranty, and breach of implied warranty
of fitness counts.

CORE TERMS: limitation of liability, installation, summary judgment, alarm
system, service agreement, substituted, twenty-second, willful, reckless
conduct, wanton, monitoring, movant, material issue of fact, public policy,
door, genuine issue of material fact, business profits, condition precedent,
memorandum, overhead, enforceable, installed, expired, notice, present
evidence, opposing party, nonproperty, encompass, favorable, duty

LexisNexis(R) Headnotes Show Headnotes


JUDGES: John J. Langenbach, Superior Court Judge.

OPINIONBY: 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 Services, 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 judgment. 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 summary 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 signaling 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 HEREUNDER, OR $
10,000.00, WHICHEVER IS LESS." The plaintiff argues that this agreement is
not the applicable contract; the applicable contract is either the sales and
installation agreement or a 1995 letter from NAMCO to ADT proposing 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 substituted 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, COLLATERAL 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 EXCLUSIVE 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 discussed 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 agreement 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 installed."
(Plaintiff's Memorandum in Opposition, p. 13.) The plaintiff submitted no
evidence in support of this statement. 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 contract 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 monitoring 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
complaint. The plaintiff has submitted [*10] no evidence that shows that
any written notice was given by NAMCO terminating 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 provision 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 liability 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 Electronic Services, Inc., Superior Court, Complex Litigation
Docket at New Britain, docket no. X03 CV01 0510854 (October 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 negligence 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. n1 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 intentional, willful, wanton
and reckless conduct contained in the twenty-second count.

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n1 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 Opposition, 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
limitation 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 substance 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.


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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 provision.
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,
consequential, 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 parties 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 operation 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. n2 The motion for summary judgment is denied as to the
twenty-second count.

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n2 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 liable
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 liability 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).


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John J. Langenbach

Superior Court Judge

May 8, 2006