American Automobile Insurance v. Rest Assured Alarm System, Inc.

786 F. Supp. 2d 798, 2011 U.S. Dist. LEXIS 57146, 2011 WL 2020176
CourtDistrict Court, S.D. New York
DecidedMarch 31, 2011
Docket7:08-cv-11013
StatusPublished
Cited by12 cases

This text of 786 F. Supp. 2d 798 (American Automobile Insurance v. Rest Assured Alarm System, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Automobile Insurance v. Rest Assured Alarm System, Inc., 786 F. Supp. 2d 798, 2011 U.S. Dist. LEXIS 57146, 2011 WL 2020176 (S.D.N.Y. 2011).

Opinion

KENNETH M. KARAS, District Judge:

Plaintiff American Automobile Insurance Co. (“AAIC”), a Missouri corporation, brought this diversity action against De *801 fendant Rest Assured Alarm System, Inc. (“Rest Assured”), a New York corporation, to recover insurance payments AAIC made to its insured, the Brass Anchor Restaurant (“Brass Anchor”) in Poughkeepsie, New York, following a fire at the insured’s premises. (Compl. ¶¶ 1-2, 5, 10.) AAIC’s complaint alleges negligence and breach of contract claims against Rest Assured, which allegedly agreed to install, inspect, and monitor the fire alarm system at Brass Anchor. Now pending is Rest Assured’s motion to dismiss the Complaint pursuant to Rule 12(b)(6) based on the exculpatory clauses contained in the contract between Rest Assured and Brass Anchor. (Dkt. No. 23.) The motion is granted.

I. Background

The Complaint alleges the following facts, which the Court accepts as true: Brass Anchor was a restaurant located in Poughkeepsie, New York. (Compl. ¶ 5.) At an unspecified time prior to December 1, 2005, Rest Assured agreed to sell Brass Anchor a fire alarm system and installed it. (Id. ¶¶ 6-7.) By a contract titled “Digital Lease Agreement” dated December 1, 2005 (the “DLA”), Rest Assured leased to Brass Anchor a “central station transmitter” device. (Def.’s Mot. Exh. B (“DLA”) (Dkt. No. 23) ¶ 1; Compl. ¶8.) The purpose of this device was to send a signal to Rest Assured or its designee in the event the alarm system was triggered; Rest Assured agreed in the DLA to “make every reasonable effort” to notify the police and fire department upon receiving such a signal. (DLA ¶ 5.) Rest Assured allegedly made inspections and repairs to the alarm system between December 1, 2005 and December 23, 2006. (Compl. ¶ 9.)

On December 23, 2006, a fire broke out at Brass Anchor. (Id. ¶ 10.) The alarm system failed to detect the fire in its early stages due to alleged “defects.” (Id. ¶ 12.) “Just weeks prior” to the fire, Rest Assured had repaired the alarm system and installed new parts, and indicated to Brass Anchor that the system was working. (Id. ¶ 11.) The fire caused significant damage to Brass Anchor, and AAIC paid over $1,500,000 pursuant to Brass Anchor’s insurance policy to cover its losses. (Id. ¶¶ 13-15.)

AAIC brought the present action in December 2008 as subrogee to the rights of Brass Anchor. The Complaint asserts claims for negligence and breach of contract. AAIC alleges that the fire spread due to the negligence and “gross negligence” of Rest Assured in its failure to properly install, test, monitor and repair the alarm system, and failure to hire competent employees to do so. (Id. ¶ 19.) The Complaint also alleges that Rest Assured breached “several written and/or oral contracts and/or agreements” it made with Brass Anchor pursuant to which Rest Assured was obligated to properly inspect, monitor, and repair the alarm system. (Id. ¶ 23.)

Three out of the fifteen paragraphs of the DLA are prominently given over to limiting Rest Assured’s liability in the event of damage to Brass Anchor:

11. NO WARRANTIES OR REPRESENTATIONS: LESSEE’S [BRASS ANCHOR’S] EXCLUSIVE REMEDY: Lessor [Rest Assured] does not represent or warrant that the Alarm System and Central Station Monitoring will prevent any loss, damage or injury to person or property, by reason of burglary, theft, holdup, fire or otherwise, or that the Alarm System will in all cases provide protection of which it is installed or intended. [Brass Anchor] acknowledges that [Rest Assured] is not an insurer, and that [Brass Anchor] assumes all risk for loss or damage to [Brass Anchor’s] *802 premises or its’ [sic] contents. [Rest Assured] has made no representation or warranties, and hereby disclaims any warrant of merchantability of fitness for any particular use. [Brass Anchor’s] exclusive remedy for [Rest Assured’s] default hereunder is to require [Rest Assured] to repair or replace, at [Rest Assured’s] option, any equipment or part of the Alarm System, which is nonoperational.
12. EXCULPATORY CLAUSE: The parties agree that [Rest Assured] is not an insurer and no insurance coverage is offered herein. [Brass Anchor’s] payments to [Rest Assured] are for the installation, rental, maintenance and monitoring of an Alarm System designed to reduce certain risks of loss, though [Rest Assured] does not guarantee that no loss will occur. [Rest Assured] is not assuming responsibility and therefore shall not be liable to [Brass Anchor] as a result of burglary, theft, holdup, fire, equipment failure, or any other cause whatsoever, regardless of whether or not such loss or damage was caused by or contributed to by [Rest Assured’s] negligent performance or failure to perform any obligation under the Agreement.
13. LIMITATION OF LIABILITY: The parties agree that the Alarm System is not designed or guaranteed to prevent loss by burglary, theft and other illegal acts of third parties, or loss by fire. If not withstanding the terms of the Agreement, there should arise any liability on the part of [Rest Assured], such liability shall be limited to an amount equal to six times the monthly payment paid by [Brass Anchor] at the time such liability is fixed, or the sum of $100.00, whichever is greater. If [Brass Anchor] wishes to increase [Rest Assured’s] maximum amount of such limitation of liability, [Brass Anchor] may, as a matter of right, at any time, by entering into a supplemental agreement, obtain from [Rest Assured] a higher limit by paying an additional amount consistent with the increase of liability.

(DLA ¶¶ 11-13.)

II. Discussion

A. Standard of Review

“On a Rule 12(b)(6) motion to dismiss a complaint, the court must accept a plaintiffs factual allegations as true and draw all reasonable inferences in [the plaintiffs] favor.” Gonzalez v. Caballero, 572 F.Supp.2d 463, 466 (S.D.N.Y.2008); see also Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir.2010) (“We review the district court’s grant of a Rule 12(b)(6) motion to dismiss de novo, accepting all factual claims in the complaint as true, and drawing all reasonable inferences in the plaintiffs favor.”).

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (alteration, citations, and internal quotation marks omitted). Instead, the Supreme Court has emphasized that “[f]aetual allegations must be enough to raise a right to relief above the speculative level,” id.

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786 F. Supp. 2d 798, 2011 U.S. Dist. LEXIS 57146, 2011 WL 2020176, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-automobile-insurance-v-rest-assured-alarm-system-inc-nysd-2011.