Bouvier Brothers, Inc. v. Baker Protective Services d/b/a Wells Fargo Alarm
Services

SUPERIOR COURT OF MASSACHUSETTS, AT MIDDLESEX

2 Mass. L. Rep. 101; 1994 Mass. Super. LEXIS 640


April 15, 1994, Decided

DISPOSITION: [*1] Defendant's motion is ALLOWED as to Counts I, II and
III; DENIED as to Counts IV and V. Plaintiff's motion for summary judgment
is DENIED.


CASE SUMMARY

PROCEDURAL POSTURE: Plaintiff jewelry store filed a motion for summary
judgment based on its misrepresentation claims seeking recovery for property
damage it had suffered when thieves disabled the alarm system serviced by
defendant alarm company and burglarized its jewelry store. Alarm company
filed a motion for summary judgment asserting that the contract's
exculpatory clause barred jewelry store's claims as a matter of law.


OVERVIEW: Plaintiff jewelry store filed a claim against defendant alarm
company seeking to recover for property damage it suffered when thieves
disabled the alarm system serviced by the alarm company and burglarized the
jewelry store. Alarm company moved for summary judgment pursuant to Mass. R.
Civ. P. 56, asserting that the contract's exculpatory clause barred the
jewelry store's claims as a matter of law. Jewelry store also moved for
summary judgment. The court granted the alarm company's motion for summary
judgment in part and denied it in part, and denied the jewelry store's
motion for summary judgment. The court held that the exculpatory clause was
valid and the clause was enforceable. The court dismissed the jewelry
store's claims for breach of contract, misrepresentation, and negligence
because the exculpatory clause barred all claims arising from the alarm
company's negligent performance of its contractual duties. The court denied
dismissal as to the gross negligence and unfair and deceptive trade
practices because the jewelry store had failed to establish that the alarm
company's agent misrepresented a material fact that induced the jewelry
store to enter into the contract.


OUTCOME: The court granted defendant alarm company's motion for summary
judgment as to the claims for breach of contract, misrepresentation, and
negligence, denied it as to the claims for gross negligence and unfair and
deceptive trade practices, and denied plaintiff jewelry store's motion for
summary judgment.


CORE TERMS: misrepresentation, exculpatory clause, gross negligence, alarm
system, alarm, negligent misrepresentation, summary judgment, intentional
misrepresentation, actionable, telephone, promissory, effective, deceit,
fraudulently induced, breach of contract, matter of law, nonperformance,
monitoring, station, Tort Law, intentional wrongdoing, liability arising,
cause of action, material fact, unambiguous, fraudulent, speaker, falsity,
wires, obligation imposed

LexisNexis (TM) HEADNOTES - Core Concepts - Show Concepts


JUDGES: Brady, J.

OPINIONBY: BRADY

OPINION:

This case arises out of an alarm service agreement entered into by the
parties. Plaintiff, Bouvier Brothers, Inc. ("Bouvier Brothers"), has
initiated suit against defendant, Baker Protective Services d/b/a Wells
Fargo Alarm Services ("Wells Fargo"), seeking to recover for property damage
it suffered when thieves disabled the alarm system serviced by defendant and
burglarized plaintiff's jewelry store. Plaintiff asserts that defendant's
conduct--namely, failing to properly monitor the alarm system--caused it to
incur damages. Plaintiff's complaint seeks recovery based on the following
theories: breach of contract (Count I), misrepresentation (Count II),
negligence (Count III), gross negligence (Count IV) and unfair and deceptive
trade practices (Count V). Defendant has moved for summary judgment pursuant
to Mass.R.Civ.P. 56 asserting that the contract's exculpatory clause bars
plaintiff's claims as a matter of law. Plaintiff, on the other hand, argues
that the exculpatory clause does not bar its claims for misrepresentation
[*2] or gross negligence. Moreover, plaintiff contends that defendant
fraudulently induced it to enter into the contract and therefore asserts
that the contract is void as a matter of law. Plaintiff has also moved for
summary judgment on its misrepresentation and G.L.c. 93A claims. For the
reasons that follow, defendant's motion for summary judgment is granted in
part and denied in part and plaintiff's motion for summary judgment is
denied.

FACTS

The following are the undisputed facts as taken from the parties' pleadings,
affidavits and depositions. Plaintiff owns jewelry stores located in
Somerville and Everett. Gilbert Bouvier and his son Jeffrey Bouvier are the
principals of the plaintiff corporation. On or about June 18, 1991,
defendant's representative, George Hopping ("Hopping"), visited plaintiff's
Somerville store to discuss upgrading its alarm system. Hopping discussed
the pulse net alarm system with Gilbert Bouvier, the manager of the
Somerville store. At this time, Hopping explained to Gilbert Bouvier that if
either the telephone lines were cut or there was a problem with the
telephone lines the central monitoring station would be notified.
Furthermore, Hopping told Gilbert [*3] Bouvier that he would be contacted
in the event there was a problem with the communication system.
Subsequently, Hopping installed the pulse net system and defendant and
plaintiff entered into a "Central Station Protective Signaling Service
Renewal" contract. This contract obligated defendant to maintain an alarm
system in plaintiff's jewelry store. This contract provided in large bold
type that:
D. IT IS UNDERSTOOD AND AGREED BY SUBSCRIBER THAT WELLS FARGO ALARM IS NOT
AN INSURER; THAT THE SUMS PAYABLE HEREUNDER TO WELLS FARGO ALARM BY
SUBSCRIBER ARE BASED UPON THE VALUE OF SERVICES OFFERED AND THE SCOPE OF
LIABILITY UNDERTAKEN AND SUCH SUMS ARE NOT RELATED TO THE VALUE OF PROPERTY
BELONGING TO THE SUBSCRIBER OR TO OTHERS LOCATED ON SUBSCRIBER'S PREMISES.
SUBSCRIBER FURTHER AGREES AND PROMISES THAT, IF IT DESIRES INSURANCE,
SUBSCRIBER'S INSURANCE WILL BE OBTAINED FROM AN INSURANCE COMPANY IN SUCH
AMOUNT AS SUBSCRIBER SHALL DEEM NECESSARY TO PROTECT ITS INTERESTS.
SUBSCRIBER DOES NOT AND WILL NOT SEEK INDEMNITY FROM WELLS FARGO ALARM
AGAINST ANY DAMAGES OR LOSSES CAUSED BY HAZARDS TO SUBSCRIBER'S PROPERTY.
WELLS FARGO ALARM MAKES NO WARRANTY, EXPRESSED OR IMPLIED, THAT THE [*4]
SYSTEMS IT INSTALLS OR THE SERVICES IT FURNISHES WILL AVERT OR PREVENT
OCCURRENCES, OR THE CONSEQUENCES THEREFROM, WHICH THE SYSTEMS AND SERVICES
ARE DESIGNED TO DETECT. 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 SUBSCRIBER MAY OBTAIN A GREATER LIMITATION
OF LIABILITY, IF DESIRED, BY PAYMENT OF AN INCREASED ANNUAL RATE, WHICH
SHALL BE NEGOTIATED BETWEEN THE SUBSCRIBER AND WELLS FARGO ALARM UPON THE
REQUEST OF THE SUBSCRIBER IN WRITING.


On December 13, 1992, defendant's central monitoring station received an
alarm from plaintiff's store indicating a "Communication Channel Failure."
This signal alerts defendant's operators to [*5] the fact that the alarm is
not communicating and further warns that the premises is not protected. Upon
receiving this alarm, defendant's employees contacted the police and Jeffrey
Bouvier. Defendant's operator informed Jeffrey Bouvier that the alarm system
was working and that the store was fully protected. Subsequently, Gilbert
Bouvier called the Wells Fargo operator, who again asserted that the alarm
was functioning and that the store was protected. When Gilbert Bouvier
arrived at the Somerville store on Monday, December 14, he discovered that
the store had been burglarized.

Following this incident, defendant prepared an "Attack Alarm Report" wherein
it stated that "Customer was erroneously told that the primary system was
working when in this instance it was not." Moreover, defendant's operator,
Michelle Amirault, stated that she did not know the meaning of the term
"Communication Channel Failure."

DISCUSSION

As an initial matter, it is well settled that a contracting party can
utilize an exculpatory clause to exempt it from its own liability. Minassian
v. Ogden Suffolk Downs, Inc., 400 Mass. 490, 492, 509 N.E.2d 1190 (1987).
Although "any doubts about the interpretation [*6] of the release must be
resolved in the plaintiff['s] favor" such action is not necessary if the
release is unambiguous and comprehensive. Cormier v. Cent. Massachusetts
Chapter of the Nat'l Safety Council, 416 Mass. 286, 288, 620 N.E.2d 784
(1993). Thus, absent evidence of fraud, deceit or duress a court will
enforce an unambiguous exculpatory clause according to its terms. n1 See 416
Mass. at 288-89; see also Marsman v. Nasca, 30 Mass. App. Ct. 789, 799-800,
573 N.E.2d 1025 (1991) (provisions of exculpatory clause (pertaining to
Trustee's liability), although strictly construed, are held effective except
in instances of bad faith or intentional wrongdoing). This court finds that
the exculpatory clause is valid and will enforce the clause according to its
terms.

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n1 Plaintiff's argument that defendant fraudulently induced it to enter into
the contract is discussed infra, 1994 Mass. Super. LEXIS 640, *12.


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The exculpatory clause disclaims responsibility "for any . . . losses or
damages . . . directly or indirectly caused by performance [*7] or
nonperformance of any obligation imposed by this agreement or by negligent
acts or omissions of Wells Fargo Alarm . . ." Simply put, this clause bars
all of plaintiff's claims arising from defendant's negligent performance of
its contractual duties. See New England Watch Co. v. Honeywell, Inc., 11
Mass. App. Ct. 948, 416 N.E.2d 1010 (1981) (exculpatory clause bars
plaintiff's claims for negligence and breach of contract arising from
failure of defendant's alarm system). Accordingly, plaintiff's claims for
breach of contract (Count I) and negligence (Count III) will be dismissed.

Plaintiff asserts that the exculpatory clause does not protect against
liability for fraud or misrepresentation. As a general rule, a term
exempting a party from tort liability for intentional fraud or intentional
misrepresentation is unenforceable. Restatement (Second) of Contracts 195
(1981); see Burten v. Milton Bradley Co., 763 F.2d 461, 465 (1st Cir. 1985);
Marsman v. Nasca, 30 Mass. App. Ct. 789, 799-800, 573 N.E.2d 1025 (1991);
see also Houghland v. Security Alarms & Services, 755 S.W.2d 769, 773 (Tenn.
1988). Plaintiff, however, has not alleged that defendant's
misrepresentations [*8] were intentional; therefore these cases have no
bearing on plaintiff's claim.

Two types of misrepresentations are actionable in Massachusetts: intentional
misrepresentation and negligent misrepresentation. See Danca v. Taunton
Savings Bank, 385 Mass. 1, 7-10, 429 N.E.2d 1129 (1982); Joseph R. Nolan &
Laurie J. Sortorio, Tort Law 143 (1989). In an action for intentional
misrepresentation a plaintiff must prove "that the defendant made a false
representation of material fact with knowledge of its falsity for the
purpose of inducing the plaintiff to act thereon, and that the plaintiff
relied upon such representation as true and acted upon it to his damage."
Barrett Assocs., Inc. v. Aronson, 346 Mass. 150, 152, 190 N.E.2d 867 (1963),
quoting Kilroy v. Barron, 326 Mass. 464, 465, 95 N.E.2d 190 (1950); see
McEvoy Travel Bureau Inc. v. Norton Co., 408 Mass. 704, 709, 563 N.E.2d 188
(1990). Negligent misrepresentations are misrepresentations that occur
without the speaker's knowledge "that the statement is false if the truth is
reasonably susceptible of actual knowledge or otherwise expressed, if
through a modicum of diligence, accurate facts are available to the speaker.
n2 Acushnet [*9] Federal Credit Union v. Roderick, 26 Mass. App. Ct. 604,
605, 530 N.E.2d 1243 (1988) (citations omitted); see Danca v. Taunton
Savings Bank, supra, 385 Mass. at 7-10 (authorizing separate measure of
damages for negligent misrepresentation); Zimmerman v. Kent, 31 Mass. App.
Ct. 72, 82, 575 N.E.2d 70 (1991) (applying Danca measure of damages for
negligent misrepresentation). Although negligent misrepresentations are
technically fraudulent, courts have treated them more as negligence actions
than deceit actions. See Danca v. Taunton Savings Bank, supra at 9 (judge's
finding of negligence established recovery on grounds of negligent
misrepresentation); see also Joseph P. Nolan & Laurie J. Sartorio, Tort Law
143 (1989) (mere negligence in discovering falsity is not enough for deceit
action but is sufficient for negligence action).

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n2 Plaintiff, in its brief, recognizes that its cause of action rests upon
this type of misrepresentation. Plaintiff, however, fails to differentiate
between a negligent misrepresentation and an intentional misrepresentation
and summarily concludes that all misrepresentation is actionable. Indeed,
the Acushnet court recognized this distinction, ruling it was reversible
error for the trial judge to only instruct on intentional misrepresentation
when the facts supported a claim for negligent misrepresentation. Acushnet
Federal Credit Union v. Roderick, 26 Mass. App. Ct. 604, 606, 530 N.E.2d
1243 (1988).


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[*10]

As plaintiff's misrepresentation claim is essentially a negligence claim, it
stands to reason that the exculpatory clause would protect defendant from
liability arising from its negligent misrepresentations. See Nat'l Academy
of Sciences v. Cambridge Trust Co., 3 Mass. App. Ct. 314, 318, 329 N.E.2d
144 (1975) (court implying in dicta that exculpatory clause would protect
defendant from liability for negligent misrepresentations); see also Marsman
v. Nasca, supra, 30 Mass. App. Ct. at 799-800 (exculpatory clause held
effective except in instances of intentional wrongdoing). Accordingly,
plaintiff's claim for misrepresentation (Count II) will be dismissed.

Plaintiff further contends that the exculpatory clause does not foreclose
its claim for gross negligence. To date, Massachusetts appellate courts have
not addressed whether an exculpatory clause can bar claims for gross
negligence; rather the Supreme Judicial Court has simply held that such
clauses release parties from liability arising from "ordinary negligence."
Lee v. Allied Sports Associates. Inc., 349 Mass. 544, 551, 209 N.E.2d 329
(1965). In Gillespie v. Papale, 541 F. Supp. 1042 (D.Mass. 1982), Judge
Skinner considered [*11] whether, pursuant to Massachusetts law, a release
bars a party's claim for gross negligence. Judge Skinner recognized that
Massachusetts courts have not ruled on this matter, and following an
analysis of treatises and cases from other jurisdictions concluded that a
release is not effective to bar suits for gross negligence. Id. at 1046,
citing W. Prosser, Torts 68 (4th Ed. 1971); A. Corbin, Contracts 1472
(1964); Restatement (Second) of Contracts 195 (1981). Other jurisdictions,
however, have held that exculpatory clauses in alarm service contracts
effectively bar gross negligence claims. See, e.g., L. Luria & Son, Inc. v.
Honeywell, Inc., 460 So. 2d 521 (Fla.App. 1984); Continental Video Corp. v.
Honeywell, Inc., 422 So. 2d 35 (Fla.App. 1982); Purolator Security, Inc. v.
Wells Fargo Alarm Service, 141 Ill. App. 3d 1106, 491 N.E.2d 161, 96 Ill.
Dec. 347 (Ill.App. 1986); Stefan Jewelers v. Electro-Protective Corp., 161
Ga. App. 385, 288 S.E.2d 667 (Ga.App. 1982); Reed's Jewelers, Inc. v. ADT
Co., 43 N.C. App. 744, 260 S.E.2d 107 (N.C.App. 1979). In light of the
uncertainty of the issue, it seems to me prudent to submit the case to the
jury on special verdict [*12] questions concerning gross negligence. Judge
Skinner's opinion in Papale is very persuasive; and in any event the issue
should be preserved for appellate review after trial.

Furthermore, plaintiff argues, albeit unsuccessfully, that the entire
agreement is void because defendant fraudulently induced plaintiff to enter
into the contract. Plaintiff's basis for this argument centers on the
representations defendant's agent, Hopping, made to plaintiff. Hopping
stated that if the central monitoring station received a notice that the
telephone wires had been cut and the store was unprotected, then the
Bouviers would immediately be notified. Plaintiff claims that in reliance on
this representation it entered into the alarm service contract with
defendant. Thus, contends plaintiff, defendant's subsequent failure to
advise it of the "Communication Channel Failure" constituted a
misrepresentation which thereby rendered the contract void.

As a matter of law, an exculpatory clause does not bar subsequent actions
where the release was obtained by fraud or misrepresentation. Shane v.
Shane, 891 F.2d 976, 986 (1st Cir. 1989); Sher v. Sandler, 325 Mass. 348,
354, 90 N.E.2d 536 [*13] (1950). This rule applies to both fraudulent and
negligent misrepresentations. Yorke v. Taylor, 332 Mass. 368, 374, 124
N.E.2d 912 (1955); Restatement (Second) of Contracts 196 (1981). Although
false statements of fact are sufficient to rescind a contract, Yorke v.
Taylor, supra at 371, the ordinary rule is that "false statements of
opinion, of conditions to exist in the future, or of matters promissory in
nature are not actionable." Yerid v. Mason, 341 Mass. 527, 530, 170 N.E.2d
718 (1960); see USM v. Arthur D. Little Systems Inc., 28 Mass. App. Ct. 108,
110 n.2, 546 N.E.2d 888 (1989); Cassano v. Gogos, 20 Mass. App. Ct. 348,
353-54, 480 N.E.2d 649 (1985) (differentiating between promissory statements
and factual statements). An action for misrepresentation cannot be premised
on the mere nonperformance of a promise. Commonwealth v. True, 16 Mass. App.
Ct. 709, 711, 455 N.E.2d 453 (1983); see Galotti v. United States Trust Co.,
335 Mass. 496, 501, 140 N.E.2d 449 (1957); see also Houghland v. Security
Alarms & Services, 755 S.W.2d 769, 774 (Tenn. 1988); Keeton, Prosser &
Keeton on the Law of Torts, 109 (5th ed. 1984) (when a promise is made in
good faith the [*14] fact that it is subsequently broken does not give rise
to a cause of action for misrepresentation).

In this case, no reasonable interpretation of the evidence would allow a
finding of misrepresentation. Simply put, plaintiff has failed to establish
that defendant's agent misrepresented a material fact that induced plaintiff
to enter into the contract. See Shane v. Shane, supra at 986. At best, the
summary judgment record establishes that defendant promised to notify
plaintiff in the event the store's telephone wires were cut. The fact that
defendant later breached its promise is immaterial because defendant's
statements were essentially promissory in nature, and thus, not actionable
as misrepresentations. See Galotti v. United States Trust Co., supra at 501;
Commonwealth v. True, supra at 711, Yerid v. Mason, supra at 530.

As a final matter, this court chooses not to address plaintiff's G.L.c. 93A
claim at this time. Although the facts do not seem indicative of a c. 93A
violation, the interests of efficient judicial management mandate that the
trial judge make a final determination of the c. 93A claim after hearing the
evidence.

ORDER

Defendant's motion [*15] is ALLOWED as to Counts I, II and III; DENIED as
to Counts IV and V. Plaintiff's motion for summary judgment is DENIED.