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NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, ET AL., Plaintiffs-Appellants -vs- SONITROL, INC. OF CLEVELAND, ET AL., Defendants-Appellees

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, ET AL., Plaintiffs-Appellants -vs-
SONITROL, INC. OF CLEVELAND, ET AL., Defendants-Appellees

COURT OF APPEALS OF OHIO, EIGHTH APPELLATE DISTRICT, CUYAHOGA COUNTY;109
Ohio App. 3d 474; 672 N.E.2d 687; 1996 Ohio App. LEXIS 412; February 8,
1996, DATE OF ANNOUNCEMENT OF DECISION
CHARACTER OF PROCEEDING: Civil appeal from Cuyahoga County Common Pleas
Court. Case Nos. CV-199184 and CV-218128.
DISPOSITION: JUDGMENT: AFFIRMED.


CASE SUMMARY
PROCEDURAL POSTURE: In consolidated cases, appellants, an insurer and a
school board, sought review of a decision from the Cuyahoga County Common
Please Court (Ohio) that granted appellee security company's motion for
summary judgment. The insurer claimed that it was entitled to pursue an
action against the company pursuant to the subrogation clause. The school
board sought damages for the costs due to a fire which had not been covered
by the insurer's policy.
OVERVIEW: In its first contention, the insurer contended that the trial
court erred in granting summary judgment for the company because the alleged
waiver of subrogation clause was ineffective to waive the school board's and
the insurer's subrogation rights. The court disagreed. The court found that
the board had signed a contract with the company which contained several
clauses alerting the board to the facts that the company's services were
offered with only a limited warranty and that the company suggested that the
board purchase insurance to cover any losses. The court found that the
waiver of subrogation clause was both clear and reasonable. Since the
insurer stood in the board's place and the board waived its right of
recovery against the company, the trial court did not err in granting the
motion for summary judgment. The insurer and the board also contended that
the company committed the tort of willful and wanton misconduct. The court
held that the insurer and the board had not proven that the company's
actions were in breach of the contract or that its actions were in any way
willful or wanton so as to either create tort liability or void the waiver
of subrogation clause.
OUTCOME: The court affirmed the trial court's decision that granted the
company's motion for summary judgment against the insurer and the school
board in their consolidated action against the company.
COUNSEL:

APPEARANCES:

For Plaintiffs-Appellants: MARILLYN FAGAN DAMELIO, Esq., JENNIFER L.
VINCIGUERRA, Esq., 323 Lakeside Avenue, West, Lakeside Place, Suite 410,
Cleveland, Ohio 44113.

For Defendant-Appellee Sonitrol, Inc. of Cleveland: ROY A. HULME, Esq.,
CLIFFORD C. MASCH, Esq., 113 St. Clair Building, Cleveland, Ohio 44114.

For Defendant-Appellee U.S. Protective Services Corp.: BRIAN M. EISENBERG,
Esq., 1800 Society Building, Cleveland, Ohio 44114.

JUDGES: JOSEPH J. NAHRA, PRESIDING JUDGE. KARPINSKI, J., and McMONAGLE,
TIMOTHY E., J., CONCUR.

OPINIONBY: JOSEPH J. NAHRA

OPINION: [*476] [**688]

JOURNAL ENTRY AND OPINION

NAHRA, P.J.:

In these consolidated cases, plaintiffs-appellants Nationwide Mutual Fire
Insurance Company ("Nationwide") and the North Olmsted City School District
Board of Education ("the Board") appeal from the trial court orders which
granted the motions for summary judgment filed by defendants-appellees
Sonitrol, Inc. of Cleveland and U.S. Protective Services Corp. (hereinafter
[***2] "Sonitrol"). n1

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


n1 Appellees are referred to in the singular because the record reflects
that in mid-1990, U.S. Protective Services Corp. became a successor to
Sonitrol, Inc. of Cleveland.


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

These appeals stem from a fire which devastated North Olmsted High School on
September 16, 1990. It was later determined the fire had been started by two
juveniles who first broke into the school building through an office window
at approximately 3:00 a.m. of that morning. The juveniles spent some time
ransacking the office, exited through the broken window, broke another
office window, reentered the building, and then spent more time vandalizing
the second office. The juveniles eventually exited the school building
through the second window, but before leaving they deposited a lit cigarette
near an overturned oil lamp. The fire which resulted was ultimately
discovered at approximately 6:00 a.m. by a North Olmsted police officer. By
the time the fire was extinguished, the school building had suffered over
three million dollars [***3] in damage.

[*477] The Board had an insurance policy with Nationwide which applied to
cover the fire damages to the high school building. The Board was forced,
however, to incur additional expenses during the time the building was
unusable in order to continue to provide the required educational services
to the community.

Prior to the fire, the high school building had been equipped with a
security system originally purchased by the Board from Sonitrol in the early
1980s. Sonitrol also installed and monitored the system, which was designed
to detect burglaries.

Throughout the time the system was in use, it was occasionally altered to
the Board's specifications. The most recent contract between the parties
regarding the system had been executed in March 1988 and was for a term of
three years. At its outset, the contract provided that Sonitrol would
install and service a burglary alarm system "without liability and not as an
insurer, ...." The system to be installed was subject to a limited warranty.

The initial terms of the limited warranty were set forth in capital letters,
followed by an underscored provision indicating Sonitrol would "not be
liable for any general, direct, [***4] ... incidental or consequential
damages." Indeed, that Sonitrol's liability was limited was repeated several
times in the language of the limited warranty. The warranty's terms further
indicated the Board's acknowledgment that Sonitrol did not represent
[**689] the system "may not be compromised, circumvented or ... will in all
cases provide the signaling, monitoring and response for which it was
intended: ...."

After setting forth the terms of the limited warranty, the contract provided
that if Sonitrol received from the system a signal indicating a burglary was
occurring, Sonitrol's operator would "make every reasonable effort to
identify the signal, and when warranted" would notify both the local police
department and the designated representatives of the Board. Moreover, the
Board agreed to hold Sonitrol harmless from "any damage, loss or liability"
which might result if Sonitrol in its discretion deemed it necessary to turn
off the alarm for some reason.

Paragraph 14 of the contract further provided in pertinent part the
following:
14. A. It is understood and agreed by the parties hereto that DEALER is not
an insurer and that insurance, if any, covering [***5] personal injury and
property loss or damage on CLIENT'S premises shall be obtained by CLIENT;
that the payments provided for herein are based solely on the value of the
service as set forth herein and are unrelated to the value of CLIENT'S
property or the property of others located on CLIENT's premises; that DEALER
makes no guarantee, ...

[*478] B. CLIENT acknowledges it is impractical and extremely difficult to
fix the actual damages, if any, which may approximately (sic) result from a
failure to perform any of DEALER'S obligations or a failure or malfunction
in the system to properly operate because of, among other things: the
uncertain amount or value of CLIENT'S property or the property of others
which may be lost or damaged; the uncertainty of the response time of the
police or other authority; the inability to ascertain what portion, if any,
of any loss would be approximately (sic) caused by DEALER'S failure to
perform any of its obligations or failure of its equipment to properly
operate; the nature of the services to be performed by DEALER.

C. CLIENT understands and agrees that if DEALER should be found liable for
any loss or damage due from a failure [***6] to perform any of its
obligations or a failure of the equipment to properly operate, DEALER'S
liability shall be limited to a sum equal to the total of one-half year's
monitoring payments, or five hundred dollars, whichever is the lesser, 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 and agents.

D. In the event that the CLIENT wishes DEALER to assume greater liability,
CLIENT may, as a matter of right, obtain from DEALER a higher limit by
paying an additional amount to DEALER...


(Emphasis added.)

The final portion of paragraph 14 indicated the Board's understanding that
at its request, it could purchase "additional protection" to augment the
burglary alarm system.

Finally, paragraph 16 of the agreement stated as follows:
16. CLIENT acknowledges that the provisions of this Agreement, and
particularly those paragraphs relating to disclaimer of warranties,
limitation of liability and [***7] third-party indemnification, inure to
the benefit of and are applicable to Sonitrol Corporation and its
subsidiaries and to any subcontractors engaged by DEALER to provide
monitoring, maintenance, installation or service of the alarm system
provided herein, and bind CLIENT to Sonitrol Corporation and its
subsidiaries and to said subcontractors, or to the Department or other
authority to which the alarm may be transmitted, with the same force and
effect as they bind CLIENT to DEALER. CLIENT hereby waives his right of
recovery for any loss covered by insurance on the premises or its contents
to the extent permitted by any policy or by law.


(Emphasis added.)

As installed before the date of the fire, the security system protected
certain specified areas of the building and consisted of wires attached to
the front door [*479] and several office doors inside the building,
together with six to seven infrared motion detectors aimed [**690] at
certain areas, or "zones," within the building. The motion detectors
monitored the ambient heat of the area at which they were directed, so that
if a person entered the monitor's "field" the monitor would register the
[***8] person's body heat as a change in the field which would cause an
alarm signal to trigger.

Thus, in the high school's case, after the system had been "armed," i.e.,
set, if a protected door was opened or someone entered a protected area, the
system would immediately send a signal through the telephone lines to
Sonitrol's main office. The signal would register on a computer screen being
overseen by a Sonitrol employee. The employee was then to take appropriate
action.

The record reveals that on the morning of September 11, 1990, the two
juveniles broke through windows and entered offices of the building which
were not equipped with Sonitrol's monitoring devices. Starting at 4:03 a.m.,
however, Sonitrol's computer screen began receiving alarm signals from the
building's monitors. Although she observed these signals, Sonitrol's
employee Kimberly Barkley did not notify the police department and was
unable to reach anyone from the school. Barkley merely continued to observe
the signals.

At approximately 5:40 a.m., Barkley finally reached the school's head night
custodian. Barkley stated she was shutting off the system because it was
malfunctioning. Ultimately, the fire was discovered [***9] by a police
officer only by chance. The Board duly filed a claim for the damage done to
the building with its insurer, Nationwide.

On October 22, 1990, Nationwide filed a complaint in the Cuyahoga County
Court of Common Pleas against Sonitrol and the two juveniles and their
families, seeking damages for the amount it had paid to the Board pursuant
to the insurance policy. n2 This case was designated number CV-199184.

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n2 Nationwide's claims against the juveniles and their families were later
settled and dismissed and are not a part of these appeals.


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

In pertinent part, Nationwide alleged that the insurance policy's
subrogation clause entitled it to pursue an action against Sonitrol, and
that Sonitrol's actions when it received the alarm signal on September 16,
1990 were not only negligent, but constituted a breach of the agreement it
had with the Board. The complaint was later amended to include language
indicating Sonitrol's negligence was in wanton disregard of a "contractual
and a legal duty." Nationwide [***10] attached to its complaint a copy of
the Board's insurance policy. Included in the policy was the following
clause:
[*480]
CLAIMS AGAINST OTHERS

1. Subrogation. If we pay for a loss, we may require the insured to assign
to us the right of recovery against others. We will not pay for a loss if
the insured impairs this right to recover. The insured's right to recover
from others may be waived in writing before a loss occurs. (Emphasis added.)


Sonitrol answered the complaint by denying the pertinent allegations and
setting up several affirmative defenses. Following some discovery, n3
Sonitrol filed a motion for summary judgment. Therein, Sonitrol argued it
was entitled to judgment on Nationwide's claims as a matter of law because
the claims were based upon "non-existent derivative rights." (Emphasis
added.) Sonitrol drew the trial court's attention to paragraph 16 of its
contract with the Board, which stated that the Board waived its right of
recovery against Sonitrol for any loss covered by insurance.

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


n3 Several depositions of persons involved in the case were taken by the
parties and later filed in the trial court.


- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***11]

Furthermore, Sonitrol attached to its motion the deposition testimony of
Kenneth Masti, the Sonitrol employee who acted as customer representative to
the Board and had sold the security system to it. Masti stated the
following: (1) the Board had bought a burglary and vandalism detection
system which protected only certain areas; (2) a detection system
specifically for fires was not discussed but he made it clear it was a
separate system which Sonitrol could provide if one was requested; (3) the
System's infrared sensors were "strictly for burglary" protection; and (4)
the Board wanted the "most economical" burglary protection Sonitrol could
provide.

[**691] Nationwide filed a brief in opposition to Sonitrol's motion,
arguing the contract's paragraph 16 did not entitle Sonitrol to summary
judgment for three reasons: (1) it either was not a waiver of subrogation or
was ambiguous because it did not state that in clear terms; (2) it precluded
a waiver of subrogation in this case based upon the words "to the extent
permitted by any policy" because Nationwide's insurance policies did not
permit waiver of subrogation; and (3) it did not apply since Sonitrol's
actions were so [***12] "aggregious." Nationwide filed numerous exhibits in
support of its brief in opposition to Sonitrol's motion for summary
judgment, including deposition transcripts, affidavits and several
"statements."

Sonitrol filed a brief in reply, attaching thereto a copy of the Board's
insurance policy with Nationwide, n4 together with a copy of a letter
indicating the Board had notified Sonitrol to be cautious in reporting to
the police what actually could be a "false alarm."

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


n4 The record reveals the copy which Nationwide had attached to the
complaint was an incorrect version of the policy actually issued to the
Board.


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[*481] On September 13, 1991, while Sonitrol's motion was pending, the
Board filed its own complaint in the Cuyahoga County Court of Common Pleas,
seeking damages in the amount of $ 322,000 for the costs due to the fire
which had not been covered by the insurance policy with Nationwide. n5 The
Board asserted the same two causes of action against Sonitrol as Nationwide
had asserted, viz., negligence [***13] and breach of contract. This case
was designated number CV-218128.

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


n5 The Board also stated claims against the two juveniles and their families
which were later settled and dismissed and are not a part of these appeals.


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

On November 6, 1991, the trial court granted Sonitrol's motion for summary
judgment against Nationwide in case number CV-199184. On November 14, 1991,
Sonitrol filed its answer in case number CV-218128.

On January 24, 1992, Sonitrol filed a partial motion for summary judgment in
case number CV-218128. Sonitrol asserted therein that since paragraph 14(c)
of its contract with the Board limited the Board's recovery for non-covered
losses, it was entitled to summary judgment on the issue of damages.

On February 27, 1992, the Board filed a brief in opposition to Sonitrol's
motion, arguing the limitation of damages clause contained in the contract
should be declared unenforceable based upon this court's decision in
State-Automobile Ins. Co. v. Sonitrol of Cleveland, Inc. Slip op., (Dec. 3,
1987), 1987 Ohio App. LEXIS 9875, [***14] Cuyahoga App. No. 54186,
unreported.

On March 3, 1992, Sonitrol filed a motion to consolidate case numbers
CV-199184 and CV-218128. The trial court granted the motion on June 3, 1992.

On August 27, 1992, after each of the parties in CV-218128 had filed another
brief in support of their position, the trial court granted Sonitrol's
partial motion for summary judgment on the issue of damages.

Thereafter, on October 26, 1993, Sonitrol filed a motion for summary
judgment with respect to the issue of liability. Sonitrol argued the
evidence proved neither that it was negligent nor that it had breached its
contract with the Board; thus, it was entitled to judgment as a matter of
law. Sonitrol attached to its motion the following: (1) the affidavit of
Kenneth Masti; (2) the deposition testimony of one of the juveniles; and (3)
the (second) deposition testimony of Kenneth Masti.

On December 13, 1993, the Board filed a brief in opposition, arguing that
the evidence submitted to the trial court clearly demonstrated both
Sonitrol's negligence and its breach of the contract's requirement to notify
the police department upon receipt of a burglary signal.

On February 9, 1994, Sonitrol filed [***15] a supplementary brief in
support of its motion. Therein, Sonitrol relied on the deposition testimony
of Kimberly Barkley [*482] and one of her supervisors to argue its actions
upon receipt of the signal from the high school building were reasonable and
were not in contravention of the contract's terms.

On February 11, 1994, the trial court granted Sonitrol's motion for summary
judgment. [**692] Following the resolution of all the outstanding claims
in the consolidated cases, Nationwide and the Board filed timely notices of
appeal in this court.

This court also has consolidated case numbers CV-199184 (designated App. No.
68583) and CV-218128 (designated App. No. 68584) for briefing, hearing and
disposition. In their single appellate brief, Nationwide and the Board
present five assignments of error for this court's review. The first
follows:
I. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR SONITROL BECAUSE
THE ALLEGED "WAIVER OF SUBROGATION" CLAUSE IS INEFFECTIVE TO WAIVE THE NORTH
OLMSTED SCHOOL'S AND NATIONWIDE'S SUBROGATION RIGHTS.


In this assignment of error, Nationwide argues that the trial court should
have held paragraph 16 of the Board's agreement [***16] with Sonitrol, the
waiver of subrogation clause, unenforceable since (1) Sonitrol did not
attempt to "explain" it; (2) its customer the Board didn't "understand" it;
(3) it was "hidden"; and (4) the Board was not "allowed" to negotiate
concerning the clause. This court cannot agree with Nationwide's argument.

The Ohio Supreme Court recently reviewed a contract containing a subrogation
clause and explained such clauses as follows:


In Ohio, there are three distinct kinds of subrogation: legal, statutory,
and conventional. Legal subrogation arises by operation of law and applies
when one person is subrogated to certain rights of another so that the
person is substituted in the place of the other and succeeds to the rights
of the other person. State v. Jones (1980), 61 Ohio St. 2d 99, 100-101, 15
Ohio Op. 3d 132, 133, 399 N.E.2d 1215, 1216-1217. Statutory subrogation is a
right that exists only against a wrongdoer. Conventional subrogation is
premised on the contractual obligations of the parties, either express or
implied. The focus of conventional subrogation is the agreement of the
parties. Id. at 101, 15 Ohio Op. 3d at 133, 399 N.E.2d at 1217. [***17]


Blue Cross & Blue Shield Mut. of Ohio v. Hrenko (1995), 72 Ohio St. 3d 120
at 122, 647 N.E.2d 1358. (Emphasis added.)

With regard to legal subrogation, the supreme court has previously held that
parties to a contract may modify, extinguish or even completely destroy the
right. See, e.g., Bogan v. Progressive Ins. Co. (1988), 36 Ohio St. 3d 22,
521 N.E.2d 447. Moreover, contractual subrogation clauses are controlled by
contract principles, including those of interpretation of language. Blue
Cross & Blue Shield Mut. of Ohio v. Hrenko, supra. It is axiomatic that an
insurer-subrogee cannot succeed to or acquire any right of remedy not
possessed by its insured-subrogor. [*483] Chemtrol Adhesives, Inc. v.
American Mfrs. Mut. Ins. Co. (1989), 42 Ohio St. 3d 40, 537 N.E.2d 624,
syllabus 1.

In this case, Nationwide attempted to put itself in the Board's place in
order to pursue an action against Sonitrol. However, the Board signed a
contract with Sonitrol which contained several clauses alerting the Board to
the following factors: (1) Sonitrol's services were offered with only a
limited warranty; (2) [***18] Sonitrol's services could be interrupted by
causes beyond the parties' control; (3) The Board was purchasing only one of
the protective services available; (4) Sonitrol was not an insurer; and (5)
Sonitrol recommended the Board purchase insurance to cover any losses which
might occur for any reason.

The fact that the Board did purchase an insurance policy demonstrates that
it was aware of these clauses. Furthermore, it demonstrates that the Board
comprehended the contract's language and understood the contract's terms.
Thus, Nationwide's argument that the clause waiving subrogation was
"ambiguous" and "hidden" seems disingenuous.

Indeed, since the Board was purchasing insurance with Nationwide, it would
have no reason to object to this clause, which merely restated the matters
to which it had been already alerted and indicated insurance would cover any
losses.


Other jurisdictions construing similar contract provisions have upheld
contract provisions where the parties agreed to waive claims of personal
liability in the event of a loss or peril, with the understanding that the
loss would be covered by insurance.


Len Immke Buick v. Architectural Alliance [**693] (1992), 81 Ohio App. 3d
459 at 464, 611 N.E.2d 399. [***19]

Under the circumstances of this case, the waiver of subrogation clause was
both clear and reasonable. Id.Since Nationwide stood in the Board's place
and the Board had waived its right of recovery against Sonitrol, the trial
court did not err in granting Sonitrol's motion for summary judgment against
Nationwide. American States Ins. Co. v. Honeywell, Inc. (Mar. 1, 1990), 1990
Ohio App. LEXIS 753, Cuyahoga App. No. 56552, unreported.

Accordingly, the first assignment of error is overruled.

Assignments of error II, III and V are interrelated; thus, they are
addressed together as follows:
II. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT BECAUSE GENUINE
ISSUES OF MATERIAL FACT EXIST REGARDING WHETHER SONITROL ACTED WILFULLY AND
WANTONLY AND THUS VOIDED THE APPLICATION OF THE ALLEGED "WAIVER OF
SUBROGATION" CLAUSE.
[*484]
III. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR SONITROL BECAUSE
GENUINE ISSUES OF MATERIAL FACT EXIST AS TO WHETHER SONITROL COMMITTED THE
TORT OF WILLFUL AND WANTON MISCONDUCT.

V. THE TRIAL COURT ERRED BY GRANTING SONITROL'S MOTION FOR SUMMARY JUDGMENT
OF OCTOBER 26, 1993 AGAINST BOTH APPELLANTS WHERE [***20] GENUINE ISSUES OF
MATERIAL FACT EXIST RELATING IN PART TO: (1) THE ACTIONS OF SONITROL'S
EMPLOYEES; (2) THE NATURE OF SONITROL'S SECURITY SYSTEM AT THE NORTH OLMSTED
HIGH SCHOOL; AND (3) THE OPERATION OF THAT SYSTEM ON SEPTEMBER 16, 1990.


Nationwide and the Board argue that even if the waiver of subrogation clause
is contractually valid, it cannot be enforced in a case where a party to a
contract "wilfully and wantonly" failed to carry out its contractual duties.
Nationwide and the Board contend that issues of fact remain concerning
whether Sonitrol's actions in this case were negligent and in breach of its
contract with the Board. A review of the record, however, does not support
these arguments.

The contract clearly stated the security system was designed to detect only
burglaries; fire detection systems were completely different. It also
clearly stated that Sonitrol's employees would use their judgment in
interpreting the signals received when the system was triggered. Moreover,
it stated the employees' actions would be reasonable based upon their
judgment.

The evidence that the juveniles who entered the building did not activate
the system was undisputed. The juveniles [***21] neither opened the
protected doors nor entered the protected "zones" of the building. Thus, the
system was not triggered by a burglary.

Nationwide and the Board rely heavily on the fact that Barkley's computer
screen showed numerous "BURG" signals after 4:03 a.m., but that she took
little action in regard to the signals. The evidence before the trial court,
however, proved that the very number and sequence of these signals indicated
to the employee only a malfunction. The signals indicated neither a burglary
(which was accurate because it was not occurring as far as the system was
concerned), nor a fire because the system was not designed to detect fires.

Clearly, the juveniles did not set off the burglary signal since they
disturbed nothing that would trigger it. From the testimony of Sonitrol's
employees, it is equally clear that the heat from the fire also did not
trigger the alarm; rather it affected it by destroying it. Thus, Barkley
correctly concluded from the signals she was receiving the system was
malfunctioning. The evidence before the trial court therefore proved only
that Barkley's actions in the face of this eventuality were both reasonable
and [***22] in accordance with the specific terms of the contract.

[*485] Civ. R. 56(C) makes summary judgment proper when there is no
genuine issue as to any material fact and the moving party is entitled to
judgment as a matter of law. Norris v. Ohio Std. Oil Co. (1982), 70 Ohio St.
2d 1, 433 N.E.2d 615. A motion for summary judgment forces the nonmoving
party to produce evidence on any issue for which that party bears the burden
of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio
St. 3d 108, 570 N.E.2d 1095.


Although the distinction between tort liability and contract liability has
apparently [**694] been eroded away by our sister states, a review of the
case law of the state of Ohio indicates that a party to contract can only be
liable in tort, in relation to the contract, where some positive duty
imposed by law has been breached by the alleged negligent conduct of one of
the parties to the contract.

"It has long been the general rule and so recognized in this state, that,
when the only relation between the parties is contractual, the liability of
one to the other, in an action of tort, must arise out of some positive
[***23] duty which the law imposes because of the relationship, or because
of the negligent manner in which some act which the contract provides for is
done; and the mere omission to perform a contract obligation is never a tort
unless the omission is also the omission to perform a legal duty. ***"
Bowman v. Goldsmith Bros. Co. (App. 1952), 63 Ohio L. Abs. 428 at 431, 109
N.E.2d 556.

*** Willful or wanton misconduct on the part of a party to a contract can
[also] result in the imposition of tort liability. Cf. Royal Indemn. Co. v.
Baker Protective Services, Inc. (1986), 33 Ohio App. 3d 184, 515 N.E.2d 5;
Hine v. Dayton Speedway Corp. (1969), 20 Ohio App. 2d 185, 252 N.E.2d 648;
Prosser and Keeton, Law of Torts (5 Ed. 1984), 655-669, Section 92.


American States Ins. Co. v. Honeywell, Inc., supra. (Emphasis added.)

In this case, Nationwide and the Board proved neither that Sonitrol's
actions were in breach of the contract nor that Sonitrol's actions were in
any way "willful or wanton" so as to either create tort liability or void
the waiver of subrogation clause. Therefore, the trial court did not err in
granting [***24] Sonitrol's motions for summary judgment. Id.

Accordingly, assignments of error II, III and V are also overruled.

The final assignment of error states:
IV. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR SONITROL BECAUSE
THE LIMITATION OF DAMAGES CLAUSE IS UNCONSCIONABLE AND, THEREFORE,
UNENFORCEABLE.


The Board argues that because the over $ 3,000,000 in damages it sustained
in the fire was so disproportionate to the cap Sonitrol agreed to pay, the
limitation of damages clause of the agreement must be declared an
unenforceable penalty. [*486] The Board relies on Samson Sales, Inc. v.
Honeywell, Inc. (1984), 12 Ohio St. 3d 27, 465 N.E.2d 392, in support of its
argument.

In Samson, the supreme court set forth the following as the factors to be
considered in determining the validity of limitation of liability clauses:


Clauses in contracts providing for reasonable liquidated damages are
recognized in Ohio as valid and enforceable. Lange v. Werk (1853), 2 Ohio
St. 519; Jones v. Stevens (1925), 112 Ohio St. 43, 146 N.E. 894; 30 Ohio
Jurisprudence 3d (1981), 136-137, Section 128. However, reasonable [***25]
compensation for actual damages is the legitimate objective of such
liquidated damage provisions and where the amount specified is manifestly
inequitable and unrealistic, courts will ordinarily regard it as a penalty.
***

Whether a particular sum specified in a contract is intended as a penalty or
as liquidated damages depends upon the operative facts and circumstances
surrounding each particular case, but time has apparently had no undermining
influence upon the guiding principles initially set forth in Jones v.
Stevens, supra, where the court held at paragraph two of the syllabus:

"Where the parties have agreed on the amount of damages, ascertained by
estimation and adjustment, and have expressed this agreement in clear and
unambiguous terms, the amount so fixed should be treated as liquidated
damages and not as a penalty, if the damages would be (1) uncertain as to
amount and difficultly of proof and if (2) the contract as a whole is not so
manifestly unconscionable, unreasonable, and disproportionate in amount as
to justify the conclusion that it does not express the true intention of the
parties, and if (3) the contract is consistent [***26] with the conclusion
that it was the intention of the parties that damages in the amount stated
should follow the breach thereof."



12 Ohio St. 3d at 28-29. (Emphasis added.)

Thus, a liquidated damages clause is enforceable if, in consideration of the
facts surrounding the contract, its objective is the reasonable compensation
of actual damages flowing from the breach of the contract. Cad [**695]
Cam, Inc. v. Underwood (1987), 36 Ohio App. 3d 90, 521 N.E.2d 498; Williams
v. Mark IV Apartments, 1994 Ohio App. LEXIS 4178 (Sep. 22, 1994), Cuyahoga
App. No. 65915, unreported.

In this case, Sonitrol and the Board entered into an agreement for burglary
protection for a few offices and corridors of a high school building. The
amount of money or the actual items which could be taken by a thief would be
difficult to ascertain. See, e.g., Williams v. Mark IV Apartment, supra.
Furthermore, in contrast to the store sought to be protected in Samson, the
likelihood that there were extremely valuable items in these areas was not
great. Cf., Nationwide Mutual Fire Ins. Co. v. T&J Transportation &
Warehouse (Jan. 25, 1991), 1991 Ohio App. LEXIS 229, [***27] Lucas App. No.
L-90-097; [*487] Zurich-American Ins. Co. v. Citadel Alarm, Inc., Slip
op., (May 6, 1986), 1986 Ohio App. LEXIS 6728, Cuyahoga App. No. 50499,
unreported.

>From reading the agreement in this case, it is also clear the parties did
not contemplate the possibility of fire damage to the premises. See, e.g.,
Nationwide Mutual Fire Ins. Co. v. T&J Transportation & Warehouse, supra.
Thus, it would be manifestly unfair at this juncture to declare the
limitation of damages clause unenforceable since it would not be in
accordance with the "true intention of the parties." Samson Sales, Inc. v.
Honeywell, Inc., supra.

A review of the facts and circumstances of this case leads to the conclusion
the trial court correctly determined the limitation of damages clause was
reasonable and enforceable. Therefore, Sonitrol's motion for partial summary
judgment was properly granted.

Accordingly, assignment of error IV is also overruled.

The judgment of the trial court is affirmed in its entirety.

It is ordered that appellees recover of appellants their costs herein taxed.

The Court finds there were reasonable grounds for [***28] this appeal.

It is ordered that a special mandate issue out of this Court directing the
Common Pleas Court to carry this judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule
27 of the Rule of Appellate Procedure.

KARPINSKI J., and

McMONAGLE, TIMOTHY E., J., CONCUR.

JOSEPH J. NAHRA

PRESIDING JUDGE

N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio
Rules of Appellate Procedure. This is an announcement of decision (see Rule
26). Ten (10) days from the date hereof this document will be stamped to
indicate journalization, at which time it will become the judgment and order
of the court and time period for review will begin to run.

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