DCR INC. v. Peak Alarm Co.

INCORPORATED, Compa dba DCR

ny, Appellant, Plaintiff and

PEAK ALARM COMPANY and John I-V,

Does Defendants and

Respondents.

No. 17647.

Supreme Court of Utah.

March Zoll, for plaintiff-

B. Lаke Ray City, Salt appellant. Stewart, City, H. Salt Lake

Steven defendants-respondents. true, liability negligence for

HALL, defendant’s Justice: Chief liqui- breach be limited $50 or must store, Plaintiff, a clothing the owner of the contract. The by dated fixed damages the appeals summary judgment limiting a summary judgment on trial court granted burglar compa- alarm liability of defendant appeals. ground. this Plaintiff on ny to in an action based theories of $50 liability negligence, product and breach of plaintiff’s focus on appeal, parties On the alleged contract. Plaintiff has the follow- Plaintiff claims allegations negligence. ing facts. liquidated that even the contractual dam- if liability defendant’s ages provision limited exe- September $50, this limitation for breach of contract providing cuted contract for installation liability burglar nothing defendant had to do with by and maintenance of a system plaintiff’s clothing alarm store. theories set negligence in tort under a clause fixing liqui- The contract contained Defendant does not complaint. forth in the damages dated in the еvent of rather, $50 but, continues to deny negligence, by stating breach defendant that de- premise argument rest its entire fendant was “not an insurer.” Defendant plaintiff prove negligence, if such were system agreed plaintiff installed the as damages plaintiff only could recover paid to defendant installation $635 liquidated damages provided by the $50 charge. paid Plaintiff also defendant Thus, presented this by contract. the issue charge through- service each month $28 whether, assuming negligence on aрpeal is out the term of the contract. defendant, liquidated dam- part 22, 1979, a oc- burglary On December ages provision parties’ gov- in the contract store, resulting in an plaintiff’s curred at as in contract. liability erns in tort as well $55,000. loss of Plaintiff’s alarm inventory the “negli- Defendant contends Plain- burglary. failed to detect consists gence” plaintiff solely of alleged by tiff that the alarm had discovered perform obligations defendant’s failure to inoperative prior been to the bur- rendered contract rather expressed in the service glary simple through the use of deactivat- duty existing apart than of of a any breach ing well-known to criminals. technique from the Defendant claims that contract. Plaintiff also learned that defendant had alleged no plaintiff cause of therefore been aware of the common usé of this tech- only perform- action in failure of tort but nique and that knew by criminals defendant ance of the a breach which the of an easy, inexpensive way protect its governs liquidated damages provision liabil- the risk systems against of such deac- ity. plaintiff’s An com- examination why tivation. Plaintiff asked defendant however, fallacy this plaint, shows plaintiff had not of the vulnerabili- warned first cause of action ty existing system of its assertion. Plaintiff’s suggested simple which would correction have elimi- “to alleges by breach defendant system. nated Defend- this defect from warn of hazards and defect attend- known ant replied that the issuance such warn- particulаr system.” ant with this the use of ings “would be to customers too time-con- expressed warn is nowhere Such suming.” rather, contract; parties’ duty, exist, shown to would derive defend- negligence

Plaintiff sued defendant care general duty plain- ant’s of due toward failing ordinary maintaining care in to use law. by tiff as defined tort failing its alarm to warn inadequacy of plaintiff of the defined negligence This Court has alleged causes of Plaintiff also action based degree care as a failure to exercise product on contract. Defend- would person which a reasonable have exer summary judgment, alleging ant moved for circumstances, assuming plaintiff’s to cised the same wheth- allegations even under by acting er failing relief, to act.1 In cases both tort and contractual and in alleged negligence where the consists of a circumstances existence of act, injured relationship failure to anoth- will not bar the injured party pursuing er’s inaction must demonstrate exist- redress in ence of tоrt. special relationship some between

fact.5 the latter to tionships for the performance of services half of carriers ployees, rise to such a duty include those between upon the circumstances of that case and on be exercised and must be the extent of foreseeable pressed in the contract itself.3 apart general duty impose on each of and children. and the former.2 Relationships owners and invitees and creating passengers, in аny particular exercise determined as Similarly, due specific care a such due contracting parties employers toward the danger contractual obligations a question case care involved4 depends parents part care giving in be- other, rela- em- ex- of plained: ing marily upon growing Cal.App.2d are created to are duties of conduct which dom from various kinds of harm. The are created to but if it to.” ... As Professor ... ^[*] imposed by promises contract, [Quoting a “[.I]f breach out “[Whereas] arises from breach of duty 4s 706, 157 social the cause of action arises performed,” the action is ex protect of Peterson the contract it is ex delic- law, ^[*] a policy, P.2d 863 promise the interest in free- and are based the interest in hav- [c]ontract a ^[*] Prosser give v. and not neces- “[t]ort ‍‌​‌‌​​‌​‌‌​​​‌‌​​​​‌‌​‌‌​‌‌​‌​​​​‌​​​‌​​​​​‌‌‌‌​‍Sherman, (1945).] rise set forth in ^[*] contractu, has ex- to them actions actions ^[*] pri- ... 68 sarily upon the will intention of the A who party breaches his ” Prosser, (4th parties. ... Law of Torts due care may toward another be found lia added; 1971) p. [Emphasis ed. 613. some tort, ble the other in even where the language bracketed in original.]6 relationship giving rise to such a duty origi parties. nates a contract between the Supreme The Indiana Court has ex- also Supreme recently California Court ex pressed the above distinction follows: plained the difference between a tort action If a defendant be held liable for the arising relationship from contractual imposed him, neglect of a on inde- an brought action on the contract itself: pendently contract, by any operation wrongful law, ought act committed in course to be fortiori he liable

[A] relationship obligation afford he come where under an Brigham Jones, Young University, Utah, 1. Meese v. (1979); Wheeler v. 604 P.2d 927 Utah 19 Stuart, (1981). 392, 639 P.2d 720 (1967); Evans v. 2d 431 P.2d 985 308, (1966). 17 410 999 It Utah 2d P.2d should Prosser, 2. W. Handbook of the of Torts Law be noted that 53, (4th 1971); Harper 56 §§ ed. 2 F. & F. universally accepted applying standard James, (1956); Git The Law 18.6 of Torts § ordinary, of care: that of the reasonable and Holy Hospital zhoffen v. Sisters of Cross Asso circumstаnces, prudent man under ciation, 46, 691, (1907). 32 Utah 88 P. 696 “ordinary” given true term should be supra; see, e.g., Ajax Prosser, Hardware 3. meaning by requiring not an the conduct of Manufacturing Corp, Corp., v. Industrial Plants extraordinarily person. Such “or- careful Bashline, (2d Cir.1977); Hamil v. 569 F.2d 181 dinary” necessarily supercau- man not 256, (1978); Nixdorf v. 481 Pa. 392 A.2d 1280 tious individual devoid human frailties Hicken, Utah, (1980). 612 P.2d 348 constantly preoccupied with idea danger lurking every may direction Kilpack Utah, Wignall, v. 604 462 P.2d time. about him Nelson, Utah, (1979); Black v. 532 212 P.2d Co., 81, Whitman v. W.T. Grant Bennion, 16 Utah 2d 395 (1975); Erickson v. 28 2d Utah (1964). (1972); Brigham P.2d 918 v. Moon Lake 503 P.2d 139 Assоciation, Electric 470 P.2d 6.Tameny v. Atlantic Richfield 27 Cal.3d (1970). 393 Cal.Rptr. ‍‌​‌‌​​‌​‌‌​​​‌‌​​​​‌‌​‌‌​‌‌​‌​​​​‌​​​‌​​​​​‌‌‌‌​‍P.2d Refining Leyba, Utah, 5. Little America v. Co. Ames, (1982); Utah, Benson 641 P.2d 112 undertaking pay, use care as the result of an der a contract for and undertook and him, treat then it owed a founded on a consideration.... In some assumed to giving ... to use reasonable care in the coexist ground liability may cases this doing of the treatment and the of that with a on contract towards agreed which it had and assumed to do.8 (as person, arising regards same breach) out of the same facts.... And Utah, jurisdictions, like have A fact, is not affected if so exercise reasonable recognized duty to be, reward, acting that he is who part care on the of one undertakes words, other under a and may (Second) render services.9 Restatement be liable on the contract. The two duties principle Torts formulates this as follows: are distinct... .7 undertakes, gratuitously who or for One consideration, to render services to anoth- applied This Court has the above recognize as necessary er which he should negligence specifically rules to cases such as protection for the of the other’s or this which involve contracts for services. subject liability is to to the other things, case, early In an the Court held that resulting from his fail- physical for harm hospital, defendant which had undertaken per- ure to exercise reasonable care to provide to medical services to the plaintiff, undertaking, form his owed him a of due care based on the (a) exercise such care in- his failure to parties’ contractual relationship. The Court harm, the risk of such creases explained: (b) the harm is suffered because of the While it that be said this is an action upon undertaking.10 other’s reliance tort, contract, nevertheless, and not on Prosser, torts, in treatise on states the his action, plaintiff seeking to re- rule broadly: more injuries cover sustained him who longer dispute It is no that one through negligence of another must renders to another is under a services show that the latter committed a breach doing care in duty to exercise reasonable duty owing plaintiff of some to the so, negli- for any and that he is liable imposed for his benefit. To show what gence anyone may foreseeably to who was, it was proper to aver and expected injured as a result.11 to be prove relationship par- between the Hawkins, Dean and Professor of tending ties. As Carl S. duty owing show a Law, School, Brigham J. Law from the defendant it Rеuben Clark plaintiff, Young University, recently say had this to proper was aver prove subject: defendant had received him under con- consideration, tract for a tending and as limits defendants’ “duty” concept to show what it was that arising particular defendant to claims out of liability had assumed and undertaken do... . relationships professional and risks. In cases, If ... it received him for treatment un- a contract with the negligence Wailing Manufacturing Plumbing Heating, 7. Flint & Co. v. Beck Ed & Gardner ett, 491, 503, 505, (1906). 138, 140, 611, (1965). 167 Ind. 79 N.E. 506 405 P.2d 612 Eastman, Amphitheater Public Schools v. Sеe 559, (1977); Atkinson v. 117 Ariz. 574 P.2d 47 (Second) 9. See cases cited at Restatement Co., Exterminating 739, Kan.App.2d Orkin app. (1966 Supp.1979). Torts & § Theroux, (1981); Quitmeyer v. 625 P.2d 505 (1964); Hall Jones 144 Mont. 395 P.2d 965 (1965). (Second) 10. Restatement of Torts § Corp. Claro, Okl., v. (1969); Oil 459 P.2d 858 Appeals, Tenth The United States Court of Cir Salamonsen, DiPangrazio v. 64 Wash.2d cuit, recently recognized the Restatement rule supra, 393 P.2d 936 and cases cited note involving interpretation in a case of Utah 3. Marchello v. Denver West & Rio Grande law. ern Railroad 576 F.2d 262 Holy Hospital 8. Gitzhoffen v. Sisters ‍‌​‌‌​​‌​‌‌​​​‌‌​​​​‌‌​‌‌​‌‌​‌​​​​‌​​​‌​​​​​‌‌‌‌​‍Cross Association, supra, note 88 P. at 696. See Prosser, supra, note 104 Services. See § Hicken, supra, 354; Nixdorf v. Ben- note 3 at cases cited id. at note 77. Ames, supra, 929; son v. Crandall note 5 at client most often the relationship liability creates hereunder shall be limited to a $50.00, from which the care arises. fixed sum liquidated dam- However, ages, liability defendant’s tort is and not as a penalty, this liabil- upon contract, ity [Emphasis not based shall be exclusive. breach but added.] legal rather violation of the provision The above no expression contains imposed independently as а result anof intent of the parties to limit defend- what the defendant undertook to do with prospective ant’s liability Rather, in tort. plaintiff’s Thus, relation to the interests. its language applies “obligations hereun- when a defendant undertaken to give der” “liability hereunder.” Although professional gratuitously, services liabili- the clause concludes with phrase “and ty may imposed injuries resulting liability exclusive,” this shall be such lan- conduct, though guage, context, substandard even viewed in does not clearly there is no cоntract.12 show omit- an intent to limit noncontractual lia- [Citations bility. ted.] Even if this Court were to construe the case, present defendant’s liquidated damages clause as an plaintiff warn of the vulnerability of its attempt to limit in tort as well as originate does not enforceability the clause

promise contained within the service con- questionable would be lack because Rather, tract itself. the duty as it exists clarity. This Court has indicated case derived from gener- does not favor contract clauses purporting al duty of due care which accompanies its or negate liability. to limit In Union ongoing contractual relationship plain- with Pacific Railroad Co. v. El Paso Natural Gas tiff for service and maintenance of the P.2d Thus, plaintiff’s allegation very Court refused to enforce a de- of failure provides to warn the basis for a tailed and thorough exculpatory clause cause action in tort entirely which is “against loss, any and all liability, damage separate from аny contract-based claims ” claims ... whatsoever nature to [and] plaintiff might present. which plaintiff personal from a injury Defendant contends that even negligence. claim based on The Court though plaintiff alleged liability in tort there reiterated the rule that covenants as aswell liqui contractual purporting to party relieve a of his damages dated prevents plaintiff clause due care are disfavored and sometimes de- from recovering any theory. under against public сlared invalid policy. as damage The contractual liquidated clause Court then stated: reads: rule to be that appears agreed

It is parties between the hereto situations, most where such is the desire insurer; that is not that is parties, clearly and it understood [defendant] payments hereinbefore named are expressed, such covenant will be solely based upheld. against value the services the presumption But herein; that, provided intention, from the na- any such and it is not achieved rendered, ture of the to implication general services be it is inference or impracticable extremely language as employed difficult to such was here. It regarded binding will damages, may fix the actual be as a any, which only obligation when that intention is proximately result from a failure on the expressed. part clearly unequivocally perform any to of its [defendant] hereunder; obligations that, in case of parties If it had been the intent of the the failure of perfоrm any to indemnify that the defendant should [defendant] hereunder, obligations of its plaintiff and the re- against negli- even the latter’s sulting [plaintiff], acts, loss to gent easy it would have been [defendant’s] Vol.1981, 12. Number B.Y.U.L.Rev. (1965). I concur with and to enough very language to use that 408.P.2d the limitation of majority that intent clear and unmis- thus make that apply to a the contract does not added; clause in foot- [Emphasis takable .... action, remedy is and that the contract tort notes omitted.]13 where there is an remedy not an exclusive case, em- present language In the beyond in tort actionable breach “clearly does not ployed by established obligations duties and limit express an intent unequivocally” contract. liability. tort Absent such defendant’s Nevertheless, dissent be- respectfully I intent, we decline to expression clear cannot, as a view the defendant my cause in dam- liquidated construe the contractual law, in this alleged on the facts matter of limit liabili- ages way clause in such based case, any damages liable for be held ty arising outside of the contract. We hold liability. conduct or strict on tortious present liquidated damages clause based on short, allegations that the I submit plaintiff’s present right does not affect liabili- negligence and strict the theories of concerning question factual proof relief claims which ty fail to state negligence on breach of and attendant granted. part of defendant and to recover rea- knew that that Peak Alarm alleges DCR shown. damages

sonable therefor as installed could be dis- type we Having holding, reached above abled, plain- to the sale to subsequent need not make the further determination of using a bypassed by burglars tiff was liquidated damages whether the clause in installa- technique at other fairly simple question constitutes an enforceable limita- tions, the vulnerable feature of the and that liability. tion on contract a small cost. was correctable at pro- Reversed and remanded for further is that Peak Alarm legal contention DCR’s ceedings opinion. consistent with this Costs warn had a DCR plaintiff. to- and that Peak’s failure bypassed could be is no negligence. warn constituted There OAKS, DURHAM, JJ., and con- HOWE installed had allegation that the cur. design either in its or construction. defect STEWART, (dissenting): Justice dangerous of a in Although supplier of known strumentality has a to warn majority opinion I the agree with in its product inherent in the or dangers the clause in the con- limitation use, v. Mo contemplated Comstock Genеral under pertains only brought tract to actions 163, Corp., 358 Mich. 99 N.W.2d 627 tors tort liabili- the contract and does not affect supplier generally it is true that ty. The law does not look with favor generally market goods open sold on the purports a covenant which to relieve one of non-dangerous has to warn as to no the fundamental duties of due care for the E.g., Robinson v. Williamsen Ida products. actions, such a safety of others. As to tort Co., 819, 94 Idaho 498 P.2d Equipment ho against public covenant be void as Inc., (1972); Stop Shop, & Crandall cases, not, if policy, at ‍‌​‌‌​​‌​‌‌​​​‌‌​​​​‌‌​‌‌​‌‌​‌​​​​‌​​​‌​​​​​‌‌‌‌​‍least in some but 543, (1937); 6 N.E.2d 685 Brad Ill.App. in actions strictly such a clause is construed Co., 79 Blystone Equipment shaw v. Nev. the binding only parties’ ex delicto and is Annot, (1963); 76 A.L. 386 P.2d intention to relieve one of the (1961). R.2d 9§ imposed by care law is the of due “unequivocally and ex- alarm in this case is unambiguous burglar The designed v. El article commerce ordinary Pacific Railroad Co. an pressed.” Union 255, 259, burgla- provide protection against limited Paso Natural Gas 17 Utah 2d 13. See also Walker Bank & Trust Co. v. First Security Corp., 341 P.2d 944

ries. It is commonly burglar known that no issue of the offering company system foolproof. alarm is Every burglary burglary prevention systems the context prevention alarm can circum- or liability, applies strict the reasoning with way vented in one another. Given equal negligence force both a and a strict burglary nature of prevention systems and liability action: ingeniousness of those committed to Homeowners are not “otherwise defense- circumventing systems, it cannot be burglar less victims” of alarm manufac- concluded, view, reasonably my just buyer turers in the same sense that a because a system may be circumvented or automobile, an example, may disabled give the vendor should notice of victim the automobile manufacturer. that fact to its all customers. ongo- valuable, If the property is the homeown- ing war against burglaries, the possibility er may insure it. To apply Section 402A of disablement and circumvention are obvi- present case in practicаl would risks ous limited primarily by experi- effect excuse the homeowner hav- ence and sophistication a burglar. In my ing to insure the and would property shift view, Peak has no legal duty subsequent to burglar risk of its loss to the alarm the sale to of particular warn manner represent manufacturer. This would which the system could be defeated. less, more, not equitable allocation of scope pro- homeowner, risk. The not manufac- tect the plaintiff in this case should be turer, knows what is property determined Court a matter of value; home, and its the manufacturer Thode, law. generally, See Analysis: “Tort does not. Even if the manufacturer were Duty-Risk v. Proximate Cause and Ra- out property find what was in the tional Allocation of Functions Between home installing burglar before Judge Jury,” 1; and 1977 Utah L.Rev. could, system, the proba- homeowner Hawkins, Liability “Premises Repudi- After would, bly property, add other without ation of Categories: the Status Allocation notice to the As between manufacturer. Judge Functions,” Jury 1981 Utah manufacturer, homeowner L.Rev. 35-40. manufacturer more “defenseless” has determined that de- than the homeowner. If the homeowner legal fendant has a albeit duty, unde- buys silver system, service a stereo scope, fined its customers from he get against least can insurance by-pass those who may the alarm I loss; cannot, but manufacturer disagree with conclusion. I am per- will not know that the service or stereo suaded that position, the better the one put been in the home. Thus it “ authorities, I supported think by the is that not of injury be said that ‘the risk can Furthermore, duty. defendant has no such be insured the manufacturer and dis- I think the case cannot theory stand on a among public as a cost of tributed ” liability. strict negli- Whether based on doing business.’ [Citation omitted.] gence liability, or strict liability cannot be may Nor it be that said the manufacturer because, sustained in this case ab- protect to ought by increasing itself sence of or misrepresentation by fraud charge, way distributing in that the risk. seller, a proper allocation of duties and risks that That would mean a homeowner with requires case purchaser personal property only modest value system to bear the risk loss caused a required pay would to his burglar be burglary. high enough alarm a price pro- This supported by conclusion is the rea- tect against the manufacturer loss soning of court Property might person- in Lobianco v. incur if a homeowner with Inc., Protection 292 Pa.Super. great burglar- 437 A.2d al value were property I 417 which think is be fully applicable ized. Those of modest means would Although here. subsidizing the court addressed the the rich. of serv- reasoning relationships performance This

Id. 437 A.2d 424-25. contracting par- each forcibly impose as business establish- ices on applies Annot., also care toward general ments as to homeowners. See ties a of due obligation other, specific 53 A.L.R.3d 239 apart from the (id), in the itself” expressed contract in Bor agree I also with the law stated dimen- vastly expanded the majоrity has Nations, Electric Co. v. United rell-Bigby an that such duty. sions of tort I think (1980), where Inc., Fla.App., So.2d without a sound expansion is unwise and a decision reversed lower court the court policy. basis in and designed had company that a which liable for installed an alarm was contend that may It be too much to alarm did not losses sustained when the is to consequence majority opinion of the held a vendor’s obli work. The court that guarantors burglar companies make alarm beyond obliga not gation “dоes extend however, possi- it is not against burglaries; fit for supply reasonably tion to an article majority opinion determine from the ble to intended, a impose does not purpose and burglar imposes on just what law to furnish the article of its kind best left that issue is companiés alarm because equal any an article other similar will be that jury. Because competing (quoting article.” Id. at 715 on the basis as a factual matter determined Goodyear Wisner v. Tire & Rubber burglars it is of whether foreseeаble (1964)). Fla.App., 167 So.2d bypass system, be able a will argues Peak had a The The conse- virtually foreordained. may be is a duty to warn because the contract burglar goods be quence propo- service With that personal contract. out simply priced will companies alarm sition, char- agree. majority’s I cannot The of the market. as acterization of the Peak Alarm contract fail, as a matter pleadings I think personal service not stand a contract doеs relief law, which to establish claim and analysis. The contract for the sale was granted. a case maintenance of This is not harm where a special relationship be-

arises because of Prosser, Law of parties.

tween the W.

Torts, (4th 1971). 56 at 338-43 ed. § question way anal-

contract not

ogous to contracts “carriers and ‍‌​‌‌​​‌​‌‌​​​‌‌​​​​‌‌​‌‌​‌‌​‌​​​​‌​​​‌​​​​​‌‌‌‌​‍between employers employees, own-

passengers, CITY, Municipal parents children” ers and invitees CLEARFIELD Corporation of the State (majority opinion p. 435). principles Utah, Plaintiff, clear- govern relationships of law that those do not control the instant case where ly only a the installation there is contract for OF SE- DEPARTMENT EMPLOYMENT of a burglar and maintenance CURITY, Industrial Commission majority’s and that is all. The rationale Rendon, Utah, Benjamin Defend- R. equipment contract places maintenance ants. legal on the same basis a contract for services; indeed, far goes medical No. 18388. caused beyond that since harm was not Supreme Court of Utah. perform a failure to the maintenance but was caused properly, services rather March in a unrelated totally a third context maintaining the “personal service” of plaintiff. equipment purchased by

short, broadly holding that “contractual

Case Details

Case Name: DCR INC. v. Peak Alarm Co.

Court Name: Utah Supreme Court

Date Published: Mar 29, 1983

Citation: 663 P.2d 433

Docket Number: 17647

Court Abbreviation: Utah