Corral v. Rollins Protective Services Co., 59325

• Decision Date: 20 February 1987
• Docket Number: No. 59325,59325
• Citation: 732 P.2d 1260,240 Kan. 678
• Parties: , 3 UCC Rep.Serv.2d 1358 James A. CORRAL, Appellant, v. ROLLINS PROTECTIVE SERVICES COMPANY, d/b/a Rollins Protective Services, Inc., a subsidiary of Corporation of Rollins, Inc., Appellee.
• Court: Kansas Supreme Court

Page 1260

732 P.2d 1260

240 Kan. 678, 3 UCC Rep.Serv.2d 1358

James A. CORRAL, Appellant, v. ROLLINS PROTECTIVE SERVICES COMPANY, d/b/a Rollins Protective Services, Inc., a subsidiary of Corporation of Rollins, Inc., Appellee.

No. 59325.

Supreme Court of Kansas.

Feb. 20, 1987.

Syllabus by the Court.

1. A motion for summary judgment is to be sustained only where the record conclusively shows there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. However, only disputed "material" facts will preclude summary judgment. If a disputed fact, however resolved, could not affect the judgment, it does not present a genuine issue of a material fact.

2. Mentally competent parties may make contracts on their own terms and fashion their own remedies where they are not illegal, contrary to public policy, or obtained by fraud, mistake, overreaching, or duress. A party who has fairly and voluntarily entered into such a contract is bound thereby, notwithstanding it was unwise or disadvantageous to him. However, an exception to this principle of freedom of contract has been recognized when a contract is so one-sided that it is found to be unconscionable.

3. Warranties, express or implied, may be present in any type of contract including sales, leases, bailments, service agreements, and others.

4. In order to constitute an express warranty, no particular language is necessary. It need not be in writing or be made in specific terms, and the word "warrant" or "warranty" need not be used.

5. Any direct and positive affirmation of a matter of fact, as distinguished from a mere matter of opinion or judgment, made by one party during contract negotiations and as part of the contract, designed or intended by the first party to induce the other party to enter into the contract, and actually relied upon by the other party in doing so, is a "warranty."

6. Express warranties are those for which a party bargained; they go to the essence of the bargain, being a part of its basis, and are contractual, having been created during the bargaining process. Implied warranties arise by operation of law and not by agreement of the parties, their purpose being to protect a party from loss where the subject matter of the contract, though not violating an express promise, fails to conform to the normal commercial standard or meet the party's known particular purpose.

7. The federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. (1982), by its own terms is limited to sales of consumer products to a consumer as those terms are defined in the Act. The Act does not apply to contracts for services or leases of personal property.

8. A person who contracts to perform work or to render service, without an express warranty, impliedly warrants to perform the task in a workmanlike manner and to exercise reasonable care in doing the work.

9. The Kansas Uniform Commercial Code, K.S.A. 84-2-101 et seq., applies only to sales but does not preclude the application of common-law or statutory implied warranties to transactions which are not sales and which are not controlled by the UCC.

10. The Kansas Consumer Protection Act, K.S.A. 50-623 et seq., is discussed under the facts of this case and applied.

Paul Hasty, Jr., of Wallace, Saunders, Austin, Brown & Enochs, Chtd., Overland Park, argued the cause and Jeffrey L. Lauersdorf, of the same firm, was with him on the briefs, for appellant.

Jeffrey S. Nelson, of Shook, Hardy & Bacon, Overland Park, argued the cause and was on the brief, for appellee.

HOLMES, Justice:

James A. Corral (Corral), plaintiff below in an action to recover damages for a fire loss suffered at his residence, appeals from orders of summary judgment and partial summary judgment rendered in favor of the defendant, Rollins Protective Services Co. (Rollins). The trial court determined that its orders constituted a final judgment under K.S.A. 60-254(b) and Corral appeals.

Rollins had installed and agreed to service a fire and burglary alarm system in the Corral home. A fire occurred, the alarm system failed to function, and Corral sustained substantial damage. Suit was filed against Rollins for the amount of the fire loss asserting five separate causes of action based upon (1) negligence, (2) strict liability, (3) breach of implied warranty, (4) breach of express warranty, and (5) violation of the Kansas Consumer Protection Act (KCPA). In an amended petition, an additional cause of action was alleged for violation of the federal Magnuson-Moss Warranty Act. Upon motions filed by Rollins, the trial court granted partial summary judgment on the negligence and strict liability claims limiting any recovery thereunder to $250.00 and granted summary judgment in full as to the remaining claims.

A motion for summary judgment is to be sustained only where the record conclusively shows there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Williams v. Community Drive-in Theater, Inc., 214 Kan. 359, 520 P.2d 1296 (1974). However, only disputed "material" facts will preclude summary judgment. If a disputed fact, however resolved, could not affect the judgment, it does not present a genuine issue of a material fact. Secrist v. Turley, 196 Kan. 572, 575, 412 P.2d 976 (1966). In the case at bar, it does not appear that Corral contests the facts as contained in the trial court's decision, but instead takes issue only with the trial judge's application of the law.

On August 28, 1978, Corral entered into a one-page contract with Rollins entitled "Installation-Service Agreement." Under the terms of the agreement Rollins was to install and service a burglary/fire alarm system at plaintiff's residence in Stanley, Kansas. Corral agreed to pay $1,760 for installation and then $35.20 per month for servicing. The contract was for an initial three-year period and thereafter converted to a yearly term until cancellation by one of the parties. Three provisions of the agreement are relevant to this action.

"The Rollins Protective System shall remain personal property and title thereto * * *

shall continue in Rollins. Customer covenants and agrees not to mortgage, sell, pledge or permit the damage or destruction of the System; to use the System in a proper manner; and upon termination of this Agreement to immediately return the System to Rollins in the same condition as when received, reasonable wear, tear and depreciation resulting from proper use thereof alone excepted. Rollins hereby waives all lien rights on the Customer's property described in Exhibit 'A'.

"It is further agreed that Rollins is not an insurer of the Customer's property and that all charges and fees herein provided for are based solely on the cost of installation, service of the System and scope of liability hereinafter set forth and are unrelated to the value of the Customer's property or the property of others located on the Customer's premises.

"The parties agree that if loss or damage should result from the failure of performance or operation or from defective performance or operation or from improper installation or servicing of the System, that Rollins' liability, if any, for the loss or damage thus sustained shall be limited to a sum equal to ten (10%) per cent of one year's service charge or $250.00, whichever sum is the greater, and that the provisions of this paragraph shall apply if loss or damage, irrespective of cause or origin, results, directly or indirectly to persons or property from performance or nonperformance of obligations imposed by this Agreement or from negligence, active or otherwise, of Rollins, its agents or employees."

On November 30, 1981, a fire occurred at Corral's residence causing an estimated $185,631.30 damage. Appellant claimed that the fire alarm system failed to relay an alarm to the defendant's central receiving station, which resulted in a delay in the summoning of firefighters. Corral claimed that the damage to his residence and personal belongings was much worse than would have occurred if the fire alarm system had functioned properly.

NEGLIGENCE AND STRICT LIABILITY

Corral alleged that Rollins' negligence in failing to exercise reasonable care in the installation and maintenance of the alarm system resulted in the destruction of his home. He also sought to recover from Rollins based upon the theory of strict liability. The trial court held that the provisions of the agreement limited Corral's recovery under these theories to the sum of $250. It is plaintiff's position that the trial court erred by enforcing the limitation of damages clause, and in not finding the clause violated public policy.

It is the traditional rule, followed in Kansas, that mentally competent parties may make contracts on their own terms and fashion their own remedies where they are not illegal, contrary to public policy, or obtained by fraud, mistake, overreaching, or duress. Belger Cartage Serv., Inc. v. Holland Constr. Co., 224 Kan. 320, 327, 582 P.2d 1111 (1978); Kansas City Structural Steel Co. v. L.G. Barcus & Sons, Inc., 217 Kan. 88, 535 P.2d 419 (1975); Kansas Power & Light Co. v. Mobil Oil Co., 198 Kan. 556, 426 P.2d 60 (1967). A party who has fairly and voluntarily entered into such a contract is bound thereby, notwithstanding it was unwise or disadvantageous to him. Wille v. Southwestern Bell Tel. Co., 219 Kan. 755, 757, 549 P.2d 903 (1976). However, an exception to this principle of freedom of contract has been recognized when a contract is so one-sided that it is found to be unconscionable. Wille v. Southwestern Bell Tel. Co., 219 Kan. 757, 549 P.2d 903.

Although this court has not previously dealt with the validity and enforceability of provisions limiting damages in contracts involving fire and/or burglar alarm systems, the vast majority of cases from our In Atkinson v. Pacific Fire Extinguisher Co., 40 Cal.2d 192, 253 P.2d...