CORNELIUS RASSA, et al., Plaintiffs, v. ROLLINS PROTECTIVE SERVICES COMPANY,
et al., Defendants.

Civ. No. S-98-1017

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

30 F. Supp. 2d 538; 1998 U.S. Dist. LEXIS 19056; 37 U.C.C. Rep. Serv. 2d
(Callaghan) 298


December 3, 1998, Decided

DISPOSITION: [**1] Defendants' Motion to Dismiss for Lack of Subject
Matter Jurisdiction GRANTED.


CASE SUMMARY

PROCEDURAL POSTURE: Under Fed. R. Civ. P. 12(b)(1), defendants fire alarm
and monitoring companies filed a motion to dismiss plaintiffs' negligence,
breach of warranty, and breach of contract case, contending plaintiffs could
recover more than the jurisdictional minimum required under 28 U.S.C.S. §
1332(a).


OVERVIEW: Defendants fire alarm and monitoring companies moved to dismiss
plaintiffs' negligence, breach of warranty, and breach of contract case,
contending the jurisdictional minimum required under 28 U.S.C.S. § 1332(a)
could not be met. Dismissing the case, the court found the contractual
relationship between did not give rise to a tort duty. Plaintiffs had no
negligence claim. An action on the contract was the sole avenue for
recovery. The limitation of liability provision arguably could be
inoperative under Md. Code Ann., Com. Law I § 2-316.1, as it would
improperly limit a remedy for breach of warranties. But, any action for
breach of warranty was barred by Md. Code Ann., Com. Law I § 2-725, as the
action had to be commenced within four years after the cause of action has
accrued. The tender of delivery of the system occurred more than four years
before filing suit. An independent breach of warranty claim for services,
where the statute of limitations barred the warranty claim for the "goods"
portion of the transaction, was improper. Although the contract included
standard, boilerplate language, the limitation of liability clause was not
an adhesion contract and not unconscionable.


OUTCOME: Defendants' motion to dismiss for lack of subject matter
jurisdiction was granted. A contract between defendant alarm company and
plaintiff customer did not create a tort duty. The contract limited damages
to $ 500 for any breach. Limitation of damages clause was not
unconscionable.


CORE TERMS: alarm, limitation of liability, duty, alarm system, warranty,
consumer, monitoring, breach of warranty, consumer goods, fire alarm,
unconscionable, subject matter jurisdiction, statute of limitations, gross
negligence, warranty claim, installation, failure to perform, burglar alarm,
customer, programming, jurisdictional amount, implied warranties,
limitation-of-liability, enforceability, contractual, predominant,
persuasive, diversity, insurer, hybrid

LexisNexis (TM) HEADNOTES - Core Concepts - Show Concepts


COUNSEL: For CORNELIUS RASSA, IRENE RASSA, plaintiffs: Elaine Rinaldi, Adam
B. Weinstein, Law Office, Philadelphia, PA.

For IRENE RASSA, plaintiff: Adam Jason Sevel, Law Office, Baltimore, MD.

For ROLLINS PROTECTIVE SERVICES COMPANY, ROLLINS, INC., defendants: D.
Stephenson Schwinn, Susanne Marie Lewis, Jordan, Coyne & Savits, Washington,
DC.

JUDGES: Frederic N. Smalkin, United States District Judge.

OPINIONBY: Frederic N. Smalkin

OPINION: [*539] MEMORANDUM OPINION

The defendants, Rollins Protective Services Company and Rollins, Inc., have
filed a motion to dismiss this case under Rule 12(b)(1) of the Federal Rules
of Civil Procedure, contending that the plaintiffs, Cornelius and Irene
Rassa, cannot recover in excess of the jurisdictional minimum required in a
federal diversity action. For the reasons set forth below, the defendants'
motion will be granted. The issues have been well and fully briefed, and no
oral hearing is necessary. Local Rule 105.6, D. Md.

[*540] I. BACKGROUND

The plaintiffs have filed suit to recover compensatory damages resulting
from the alleged failure of a fire alarm sold and installed by the [**2]
defendants. On July 3, 1990, the plaintiffs contracted to upgrade their
existing home security service, purchasing a comprehensive system capable of
responding to burglaries as well as fire and medical emergencies. Under the
terms of the contract, the alarm system was to be connected through
telephone lines to a central monitoring station manned by operators who
would report emergencies to the fire and police departments.

On December 9, 1996, a fire broke out in the basement of the plaintiffs'
house, and the alarm system failed to transmit a signal to the central
monitoring station. The plaintiffs assert that the defendants' defective
installation and programming of the system led to this failure, allowing the
fire spread undetected for a substantial period of time and causing
significant damage to their home. As a result, the plaintiffs seek recovery
under four different legal theories: negligence, gross negligence, breach of
contract, and breach of warranty.

II. DISCUSSION

The plaintiffs contend that this Court has jurisdiction in this case under
28 U.S.C. § 1332(a). This section provides in pertinent part that "district
courts shall have original jurisdiction of all civil [**3] actions where
the matter in controversy exceeds the sum or value of $ 75,000, exclusive of
interests and costs, and is between-- (1) citizens of different States."

Applying this statutory provision, Judge Harvey previously has noted:

A federal court is a court of limited jurisdiction, and it is necessary that
the facts of a dispute be closely examined by the court to determine whether
federal jurisdiction exists. Jurisdiction has been claimed to exist in this
case under 28 U.S.C. § 1332(a), and the first essential inquiry here is
whether the jurisdictional requirement of $ 50,000 n1 has been met.


Herlihy v. Ply-Gem Indus., Inc., 752 F. Supp. 1282, 1285 (D. Md. 1990). In
undertaking this examination, this Court has held that the "failure to meet
the jurisdictional amount need not be apparent from the face of the
pleadings." Maryland Nat'l Bank v. Nolan, 666 F. Supp. 797, 798 (D. Md.
1987). Even after trial, "'if from the proofs, the court is satisfied to a
[legal] certainty that the plaintiff never was entitled to recover that
amount,'" the case should be dismissed for want of subject matter
jurisdiction. Id. (quoting Saint Paul Mercury Indem. Co. v. [**4] Red Cab
Co., 303 U.S. 283, 289, 82 L. Ed. 845, 58 S. Ct. 586 (1938)).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -


n1 As noted in the statutory language, Congress raised the minimum
jurisdictional amount for diversity actions from $ 50,000 to $ 75,000 in
1996. See Federal Courts Improvement Act of 1996, Pub. L. 104-317, 110 Stat.
3847 (1996).


- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

This Court recently has stated that "'the party seeking to invoke the
jurisdiction of the federal courts has the burden of proving its existence
by showing that it does not appear to a legal certainty that its claim is
for less than the jurisdictional amount.'" Schaefer v. Aetna Life & Cas.
Co., 910 F. Supp. 1095, 1097 (D. Md. 1996) (quoting 14A Charles Alan Wright
et al., Federal Practice and Procedure § 3702, at 19 (1985)). As the
discussion below demonstrates, however, the plaintiffs can recover no more
than $ 500 under any of the legal theories advanced, far below what is
required by 28 U.S.C. § 1332(a).

A. Negligence and Gross Negligence Claims

The plaintiffs have alleged that the defendants' [**5] actions in
installing and programming the alarm system constituted both negligence and
gross negligence. To prove either count, the plaintiffs must show that the
defendants owed some duty of care to the plaintiffs under Maryland law. n2
The Court of Appeals of Maryland has recently emphasized that there can be
no claim for negligence "'where there is no duty that is due; [*541] for
negligence is the breach of some duty that one person owes to another. It is
consequently relative and can have no existence apart from some duty
expressly or impliedly imposed.'" Bobo v. State, 346 Md. 706, 714, 697 A.2d
1371 (1997) (quoting West Virginia Cent. & P.R. v. State ex rel. Fuller, 96
Md. 652, 666, 54 A. 669 (1903)). Likewise, the Court of Appeals has defined
gross negligence as "'an intentional failure to perform a manifest duty in
reckless disregard of the consequences as affecting the life or property of
another . . . .'" Liscombe v. Potomac Edison Co., 303 Md. 619, 635, 495 A.2d
838 (1985) (quoting Romanesk v. Rose, 248 Md. 420, 423, 237 A.2d 12 (1968))
(emphasis added).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -


n2 Because this is a diversity action, it is necessary to look to the
substantive law of Maryland to determine whether the plaintiffs could
recover the minimum amount necessary to establish subject matter
jurisdiction in this case. See Wiggins v. North Am. Equitable Life Assurance
Co., 644 F.2d 1014, 1017 (4th Cir. 1981).


- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**6]

In bringing their tort claims, however, the plaintiffs have "failed to point
to any statute or common law rule which would support a finding that
Defendants owed a duty of care to [them]." Tolson v. Primerica Corp., 1991
U.S. Dist. LEXIS 6474, No. HAR-89-3557, 1991 WL 83136, at *5 (D. Md. May 20,
1991). The contractual relationship between an alarm company and a customer
does not, ipso facto, give rise to a tort duty, as would the relationship
between a doctor and a patient, a lawyer and a client, or a common carrier
and a passenger. In the absence of a tort duty "independent of that arising
out of the contract itself," Heckrotte v. Riddle, 224 Md. 591, 595, 168 A.2d
879 (1961), the plaintiffs are without a cognizable claim for either
negligence or gross negligence under Maryland law.

In their seminal treatise, Professors Prosser and Keeton provide a helpful
framework for distinguishing tort and contract claims as between parties to
a contract; their analysis further supports the preclusion of the
plaintiffs' negligence and gross negligence counts in this case. They note:

Tort obligations are in general obligations that are imposed by law on
policy considerations to avoid some kind of [**7] loss to others. They are
obligations imposed apart from and independent of promises made and
therefore apart from any manifested intention of parties to a contract or
other bargaining transaction. Therefore, if the alleged obligation to do or
not to do something that was breached could not have existed but for a
manifested intent, then contract law should be the only theory upon which
liability would be imposed.


W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 92, at 656
(5th ed. 1984) (emphasis in the original). Applying this reasoning to the
instant case, the defendants' obligation to install, program, and monitor
the plaintiffs' alarm system arose exclusively from the agreement between
the parties and not from any separate, state-imposed tort duty. Thus, under
well-settled Maryland law, an action on the contract provides the plaintiffs
with their sole avenue for recovery. n3

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -


n3 In Steiner Corp. v. American District Tel., 106 Idaho 787, 683 P.2d 435
(Idaho 1984), the Supreme Court of Idaho considered a negligence claim
against an alarm company stemming from the alleged failure of a fire alarm
system and came to the same conclusion reached here. The court held that to
maintain an action in tort,
a clear duty must be shown to exist by operation of law, separate and apart
from the contractual duty to maintain the equipment. It is clear from the
allegations in the complaint that such a separate duty cannot be shown.
Apart from this contract, [the alarm company] could not be said to have a
duty to maintain equipment in [the plaintiff's] building. [The plaintiff]
has not pointed to any statutory duty of suppliers of fire alarm systems,
nor pointed to any common law duty of a supplier to his customer. The only
duty to which [the alarm company] could be held under the facts of this case
is that which arose by virtue of the contract obligating it to maintain this
fire alarm system.


683 P.2d at 438-39.


- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**8]

A careful review of the complaint plainly reveals that the plaintiffs have
asserted these tort claims for purely economic losses stemming from the
defendants' failure to perform the agreed-upon contract. "In that the
essence of the relationship was contractual, and the essence of the claimed
dereliction by defendant was failure to perform the contract, only contract
damages are recoverable." Nixon Uniform Serv., Inc. v. American Directory
Serv. Agency, Inc., 693 F. Supp. 367, 368 (D. Md. 1988) (applying Maryland
law). n4 Preclusion of the plaintiffs' [*542] tort claims in this case is
wholly consistent with the maintenance of the "proper distinction between
tort and contract law" espoused by Maryland courts. Flow Indus., Inc. v.
Fields Constr. Co., 683 F. Supp. 527, 530 (D. Md. 1988).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -


n4 Accord Martin Marietta Corp. v. International Telecommunications
Satellite Org. (INTELSAT), 763 F. Supp. 1327 (D. Md. 1991), aff'd in part,
rev'd in part on other grounds, 991 F.2d 94 (4th Cir. 1992). In that case
the court observed that "contract duties are those specifically agreed upon
by the parties, while tort duties are those imposed by the state for the
purpose of protecting a vulnerable party. . . . In those instances where the
relationship between the parties is purely contractual, and the heart of
plaintiff's claim is the defendant's failure to perform the contract,
contract damages will suffice to compensate the plaintiff--no extra
protection for the parties is necessary." Id. at 1331.


- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**9]

B. Breach of Warranty Claims

In addressing the plaintiffs' Uniform Commercial Code (U.C.C.) warranty
claims, the Court noted, in a prior order, the potential applicability of
Md. Com. Law I Code Ann. § 2-316.1 (1997) to the facts of this case. Under
that statute, "any . . . written language used by a seller of consumer goods
and services, which attempts to exclude or modify any implied warranties of
merchantability and fitness for a particular purpose or to exclude or modify
the consumer's remedies for breach of those warranties, is unenforceable." §
2-316.1(2) (emphasis added).

The contract at the heart of this dispute involves the sale of both consumer
goods (an alarm system) and services (the installation, programming, and
monitoring of the alarm system). The Court of Appeals of Maryland has
described such an agreement as "a mixed or hybrid transaction." Anthony
Pools v. Sheehan, 295 Md. 285, 290, 455 A.2d 434 (1983). It appears that the
predominant purpose of this hybrid contract was for the installation,
programming, and monitoring of the alarm system, while the sale of the alarm
parts was incidental to the services provided by Rollins. See 295 Md. at 293
(considering [**10] the sale and construction of an in-ground swimming
pool, the court noted that "the predominant factor, the thrust, the purpose
of the contract was the furnishing of labor and service by Anthony, while
the sale of the diving board was incidental to the construction of the pool
itself").

However, even where the sale of services constitutes the predominant purpose
of such a contract, the protections against modifying a consumer's remedies
for breach of the implied warranties of merchantability and fitness for a
particular purpose under § 2-316.1 would still apply to the "goods"
component of the contract. See id. at 297 ("Where, as part of a commercial
transaction, consumer goods are sold which retain their character as
consumer goods after completion of the performance promised to the consumer,
and where monetary loss or personal injury is claimed to have resulted from
a defect in the consumer goods, the provisions of the Maryland U.C.C.
dealing with implied warranties [including § 2-316.1] apply to the consumer
goods, even if the transaction is predominantly one for the rendering of
consumer services."). Accordingly, the contested limitation of liability
provision in the Rollins [**11] contract arguably would be inoperative
under § 2-316.1 as it would improperly limit the Rassas' remedy for breach
of those warranties.

Clearly, though, any action brought in this case under the U.C.C. for breach
of warranty is barred by the statute of limitations as provided in § 2-725.
Under § 2-725(1), "an action for breach of any contract for sale must be
commenced within four years after the cause of action has accrued." The
statute further states:
A cause of action accrues when the breach occurs, regardless of the
aggrieved party's lack of knowledge of the breach. A breach of warranty
occurs when the tender of delivery is made, except that where a warranty
explicitly extends to future performance of the goods and discovery of the
breach must await the time of such performance, the cause of action accrues
when the breach is or should have been discovered.


§ 2-725(2).

The tender of delivery of the alarm system in this case occurred in July
1990, and the contract into which the parties entered did not contain any
express warranties as to future performance. Thus, the plaintiffs failed to
bring their breach of warranty claim by July 1994 as required by the statute
[**12] of limitations. See Lee v. Baxter Healthcare [*543] Corp., 721 F.
Supp. 89, 96 (D. Md. 1989), aff'd, 898 F.2d 146 (4th Cir. 1990) (holding
that plaintiff's breach of warranty claim against manufacturer of breast
prosthesis was barred by § 2-725 where plaintiff received implants on March
3, 1976 and failed to commence action by March 3, 1980).

Thus, the lingering issue before the Court is whether there remains a viable
claim for breach of warranty for the "services" aspect of the contract
between the Rassas and Rollins. To reach such a conclusion would require
this Court to hold that an implied warranty applies to consumer services
which cannot be limited or modified under § 2-316.1 and is independent of
any warranty attaching to the goods. Under this theory, the statute of
limitations would not bar a warranty claim related to Rollins' monitoring
obligations because of the continuing nature of this service.

This Court concludes, however, that to allow an independent breach of
warranty claim for services, where the statute of limitations has barred the
warranty claim for the "goods" portion of the transaction, would be
improper. Such a result would extend § 2-316.1 beyond the scope [**13] of
the statutory title of which it is a part; Title 2 of the Maryland U.C.C.
(usually referred to as "Article 2") applies, "unless the context otherwise
requires," only to "transactions in goods." § 2-102; see also § 2-105
(defining "goods" as "moveable"). Therefore, providing a consumer service
(such as monitoring and servicing a burglar/fire alarm), absent a related,
actionable goods warranty, is not a "transaction in goods" and cannot
independently give rise to a warranty claim under Title 2. In addition, the
"context" of § 2-316.1 does not "require" the application of this statute to
purely service contracts; the language of § 2-316.1, referring to specific
U.C.C. warranties that apply in terms only to goods, see §§ 2-314 and 2-315,
is insufficient to imply like warranties in all consumer service contracts.

In sum, under Anthony Pools, § 2-316.1 generally precludes the limitation of
a consumer's remedy for a breach of an implied warranty in the "goods"
portion of a predominantly services contract. In this case, however, the
plaintiffs cannot avail themselves of the rule announced in Anthony Pools,
as their warranty claims, based on the sale of goods in this [**14] hybrid
transaction, are precluded by the statute of limitations. Likewise, absent a
viable warranty claim related to the goods sold under this contract, there
exists no independent warranty claim covering the services provided by the
defendants under Title 2 of the Maryland U.C.C.

C. Breach of Contract Claim

The plaintiffs' claim for breach of contract, thus, remains as the lone
count before the Court. To determine whether this cause of action will
satisfy the $ 75,000 amount in controversy requirement of 28 U.S.C. §
1332(a), the Court must resolve the legal issue of the enforceability of the
limitation-of-liability provision in the contract.

The specific contractual language at issue provides:
CUSTOMER ACKNOWLEDGES AND AGREES THAT IF ANY LOSS OR DAMAGE SHOULD RESULT
FROM THE FAILURE OF THE DETECTION SYSTEM, OR THE MONITORING SERVICE, OR FROM
IMPROPER DESIGN, INSTALLATION, MAINTENANCE OR REPAIR OF THE DETECTION
SYSTEM, WHETHER WITHIN THE LIMITED WARRANTY PERIOD OR OTHERWISE, RPS'
LIABILITY, IF ANY, FOR SUCH LOSS OR DAMAGE SHALL BE LIMITED TO A SUM NOT
GREATER THAN FIVE HUNDRED DOLLARS ($ 500.00). IN THE EVENT PARTIES DESIRE TO
IMPOSE GREATER LIABILITY UPON THE OBLIGATION [**15] HEREUNDER, CUSTOMER MAY
REQUEST AN INCREASED LIMITED LIABILITY BY OFFERING TO PAY AN ADDITIONAL
AMOUNT OF TEN (10%) PERCENT OF THE INCREASED LIMIT (MINIMUM OF $ 100
INCREMENTS) AND, IF ACCEPTED BY RPS, AN ADDITIONAL RIDER SIGNED BY THE
PRESIDENT OF ROLLINS, INC. SHALL BE ATTACHED TO THIS AGREEMENT SETTING FORTH
THE ADDITIONAL LIABILITY OF RPS. I HAVE READ THIS CLAUSE AND [*544] CHOOSE
DO NOT CHOOSE [initialed] AN INCREASED LIABILITY.


The plaintiffs vehemently argue that the contract signed by the parties is
one of adhesion and that the limitation of liability provision is
unconscionable and, therefore, unenforceable. Accordingly, they maintain
that they should be allowed to pursue the full amount of their alleged
damages, well in excess of the statutory minimum needed to establish subject
matter jurisdiction.

Authority from the Court of Special Appeals of Maryland, though, belies the
plaintiffs' contention that the limitation of liability term is
unconscionable. In Schrier v. Beltway Alarm Co., 73 Md. App. 281, 533 A.2d
1316 (1987), the court upheld the validity of a limitation of liability
clause in a burglar alarm contract, noting that "'except in the case [**16]
of certain public service contracts, the contracting parties can by
agreement limit their liability in damages to a specified amount, either at
the time of making their principal contract, or subsequently thereto.'" Id.
at 292 (quoting Restatement of Contracts § 339, comment g (1932)). In
reaching this decision, the court found sound policy reasons for enforcing
the contested contractual provision:
'Most persons . . . carry insurance for loss due to various types of crimes.
Presumptively insurance companies who issue such policies base their
premiums on their assessment of the value of the property and the
vulnerability of the premises. No reasonable person could expect the
provider of an alarm service would, for a fee unrelated to the value of the
property, undertake to provide an identical type coverage should the alarm
fail to prevent a crime.'


Id. at 294-95 (quoting Guthrie v. American Protection Indus., 160 Cal. App.
3d 951, 954, 206 Cal. Rptr. 834 (1984)).

Persuaded by these policy considerations, the court found that the contract
signed by the parties constituted a "commercially sensible arrangement," and
refused "to rewrite [**17] their agreement to compel the [alarm company] to
act as an insurer." 73 Md. App. at 295. As a result, the Court of Special
Appeals concluded that the limitation of liability clause was not
unconscionable: "The agreement is not one 'such as no man in his senses and
not under delusion would make on the one hand, and no honest and fair man
would accept on the other.'" Id. (quoting Earl of Chesterfield v. Janssen, 2
Ves. Sr. 125, 28 Eng. Rptr. 82 (1750)).

The result reached in Schrier is binding on this Court unless there are
"persuasive data" that the Court of Appeals of Maryland would reject it.
Assicurazioni Generali, S.p.A. v. Neil, 160 F.3d 997, 1998 U.S. App. LEXIS
29365, 1998 WL 801496, at *5-6 (4th Cir. 1998). There simply are no such
data. Indeed, in a fairly recent case, the Court of Appeals cited Schrier,
along with a number of other Court of Special Appeals cases, in a review of
Maryland law on the validity of contractual exculpatory and
limitation-of-liability clauses. Wolf v. Ford, 335 Md. 525, 532-35, 644 A.2d
522 (1994). Although the Court of Appeals adopted a different analytical
approach in Wolf than that used by the Court of Special [**18] Appeals in
Schrier, it did not overrule or question the result in Schrier. Id. at 534.

In Assicurazioni Generali, the Fourth Circuit held that an applicable
decision by the Court of Special Appeals provides controlling authority for
the federal courts on Maryland law where it has been cited, but not
overruled, by the Court of Appeals in a case that reaches a different result
from that of the intermediate appellate court without expressly overruling
it. Assicurazioni Generali, 160 F.3d 997, 1998 WL 801496, at *8. Certainly,
Wolf does not so undermine confidence in the continuing validity of Schrier
as to constitute the "persuasive data" justifying failure to follow Schrier.

Furthermore, Schrier is consistent with the overwhelming majority of
decisions that have addressed the validity of limitation of liability
clauses in alarm contracts. For example, in Vallance & Co. v. De Anda, 595
S.W.2d 587 (Tex. Civ. App. 1980), the Court of Civil Appeals of Texas upheld
a limitation of liability clause in a burglar alarm contract, stating:

When a burglar alarm company undertakes to provide protective services under
terms limiting its liability for the [**19] ineffectiveness of the
performance of those services, no public policy is violated. On the [*545]
contrary, there is a sound policy reason compelling the enforcement of these
provisions. Appellee paid a service charge of $ 24.50 per month to
appellant. It would be unreasonable to expect appellant to assume the
responsibilities arising under a burglary insurance policy upon payment of .
. . this nominal fee. Had appellee desired greater protection against loss
from burglary he could have purchased burglary insurance or paid additional
amounts under a graduated scale of rates, as provided in the agreement.


Id. at 590 (internal quotations and citations omitted).

More recently, the Second Circuit echoed the same concerns, stating that
"even where the contract is not only for the sale and installation of a
burglar alarm system but is also for its maintenance or monitoring, if the
fee paid is not sufficiently high to include a premium for theft insurance,
a clause limiting the alarm service company's liability in the event the
alarm system does not function properly is not unconscionable." Leon's
Bakery, Inc. v. Grinnell Corp., 990 F.2d 44, 49 (2d Cir. 1993) (applying
Connecticut [**20] law). See generally Martin J. McMahon, Annotation,
Liability of Person Furnishing, Installing, or Servicing Burglary or Fire
Alarm System for Burglary or Fire Loss, 37 A.L.R.4th 47, 53 (1985) ("With
respect to fire alarms, the courts have generally upheld the validity and
enforceability of limitation-of-damages clauses in contracts between alarm
companies and customers, who alleged that their fire losses were caused by
the failure of their security systems to raise alarms during fires, the
courts stressing that such clauses were not void as against public policy,
and that the alarm companies were not insurers against fire losses.").

Thus, there are significant policy reasons for enforcing the limitation of
liability provision at issue in this case and no "persuasive data" that
Schrier should be disregarded. Under the original terms of the contract, the
plaintiffs paid a total of $ 35.50 per month to Rollins for servicing and
monitoring their burglar/fire alarm system. The Rassas hardly could have
expected the defendant to act as a property insurer for such a minimal cost.
Based on the foregoing, the limitation of liability clause at issue is not
unconscionable under settled [**21] Maryland law.

As noted above, the plaintiffs also maintain that the agreement signed by
the parties constitutes a contract of adhesion, claiming that they "were not
given the opportunity to negotiate a single term of the contract, let alone
any of the provisions excluding or limiting Rollins' liability." Pltf. Mem.
at 31. A contract of adhesion has been defined by the Court of Special
Appeals "as one that is drafted unilaterally by the dominant party and then
presented on a 'take-it-or-leave-it' basis to the weaker party who has no
real opportunity to bargain about its terms." Meyer v. State Farm Fire and
Cas. Co., 85 Md. App. 83, 89, 582 A.2d 275 (1990) (internal quotations
omitted).

While the contract includes standard, boilerplate language, the Rassas
plainly did not face a take-it-or-leave-it proposition regarding the
limitation of liability clause. At the end of the limitation of liability
provision in the contract, Mr. Rassa acknowledged, through the placement of
his initials, that he had read the dispositive clause and declined to
increase Rollins' liability in exchange for a higher fee. Thus, the
plaintiffs had a meaningful choice to pay the additional cost to have
Rollins [**22] assume greater liability in the event of a loss; they simply
did not exercise this option.

The Court finds the plaintiffs' remaining arguments attacking the
enforceability of the limitation of liability clause to be without merit.
Based on the discussion above, the Court concludes that the contract into
which the parties entered was not unconscionable or in any way violative of
public policy. Thus, the contractual limitation of liability provision is
enforceable, and the plaintiffs' maximum possible recovery for breach of
contract is $ 500. Accordingly, this Court is without subject matter
jurisdiction to hear this controversy under 28 U.S.C. § 1332(a) and the case
is dismissed pursuant to Rule 12(b)(1). See Pratt Cent. Park Ltd.
Partnership v. Dames & Moore, Inc., 60 F.3d 350, 353 (7th Cir. 1995) (noting
that "several cases hold or imply that a court has the power to dismiss for
want of jurisdiction after deciding that a limitation-of-liability clause .
. . caps damages at less than the [*546] jurisdiction amount"); 14B
Charles Alan Wright et al., Federal Practice and Procedure § 3702, at 98
(1998) (providing that "the legal-certainty standard for purposes of
defeating the court's [**23] subject matter jurisdiction" has been met
"when the terms of the contract limit the plaintiff's possible recovery").

III. CONCLUSION

For the foregoing reasons, the Court finds that the plaintiffs have failed
to demonstrate to a legal certainty that they could recover the requisite
amount necessary to bring this case in federal court. The defendants' Motion
to Dismiss for Lack of Subject Matter Jurisdiction is, therefore, GRANTED,
and an appropriate order will be entered separately.

12/3/98
Date

Frederic N. Smalkin

United States District Judge

ORDER

For the reasons stated in a Memorandum Opinion, of even date, it is by the
Court, this 4th day of December, 1998, ORDERED:

That the Motion to Dismiss for Lack of Subject Matter Jurisdiction BE and it
hereby IS, GRANTED.

Frederic N. Smalkin

United States District Judge