S & M GOLDEN, INC., d/b/a FOODLANE MARKET, Plaintiff-Appellant, v ALARM
MANAGEMENT II, L.L.C., d/b/a SONITROL TRI COUNTY, Defendant-Appellee.

No. 263722

COURT OF APPEALS OF MICHIGAN

2006 Mich. App. LEXIS 176


January 19, 2006, Decided

NOTICE: [*1] THIS IS AN UNPUBLISHED OPINION. IN ACCORDANCE WITH MICHIGAN
COURT OF APPEALS RULES, UNPUBLISHED OPINIONS ARE NOT PRECEDENTIALLY BINDING
UNDER THE RULES OF STARE DECISIS.

PRIOR HISTORY: Wayne Circuit Court. LC No. 04-430804-CZ.

DISPOSITION: Affirmed.

CORE TERMS: gross negligence, liquidated damages, alarm, discovery,
breached, detected, console, nonmoving party, unauthorized entry, false
alarm, monitoring, notify, night, duty, factual support, contractual, proper
authorities, question of fact, security system, homeowner, notified,
reckless

JUDGES: Before: Cavanagh, P.J., and Cooper and Donofrio, JJ.

OPINION:

PER CURIAM.

Plaintiff S & M Golden, Inc. appeals as of right the trial court's order
granting defendant Alarm Management II's motion for summary disposition
pursuant to MCR 2.116(C)(10) in this action for breach of contract and gross
negligence. We affirm.

I. Facts and Procedural History

Plaintiff contracted with defendant to provide security monitoring services
at its place of business, Foodlane Market. In exchange for a $ 60 monthly
fee, defendant agreed to monitor plaintiff's security system and, "when
warranted," to notify the police if the system detected an unauthorized
entry or other emergency. The parties' service contract included a
conspicuous "limitations of damages" provision. That provision stated, in
relevant part, that defendant "is not an insurer and that insurance, if any,
covering personal injury and property loss or damage . . . shall be obtained
by [*2] [plaintiff], at [plaintiff's] sole expense." The contract also
included a liquidated damages clause, which limited plaintiff's monetary
damages in the event that defendant was found liable for any loss incurred:
CLIENT UNDERSTANDS AND AGREES THAT IF DEALER SHOULD BE FOUND LIABLE FOR ANY
LOSS OR DAMAGE DUE FROM A FAILURE TO PERFORM ANY OF ITS OBLIGATIONS. . .
DEALER'S LIABILITY SHALL BE LIMITED TO A SUM EQUAL TO THE TOTAL OF ONE-HALF
YEAR'S MONITORING PAYMENTS, OR FIVE HUNDRED DOLLARS ($ 500) WHICHEVER IS THE
LESSER, AS LIQUIDATED DAMAGES . . . AND THIS LIABILITY SHALL BE EXCLUSIVE
AND SHALL APPLY IF LOSS OR DAMAGE, IRRESPECTIVE OF CAUSE OR ORIGIN, RESULTS
DIRECTLY OR INDIRECTLY TO PERSONS OR PROPERTY FROM PERFORMANCE OR
NON-PERFORMANCE OF ANY OF DEALER'S OBLIGATIONS OR FROM NEGLIGENCE, ACTIVE OR
OTHERWISE OF DEALER, ITS EMPLOYEES OR AGENTS. n1



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n1 Plaintiff does not contend that this contract is unenforceable. In fact,
in St Paul Fire & Marine Ins Co v Guardian Alarm Co of Michigan, 115 Mich.
App. 278; 320 N.W.2d 244 (1982), this Court found an identical limitations
of damages provision to be enforceable against the client of an alarm
monitoring company. See also USAA Group v Universal Alarms, Inc, 158 Mich.
App. 633; 405 N.W.2d 146 (1987).


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At 4:53 a.m. on June 22, 2004, the security system at plaintiff's store
detected an unauthorized entry. The console operator at defendant's
headquarters immediately notified the local police department and
plaintiff's designated representative. The officers who responded to the
scene informed the console operator that there was no sign of forced entry.
Therefore, the operator determined that the signal was only a false alarm.
The following night, the same console operator received an alarm signal that
plaintiff's system had again detected an unauthorized entry. The operator,
acting alone, decided that this was another false alarm and, as a result,
failed to contact law enforcement or plaintiff's representative. In the
morning, one of plaintiff's employees discovered that Foodlane Market had,
in fact, been burglarized during the night. As a result, plaintiff suffered
$ 60,000 in damages.

Defendant admitted that its operator violated company policy by failing to
notify the proper authorities of the alarm and offered plaintiff $ 360, the
maximum liquidated damages for its loss. Plaintiff refused this offer and
filed suit. Plaintiff contended that the liquidated damages clause was
inapplicable [*4] under the circumstances, as the conduct of defendant's
console operator amounted to gross negligence. Although plaintiff had served
notice of its intent to depose the chief executive officer of defendant's
corporation, the trial court granted defendant's motion for summary
disposition prior to the close of discovery. The trial court determined
based on the pleadings that the plaintiff could not create a question of
fact on the issue of gross negligence. Accordingly, the court determined
that plaintiff's recovery was limited by the contract and dismissed its
claims against defendant.

II. Summary Disposition

Plaintiff contends that the trial court improperly, and prematurely, granted
defendant's motion for summary disposition. While defendant's employee
clearly should have notified the police of the alarm, we must agree with the
trial court that plaintiff cannot support its claim of gross negligence.

We review a lower court's determination regarding a motion for summary
disposition de novo. n2 A motion under MCR 2.116(C)(10) tests the factual
support of a plaintiff's claim. n3 "In reviewing a motion for summary
disposition brought under MCR 2.116(C)(10) [*5] , we consider the
affidavits, pleadings, depositions, admissions, or any other documentary
evidence submitted in [the] light most favorable to the nonmoving party to
decide whether a genuine issue of material fact exists." n4 Summary
disposition is appropriate only if there are no genuine issues of material
fact, and the moving party is entitled to judgment as a matter of law. n5 As
a general rule, a trial court should only grant a party's motion for summary
disposition following the completion of discovery. However, dismissal may be
appropriate earlier if "there is no disputed issue [of fact] before the
court or if further discovery does not stand a fair chance of finding
factual support for the nonmoving party." n6 The nonmoving party bears the
burden of producing "'some independent evidence that a factual dispute
exists.'" n7

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n2 MacDonald v PKT, Inc, 464 Mich. 322, 332; 628 N.W.2d 33 (2001).


n3 Auto-Owners Ins Co v Allied Adjusters & Appraisers, Inc, 238 Mich. App.
394, 396-397; 605 N.W.2d 685 (1999).


n4 Singer v American States Ins, 245 Mich. App. 370, 374; 631 N.W.2d 34
(2001). [*6]



n5 MacDonald, supra at 332.


n6 VanVorous v Burmeister, 262 Mich. App. 467, 476-477; 687 N.W.2d 132
(2004).


n7 Id. at 477, quoting Michigan Nat'l Bank v Metro Institutional Food
Service, Inc, 198 Mich. App. 236, 241; 497 N.W.2d 225 (1993).


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It is undisputed that defendant breached its contract with plaintiff.
Defendant admitted that its agent violated company policy and offered
plaintiff the applicable liquidated damages amount for its loss. Contrary to
plaintiff's assertion, however, its damages are limited by the parties'
contract. While a party may not contractually limit its liability for gross
negligence as a matter of public policy, it may freely limit its liability
for ordinary negligence. n8 To establish a claim of ordinary negligence, a
plaintiff must show: (1) that the defendant owed the plaintiff a duty; (2)
that the defendant breached that duty; (3) causation; and (4) damages. n9 To
establish gross negligence, a plaintiff must show that the defendant engaged
in "'conduct so reckless as to [*7] demonstrate a substantial lack of
concern for whether an injury results.'" n10 Evidence of ordinary negligence
will not suffice to create a material question of fact concerning gross
negligence. n11

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n8 See Xu v Gay, 257 Mich. App. 263, 269; 668 N.W.2d 166 (2003); Universal
Gym Equipment, Inc v Vic Tanny Int'l, Inc, 207 Mich. App. 364, 367-368; 526
N.W.2d 5 (1994), vacated in part on other grounds 209 Mich. App. 511; 531
N.W.2d 719 (1995).


n9 Henry v Dow Chemical Co, 473 Mich. 63, 71-72; 701 N.W.2d 684 (2005).


n10 Xu, supra at 269, quoting Jennings v Southwood, 446 Mich. 125, 136; 521
N.W.2d 230 (1994). In Xu, this Court extended the statutory definition of
"gross negligence" found in several immunity statutes and the standard jury
instructions, M Civ. JI 14.10, to a case involving a contractual waiver of
liability. This Court reasoned that a contractual waiver of liability, like
an immunity statute, "serves to insulate against ordinary negligence, but
not gross negligence." Xu, supra at 269. [*8]



n11 Maiden v Rozwood, 461 Mich. 109, 122-123; 597 N.W.2d 817 (1999).


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Defendant was clearly negligent. Its employee breached defendant's
contractual duty to notify the police when the alarm system detected a
break-in, resulting in a significant loss to plaintiff. However, plaintiff
has not established, and could not establish by further discovery, that
defendant's conduct amounted to gross negligence. Defendant breached its
duty on a single occasion-one night after a purported false alarm at
plaintiff's store. This case is similar to this Court's opinion in USAA
Group v Universal Alarms, Inc. n12 In USAA Group, a private home was
destroyed by fire. The homeowner and his insurance company asserted that the
alarm monitoring company servicing the home was liable for the damages,
either because the alarm malfunctioned or because its agents failed to
contact the proper authorities. n13 This Court enforced the liquidated
damages clause in the parties' contract against the homeowner. n14 Under
these circumstances, plaintiff cannot establish that the operator's conduct
[*9] was so reckless as to demonstrate a substantial lack of concern for
whether an injury results. Accordingly, the trial court properly determined
that plaintiff's recovery from defendant was limited to the remedy provided
by the contract's liquidated damages clause.

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n12 USAA Group, supra.


n13 Id. at 635.


n14 Id.


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Affirmed.

/s/ Mark J. Cavanagh

/s/ Jessica R. Cooper

/s/ Pat M. Donofrio