Mark Peterson, et al., Appellants, v. Honeywell, Inc., Respondent.
COURT OF APPEALS OF MINNESOTA
February 8, 1994, Filed

NOTICE: [*1] THIS OPINION WILL BE UNPUBLISHED AND MAY NOT BE CITED EXCEPT
AS PROVIDED BY MINN. STAT. Sec. 480A.08, SUBD. 3 AS AMENDED.

SUBSEQUENT HISTORY: As Corrcted. Petition for Review Filed March 9, 1994.
Petition for Review Denied April 15, 1994, Reported at: 1994 Minn. LEXIS
291.
PRIOR HISTORY: Appeal from District Court, Hennepin County; District Court
File No. CT9123003. Hon. Daniel H. Mabley, Judge.
DISPOSITION: Affirmed.
CASE SUMMARY

PROCEDURAL POSTURE: Appellant homeowners challenged a judgment of the
District Court, Hennepin County (Minnesota), which granted summary judgment
in favor of respondent installer in the homeowners' action to recover
damages for personal injury and property damage allegedly caused by a
defective home fire alarm system.

OVERVIEW: The installer upgraded the homeowners' fire alarm system and
warranted that the system would be free from defects and promised to repair
defective equipment or parts. There was a general warranty disclaimer that
the installer was not responsible for any indirect, consequential or
incidental damages. The installer conceded that the system was not fully
functional after installation as it did not yet relay the alarm signal to
the fire department. The homeowners' house was completely destroyed by fire.
The homeowners settled their claim against the installer and their insurer
pursued subrogation rights in the homeowners' names. The trial court granted
summary judgment for the installer. Affirming, the court held that an
exculpatory clause clearly made the homeowners solely responsible for
persons and property. Because the homeowners called the fire department
almost simultaneously with the sounding of the home alarm, there was no
evidence that the inoperative signal relay system proximately caused the
resulting harm.


OUTCOME: The court affirmed the trial court's judgment.

COUNSEL: For Mark Peterson, et al., Appellants: Stephen G. Lickteig,
Fetterly & Gordon, P.A., Minneapolis, MN.

For Honeywell, Inc., Respondent: Richard J. Nygaard, William J. Egan, Eric
J. Magnuson, Rider, Bennett, Egan & Arundell, Minneapolis, MN.

JUDGES: Considered and decided by Short, Presiding Judge, Crippen, Judge and
Kalitowski, Judge.

OPINIONBY: GARY L. CRIPPEN

OPINION: UNPUBLISHED OPINION

CRIPPEN, Judge.

Appellants Mark Peterson and Barbara Jerich appeal summary judgment for
Honeywell, Inc. on their suit to recover damages for personal injury and
property damage allegedly caused by a defective home fire alarm system. We
affirm.

FACTS

Appellants signed a "Residential Agreement" with Honeywell to upgrade his
home fire alarm by installing several additional fire detection devices and
providing monitoring services. The Agreement warranted that the fire alarm
system would be free from defects in material and workmanship for a year,
and promised to repair defective equipment or parts [*2] during that
period. This warranty was followed by a general warranty disclaimer, ending
with the declaration that "in no event will Honeywell be responsible for any
indirect, consequential or incidental damages."

In addition to the warranty disclaimer, the Agreement included the following
exculpatory clause:
Customer agrees that Customer retains the sole responsibility for the life
and health of persons in the premises,; [sic] for protecting against
property or personal injury losses in the premises for both Customer and
others. Customer agrees that Honeywell is not responsible for personal
injury or other losses which are alleged to be caused by improper operation,
or non-operation of the system, including cases where the system never
functions, whether due to defects in the system or Honeywell's acts or
omissions in receiving and responding to alarm signals.


Finally, the Agreement expressly limited any liability that did arise on the
part of Honeywell to $ 250.

Honeywell installed the upgrades and tested the equipment to ensure that the
system was in working order. Honeywell concedes that the system was not
fully functional after installation. While the system was set up [*3] to
sound an alarm in the event of a fire, it did not yet automatically relay
the alarm signal to the local fire department. Honeywell intended to place
the system fully in service only after instructing Peterson on how to
operate it, so as to minimize the occurrence of false alarms.

Five days after Honeywell had installed the upgraded system, and while it
still was not in service, a fire destroyed the appellants' home. The family
was awakened by the smell of smoke, but no alarm sounded until several more
minutes passed. The family called "911" and fled to safety. Peterson
sustained minor injuries and the house was a total loss.

Computer records maintained by Honeywell indicated that the fire alarm in
the Peterson-Jerich house sounded three times within a period of about four
minutes. The first alarm sounded approximately one minute before the 911
call was placed. Almost immediately after the third alarm sounded, the
encroaching fire interrupted the alarm circuitry and the system shut down.

The appellants filed suit against Honeywell, asserting causes of action in
negligence, strict liability, misrepresentation, and violation of the
Uniform Deceptive Trade Practices Act, Minn. Stat. [*4] §§ 325D.43-.48
(1990), the Unlawful Trade Practices Act, Minn. Stat. §§ 325D.09-.16 (1990),
and the Prevention of Consumer Fraud Act, Minn. Stat. §§ 325F.68-.70 (1990.)

The appellants subsequently signed a "Settlement Agreement and Release" with
Honeywell. The settlement agreement extinguished all claims by Peterson and
Jerich against Honeywell but appeared to preserve the subrogation rights of
Atlantic Mutual Insurance Company, their fire insurance carrier. Atlantic
Mutual continued to pursue this litigation against Honeywell in the
appellants' names.

The trial court granted summary judgment on all counts for Honeywell,
holding that the exculpatory language in the Residential Agreement protected
Honeywell from liability for common law negligence, strict liability, and
misrepresentation. The trial court further ruled that, to the extent that
the exculpatory language did not protect Honeywell from liability for
statutory misrepresentation, Atlantic Mutual had no claim under the
Minnesota trade and consumer protection laws because the company was not a
"person injured" within the meaning of the private attorney general act.
Minn. Stat. § 8.31, subd. 3a (1990).

The appellants challenge [*5] these determinations, except that they do not
appeal the judgment for Honeywell on the strict liability claim.

DECISION

On appeal from summary judgment, the reviewing court must determine whether
there are any material issues of fact and whether the trial court erred in
applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). A
material fact is one whose resolution would affect the outcome of the case.
Foley v. Allard, 427 N.W.2d 647, 649 (Minn. 1988).

I. Exculpatory Clause

Exculpatory clauses are not favored in the law. Schlobohm v. Spa Petite,
Inc., 326 N.W.2d 920, 923 (Minn. 1982). A clause exonerating a party from
liability will be strictly construed against the benefitted party. Id.

The appellants contend that the term "defects in the system" should be
strictly construed against Honeywell in such a way that it would apply only
to defects in equipment, not to any negligence of Honeywell employees in
inspecting, installing, or testing the equipment. But judicial construction
of a contract generally is inappropriate in the absence of ambiguity. n1
Schlobohm, 326 N.W.2d at 923 [*6] (citing Telex Corp. v. Data Prods, Corp.,
271 Minn. 288, 294, 135 N.W.2d 681, 686 (1965)). A contract is ambiguous if
it is susceptible to more than one meaning based on its language alone.
Metropolitan Sports Facilities Comm'n v. General Mills, Inc., 470 N.W.2d
118, 123 (Minn. 1991); St. Paul Fire & Marine v. National Computer, 490
N.W.2d 626, 631 (Minn. App. 1992) (contract ambiguous where language
reasonably subject to more than one interpretation), pet. for rev. denied
(Minn. Nov. 17, 1992). If a contract is unambiguous, then the court should
give effect to the plain, ordinary, and popular meaning of its words. Lowry
v. Kneeland, 263 Minn. 537, 540, 117 N.W.2d 207, 210 (1962) (citing
Tomlyanovich v. Tomlyanovich, 239 Minn. 250, 253, 58 N.W.2d 855, 857 (1953)
(words in contracts must be given meaning they ordinarily convey).

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n1 The appellants contend in their brief that the exculpatory clause was
ambiguous. But at oral argument they contended that the exculpatory clause
clearly was unrelated to their claims.


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An examination of the common meanings of the words "defect" and "system"
shows no ambiguity as they apply to the agreement of the parties. "Defect"
means a shortcoming or flaw. Webster's New Twentieth Century Dictionary 475
(2d ed. 1983). "System" means an arrangement of parts to form a whole, or an
orderly way of doing something. Id. at 1853. The agreement provided for both
the sale of goods and the provision of services. Together, those goods and
services formed the fire alarm "system;" a system designed, installed,
tested, and monitored so as to achieve its intended purpose of sounding an
alarm in the event of a fire.

In the context of the agreement, a "defect in the system" meant any
shortcoming in any combination of goods and services rendered by Honeywell
to make the fire alarm system work as intended. The system included the
individual equipment components, their layout, installation and testing, and
the monitoring and relaying of alarm signals.

We note further that the exculpatory clause clearly provided that Peterson
and Jerich were solely responsible for the protection of property and
persons. This sentence was not modified by any limiting circumstances (such
as sole [*8] responsibility "for defects in equipment only"). We decline to
apply a narrower meaning than is apparent by the plain meaning of the words.
The exculpatory clause deals with malfunctions, and contains the phrase
"including cases where the system never functions, whether due to defects in
the system or Honeywell's acts or omissions in receiving and responding to
alarm signals." By the use of the word "including," the list of
circumstances under which the alarm system might fail was not intended to be
exclusive.

The exculpatory clause was not ambiguous and does not warrant the limited
construction urged by the appellants.

Finally, the appellants do not challenge the validity of the limitation of
liability clause. Even if the exculpatory clause did not protect Honeywell
from liability for the failure of the fire alarm system, its liability was
limited to $ 250 as provided in the agreement.

At the heart of the appellants' argument that the exculpatory clause does
not cover service failures is another serious flaw. The record includes no
evidence that this particular system failure was caused by a service or
installation failure, rather than an equipment malfunction.

II. Willful or [*9] Wanton Negligence/Misrepresentation

The appellants next argue that even if the purpose and effect of the
exculpatory clause was clear on its face, as a matter of public policy it
did not protect Honeywell from liability for misrepresentation or for acts
of willful and wanton negligence. n2 See Morgan Co. v. Minnesota Mining &
Mfg. Co., 310 Minn. 305, 246 N.W.2d 443, 448 (1976) (valid exculpatory
clause, covering acts of negligence, not applicable to claims of "willful
and wanton negligence, intentional misconduct, and fraud and
misrepresentation"); Otis Elev. Co. v. Don Stodola's Well Drilling Co., 372
N.W.2d 77, 78 (Minn. App. 1985), pet. for rev. denied (Minn. Oct. 11, 1985);
Schlobohm, 326 N.W.2d at 923.

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n2 In their brief, the appellants also allege that Honeywell was liable for
gross negligence. But in their complaint, the appellants allege wilful and
wanton negligence only. An appellate court reviews only issues that were
raised before the trial court. In re Welfare of D.S.S., 506 N.W.2d 650, 653
(Minn. App. 1993) (citing Greer v. Kooiker, 312 Minn. 499, 511-12, 253
N.W.2d 133, 142 (1977)).


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Willful and wanton negligence is the failure to exercise ordinary care after
discovering a person or property in a position of peril. Bryant v. Northern
Pac. Ry., 221 Minn. 577, 585, 23 N.W.2d 174, 179 (1946). It contemplates
that the injury to be avoided is not only foreseeable, but impending. Thus a
cause of action for willful and wanton negligence arises where there has
been "a reckless disregard of the safety of the person or property of
another by failing after and not before discovering the peril to exercise
ordinary care to prevent the impending injury." Brannan v. Shertzer, 242
Minn. 277, 280, 64 N.W.2d 755, 757 (1954) (emphasis in the original); see
also Spartz v. Krebsbach, 226 Minn. 46, 47, 31 N.W.2d 917, 918 (1948)
(willful negligence embraces conduct where infringement of another's right
intended, and where foreseen that the conduct will result in such invasion).

The appellants' allegations that Honeywell failed to adequately inspect,
install, and test the fire alarm system do not establish a basis for claims
of willful and wanton [*11] negligence, because the appellants were not in
peril before the fire began in their home. The appellants presented no facts
showing that, after the fire began, Honeywell either intentionally or
negligently failed to act with ordinary care.

Also, the evidence that Honeywell had not placed the fire alarm system in
service at the time of the fire was insufficient to withstand summary
judgment on the negligence claim. Because appellants called the fire
department almost simultaneously with the sounding of the home alarm, there
is no evidence that Honeywell's inoperative signal relay system proximately
caused the harm that resulted. The trial court did not err in granting
judgment for Honeywell on the issue of willful or wanton negligence.

The appellants asserted a claim against Honeywell in negligent
misrepresentation only, not fraudulent misrepresentation. Negligent
misrepresentation produces liability for pecuniary loss caused by
justifiable reliance upon the information. Florenzano v. Olson, 387 N.W.2d
168, 174 n. 3 (Minn. 1986) (citing Bonhiver v. Graff, 311 Minn. 111, 122,
248 N.W.2d 291, 298-99 (1976)). [*12]

The appellants allege that they relied to their pecuniary loss on two
representations made by Honeywell. First, Honeywell advertising and sales
personnel stated that their fire alarms worked "at the first whiff of
smoke." Second, after Honeywell had installed the system upgrades, Jerich
discussed with a service representative "the fact that the system was up and
running."

The appellants had no basis for justifiably relying upon either of the two
statements. Because they could not rely upon them, the statements did not
cause the pecuniary loss. The Agreement specifically disclaimed any implied
warranty of merchantability or fitness for a particular purpose. In
particular, the Agreement stated that Honeywell would not guarantee that the
system or service would in every case provide the protection for which it
was intended. The trial court did not err in entering judgment for Honeywell
on the appellants' misrepresentation claims.

III. Statutory Claims

The appellants' statutory cause of action was founded on allegations of
negligent misrepresentation. Neither party has addressed whether claims of
statutory misrepresentation require elements of proof separate and distinct
from those [*13] under common law. The Consumer protection Act provides
that in order to state a cause of action there must be an "intent that
others rely (on false representations) in connection with the sale of any
merchandise." Minn. Stat. § 325F.69, subd. 1. The Unlawful Trade Practices
Act prohibits conduct that tends to "mislead" consumers. Minn. Stat. §
325D.09. The Uniform Deceptive Trade Practices Act offers remedies otherwise
available against "the same conduct under the common law or other statutes."
Minn. Stat. § 325D.45, subd. 3. We conclude the statutory scheme before us
makes no attempt to alter the plaintiff's common law burden.

To establish a claim of damages for misrepresentation under the trade and
consumer protection statutes, the plaintiff must establish the elements of
common law misrepresentation, including justifiable reliance and proximate
cause for pecuniary loss. See Nordale, Inc. v. Samsco, Inc., 830 F. Supp.
1263, 1271-72 (D. Minn. 1993) (negligent misrepresentation claim dismissed
for want of justifiable reliance; statutory misrepresentation claim
dismissed where purchasing decision not caused by reliance on allegedly
deceptive practices); [*14] Carlock v. Pillsbury Co., 719 F. Supp. 791,
849-50 (D. Minn. 1989) (statutory cause of action made out by proving
elements of negligent misrepresentation) (citing In re Professional
Financial Services, 703 F. Supp. 1388, 1397 (D. Minn. 1989)); LeSage v.
Norwest Bank Calhoun-Isles, 409 N.W.2d 536, 539 (Minn. App. 1987) (to
establish claims of statutory misrepresentation, plaintiffs must prove "the
proper legal nexus between the complained of facts and their alleged
monetary losses"); Yost v. Millhouse, 373 N.W.2d 826, 830-31 (Minn. App.
1985) (defendant liable for misrepresentation under Consumer Protection Act
where plaintiff would not have purchased horse but for defendant's
assurances that horse was registered). Compare United Wild Rice, Inc. v.
Nelson, 313 N.W.2d 628, 634-35 (Minn. 1982) (tort of disparagement same
under common law and under Deceptive Trade Practices Act.)

Because the appellants could not sustain a common law cause of action in
negligent misrepresentation, we conclude that neither could they sustain a
statutory [*15] cause of action for misrepresentation.

The trial court properly entered judgment for Honeywell on all claims.

Affirmed.

Gary L. Crippen

February 1, 1994