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gross  negligence / more comment on changing exculpatory clause
January 24, 2018
more comment on changing exculpatory clause from January 15, 2018
    If fraud  is included as part of the Exculpatory clause, what are chances, if the fraud part is contested (and honored by the judge/jury), that the whole clause would be deemed inadmissible?  Might the fraud exclusion be better included in a separate paragraph/section/etc? Or labeled as something different than and Exculpatory clause .......  Or would that make any difference? That is ..... is an Exculpatory clause by any other name, still and Exculpatory clause?
    With regard to your questions:
    As far as getting the contract signed ..... either they sign it ...or they don't. No contract, No alarm system.  And  ......If someone has to avoid committing fraud ...... well ....... What can I say? They're probably walking too close to the edge as it is. 
Reliable Alarm
gross  negligence
    We are using your All in One Commercial contract and have a question. Our customer understands that under normal situations we would not be responsible beyond the stated limitation for an error we made that caused or allegedly caused the customer to have losses. The customer is asking what if whatever we did or didn’t do rises to the level of “gross” negligence. If that were the case our customer would like to be able to claim or sue for a higher amount. Is there anything in the contract that addresses gross negligence?
Eric Levy
    Are there two more dreaded words an alarm company can hear?  [how about - I went with someone else;   or, "you're under arrest - well those aren't two words].    The bane of the alarm industry, it's owners and it's insurance companies.  
    Gross negligence is fairly well defined in all of the jurisdictions, and typically it means "willful and reckless conduct intended to cause harm to another".  Often it is defined as as "great" negligence.  These sweeping definitions, however, do little to tell us what in fact constitutes gross negligence, especially in the context of providing alarm services.  Sort of like the famous Supreme Court line regarding pornography, "not sure what it is but I'll know it when I see it", or something like that.  
    What we do have is a healthy body of case law that tells us what is not gross negligence.  These cases developed through court decisions where judges granted motions to dismiss the case based on the exculpatory and limitation of liability clauses.  Each case had different fact patterns which the judges determined that, as a matter of law, did not meet the threshold for gross negligence. 
    There are also cases where judges have held that there might be gross negligence, leave it to the jury after a trial.  I am not aware of any cases where an alarm company has had a finding of gross negligence after trial [doesn't mean there are none - any attorneys who read this without contributing feel like sharing?]   
    But let's step out of the legal discussion and definition of gross negligence.  How does the Standard Form Agreement deal with it?  Well, if you have an updated contract - updated more than 10 or 15 years ago - your contract will not mention gross negligence as being affected by the exculpatory clause or limited by the limitation of liability clause.  And it shouldn't.
    You will be asked by subscribers and their lawyers to affirmatively state that your liability will not be waived or limited if you are found guilty of gross negligence.  You can agree to this because that's the law anyway in most jurisdictions.  A handful of cases hold that gross negligence is merely a higher level of negligence and will be treated as negligence, thus the contract terms will be enforced.  I am not suggesting that you should routinely agree to this change, but if the customer is important enough to you then it's an acceptable change.  After all, you probably should be liable if you are guilty of gross negligence.  That would be one step behind burglarizing the subscriber or starting the fire yourself.  
    The real concern is that complaints in lawsuits allege all kinds of theories.  They are suppose to allege facts, but generalizations and conclusions are typically accepted in pleadings and rarely challenged.  So the complaint comes in alleging "gross negligence" no matter what scenario precedes the conclusion.  So you have to defend the case and your insurance company has to defend the case.  When the carrier engages it's house counsel or the cheapest attorneys they can find, they don't know what they are looking at and mess up the case, causing you much aggrevation and waste of time.  Eventually the contract holds up when someone gets around to reading it.  
    Guess that enough ranting for today.   The updated contracts [for the last 10 years at least] state "negligence to any degree".  You can look for that - then update the contract if its more than 2 years old.


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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
516 747 6700