A new appellate case has just been published in New York.  The full
text will be on my web site by Monday under Alarm Law Issues, Cases sorted
state by state, New York cases.  Case is Adler v Columbia Savings & Loan
and Wells Fargo Alarm Services, Second Department, Appellate Division, New
York.
    Here are the basic facts:  Renters of safe deposit boxes at financial
institution brought action for breach of contract and negligence
against bank and burglar alarm company that installed, tested, and
monitored bank's alarm system.  The safe deposit box renters claimed that
the bank's security was inadequate.  The safe deposit boxes were emptied.
The case does not offer details of how the alarm system or security was
deficient or what went wrong with the system.  The case does address  legal
issues and public policy issues important to the alarm industry.  These
issues obviously extend beyond the borders of New York, so if you're in
another state, you should still understand these issues.
    Wells Fargo apparently had a contract that contained an exculpatory
clause.  The contract also made clear that the bank's customers were not
parties to the alarm contract, and not intended beneficiaries of the alarm
contract.
    In New York an exculpatory clause will be enforced for negligence, but
not gross negligence.  Some states will enforce the clause even if there is
gross negligence.  You can check your state's leading cases on my web site
under the state by state cases under the Alarm Law Issues page.
    So in this case Wells Fargo moves to dismiss the complaint as against
it, claiming that the bank's customers could not sue Wells Fargo.  The
Judge grants that part of the motion and dismisses the complaint against
Wells Fargo.  But that does not end Wells Fargo's involvement in the case.
    The bank made claim against Wells Fargo by way of a Cross Claim,
claiming that Wells Fargo should be responsible for its share of the
liability.  Of course Wells Fargo did have a contract with the bank.  Wells
Fargo's motion to have the Cross Claim by the bank dismissed was granted
only in part, to the extent that Wells Fargo was only negligent, but not to
the extent that Wells Fargo was grossly negligent.  So for the time being
Wells Fargo stays in the case and continues to have defense expense.
    Here are some of the more interesting holdings by the Appellate Court:

1.  A burglar alarm agreement which contains an exculpatory clause shields
the burglar alarm company from liability only for ordinary negligence, not
for gross negligence.

2.   In this context, gross negligence is conduct which "smacks" of
intentional wrongdoing or evinces a reckless indifference to the rights of
others.

3.  With respect to the cross claims for both contribution and
indemnification, triable issues of fact exist as to whether the Wells Fargo
and the bank were grossly negligent. The bank may recover from the Wells
Fargo under a contribution theory to the extent that Wells Fargo is found
to be grossly negligent  [the court did not mention the facts].

4.  With respect to the cross claim for indemnification, an issue of fact
exists as to whether Columbia was independently negligent. In indemnity,
the party legally liable shifts the entire loss to another,  Even if Wells
Fargo is found to be grossly negligent, Columbia is not entitled to
indemnification for its own negligence.

5.  Public policy considerations protect alarm companies for injuries to
non-contracting plaintiffs, particularly where, as here, the contract
explicitly states that the sums payable were calculated with the
understanding that the risk of loss, at least for ordinary negligence,
remains with the subscriber.  No duty stems from the plaintiffs' claimed
status as intended third-party beneficiaries.