New Light Co., Inc. v. Wells Fargo Alarm Services, Div. of Baker Protective Services, Inc.

Citation525 N.W.2d 25,247 Neb. 57
Decision Date23 December 1994
Docket NumberNo. S-92-694,S-92-694
PartiesThe NEW LIGHT COMPANY, INC., Doing Business As The Great Wall Restaurant, Appellant, v. WELLS FARGO ALARM SERVICES, a DIVISION OF BAKER PROTECTIVE SERVICES, INC., and General Electric Company, Jointly and Severally, Appellees.
CourtSupreme Court of Nebraska

Syllabus by the Court

1. Summary Judgment: Appeal and Error. In appellate review of a summary judgment, the court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

2. Summary Judgment. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.

3. Appeal and Error. Regarding a question of law, an appellate court has an obligation to reach a conclusion independent of that of the trial court in a judgment under review.

4. Public Policy: Words and Phrases. Public policy is that principle of the law which holds that no subject can lawfully do 5. Contracts: Public Policy. Whether a particular exculpatory clause in a contractual agreement violates public policy depends upon the facts and circumstances of the agreement and the parties involved.

that which has a tendency to be injurious to the public or against the public good, the principles under which the freedom of contract or private dealings are restricted by law for the good of the community.

6. Public Policy: Damages: Negligence. Public policy prevents a party from limiting its damages for gross negligence or willful and wanton misconduct.

Jeffrey R. Learned, of Morrison, Mahoney & Miller, Southfield, MI, Kile W. Johnson, of Barlow, Johnson, Flodman, Sutter, Guenzel & Eske, Lincoln, and, on brief, Marvin J. Monroe, of Denenberg, Tuffley & Jamieson, P.C., Southfield, MI, for appellant.

Michael G. Connery and Diana J. Vogt, of Kutak Rock, Omaha, for appellee Wells Fargo.

HASTINGS, C.J., WHITE, CAPORALE, FAHRNBRUCH, LANPHIER, and WRIGHT, JJ., and BOSLAUGH, J., Retired.

WRIGHT, Justice.

The New Light Company, Inc. (New Light), sued Wells Fargo Alarm Services (Wells Fargo) and General Electric Company as jointly and severally liable defendants for damages sustained as the result of a fire in a restaurant owned by New Light. Wells Fargo had installed a fire alarm system in the restaurant. Wells Fargo moved for summary judgment, and the district court for Douglas County granted Wells Fargo's motion. The Nebraska Court of Appeals affirmed, holding that public policy did not justify the voiding of exculpatory language in the contract between Wells Fargo and New Light, 2 Neb.App. 828, 516 N.W.2d 260. We reverse the judgment and remand the cause for further proceedings.

SCOPE OF REVIEW

In appellate review of a summary judgment, the court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Maloley v. Shearson Lehman Hutton, Inc., 246 Neb. 701, 523 N.W.2d 27 (1994); Steenblock v. Elkhorn Township Bd., 245 Neb. 722, 515 N.W.2d 128 (1994).

Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. First Nat. Bank in Morrill v. Union Ins. Co., 246 Neb. 636, 522 N.W.2d 168 (1994); Double K, Inc. v. Scottsdale Ins. Co., 245 Neb. 712, 515 N.W.2d 416 (1994).

Regarding a question of law, an appellate court has an obligation to reach a conclusion independent of that of the trial court in a judgment under review. Rains v. Becton, Dickinson & Co., 246 Neb. 746, 523 N.W.2d 506 (1994); Murphy v. City of Lincoln, 245 Neb. 707, 515 N.W.2d 413 (1994).

FACTS

New Light owned and operated The Great Wall Restaurant at 1013 Farnam Street in Omaha, Nebraska. On July 1, 1983, New Light and Wells Fargo executed an agreement which stated that Wells Fargo was to install and maintain a fire alarm system on the restaurant premises. Wells Fargo installed the system and maintained it through 1988. In October 1988, the parties signed a renewal of the agreement, which renewal contained an exculpatory clause stating that New Light agreed that Wells Fargo would not be liable for any loss or damage, irrespective of origin, to persons or property whether directly or indirectly caused by performance or nonperformance of any obligation imposed by the agreement or "by negligent acts or omissions of Wells Fargo Alarm, its agents or employees."

Wells Fargo failed to install a fire-sensing device in the basement-level clothes dryer room or the adjoining electrical room, which contained the main fire alarm control panel and its connection to the telephone junction box. On January 7, 1989, a fire began in the clothes dryer room. The fire alarm system failed to activate the outside alarm and communications system. The fire caused extensive damage to the building and its contents.

New Light's petition alleged, inter alia, that Wells Fargo was grossly negligent by failing to design, install, and maintain adequate fire-sensing devices in the electrical room or in the clothes dryer room of New Light's property; by failing to adequately test the fire detection system so as to ensure that a fire erupting in the electrical room or in the clothes dryer room would not incapacitate the system; by failing to take reasonable care in the design, installation, and maintenance of the system; and by failing to properly, diligently, and reasonably select, train, and supervise its employees and agents with regard to the design, installation, and maintenance of the system. New Light alleged that such acts were willful, wanton, and intentional and that they constituted gross negligence.

Wells Fargo generally denied the allegations and claimed that the petition failed to state facts sufficient to constitute a cause of action. As two of its affirmative defenses, Wells Fargo claimed that paragraph D of the renewal agreement exculpated Wells Fargo from liability and claimed that, in the alternative, such liability was limited to the lesser of the annual charges due Wells Fargo from New Light pursuant to the agreement or $10,000.

Wells Fargo moved for summary judgment, alleging that the contract for protective alarm services between New Light and Wells Fargo relieved Wells Fargo of all liability for any losses suffered by New Light and, in the alternative, that Wells Fargo was entitled to partial summary judgment in that its liability was limited to the amount specified by the renewal agreement.

New Light's affidavits in opposition to the motion stated the following: The fire originated in a fluorescent light fixture mounted on the ceiling of the clothes dryer room, which was located in the basement at the rear of the premises. The fire smoldered for a long period of time before it was discovered. The fire alarm system failed to detect the fire, to activate its on-premises exterior alarm, and to send a signal to Wells Fargo's monitoring communications center because the system did not include a fire-sensing device in the clothes dryer room, where the fire originated, and because the system did not include a fire-sensing device in the adjoining electrical room, which resulted in the destruction of the fire alarm communication system before it could have been activated by fire-sensing devices located in other areas of the premises. One affidavit stated that the system, as designed and installed, was in violation of the National Fire Protection Association codes and that

to design, install and maintain such a system as was installed in the Great Wall Restaurant is to be grossly negligent in that the system, as designed, installed and maintained:

a) was in violation of codes and regulations governing such systems;

b) was in violation of industry standards;

c) failed to place a heat sensing device in the basement laundry/dryer room and adjoining electrical room where fires are very likely to occur; and

d) failed to protect the very room where the fire alarm communication system was installed and thus prevented the system from operating should a fire occur in that room or the adjoining laundry/dryer room.

The district court granted Wells Fargo's motion for summary judgment and dismissed the action as it related to Wells Fargo. On appeal, New Light alleged that the district court erred in granting summary judgment in favor of Wells Fargo. The Court of Appeals affirmed, holding that the exculpatory clause was not contrary to public policy.

ASSIGNMENT OF ERROR

In its petition for further review, New Light claims the Court of Appeals erred in holding that it is not contrary to public policy

for a party to contractually exculpate itself from liability for its own gross negligence or willful and wanton misconduct.

ANALYSIS

The issue for our determination is whether, as a matter of law, the exculpatory clause set out in paragraph D of the original agreement and the renewal agreement released Wells Fargo from liability for gross negligence or willful and wanton misconduct. The Court of Appeals held that public policy did not void the exculpatory provision in the renewal agreement which precluded the imposition of liability upon Wells Fargo for gross negligence or willful and wanton misconduct. In rendering its decision, the Court of Appeals relied upon our decision in Bedrosky v. Hiner, 230 Neb. 200, 430 N.W.2d 535 (1988). The Court of Appeals' application of Bedrosky would have been correct if this case...

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