California's highest court has addressed the enforcement of the exculpatory clause in a significant case involving a release of future liability arising from negligence. The case was specifically focused on future liability around disabled children participating in recreational activity.
You can read the entire case on my web site. This is a lengthy decision, and if your business position requires you to deal with alarm contract issues, I suggest you give yourself time to read it. Even those not in California should read it because the decision reviews the case law in many other state jurisdictions.
The California case deals with whether the courts should enforce the advance release of liability -- what we call the exculpatory clause in the alarm industry -- and the limitation of liability provision with nominal potential damages. (In the California case it was a liquidated damage clause which is discussed.)
The court also addresses the difference of contracting away liability for ordinary negligence and for gross negligence. California joins the majority of states that will not enforce a contractual provision releasing future gross negligence. For the alarm industry, that means that the exculpatory and limitation of liability clauses (or liquidated damage clause) will not be enforced if it can be shown that there was gross negligence.
California defines gross negligence as "want of even scant care or an extreme departure from ordinary standard of conduct". The court notes that other states define gross negligence as "wanton, willful conduct .... reckless misconduct".
The decision addresses cases where the issue of negligence and gross negligence are discussed. Alarm cases are mentioned, though alarm cases were not the focus of this California court decision.
What can those of you working with contracts in the alarm industry anticipate from this decision? I believe that will probably mean more lawsuits against alarm companies where gross negligence is alleged rather than ordinary negligence. The tactic for defense will be in getting a motion for summary judgment granted by the judge before the issue of gross negligence reaches a jury or judge after a full trial. Under current California law the exculpatory clause and limitation of liability clause would be enforced for ordinary negligence.
About the author: Ken Kirschenbaum, Esq., is a New York-licensed lawyer practicing with Kirschenbaum & Kirschenbaum PC, a Long Island legal firm with a rich history of assisting clients in security and alarm related matters. Ken can be contacted via email at firstname.lastname@example.org. His website, www.kirschenbaumesq.com, features a great supply of legal information and court rulings relevant to the security industry. You can also sign up for Ken's discussion list from his homepage.