Hartford Insurance v. Bellsouth Telecommunications, Inc.

206 F. App'x 952
CourtCourt of Appeals for the Eleventh Circuit
DecidedNovember 24, 2006
Docket05-15788
StatusUnpublished

This text of 206 F. App'x 952 (Hartford Insurance v. Bellsouth Telecommunications, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hartford Insurance v. Bellsouth Telecommunications, Inc., 206 F. App'x 952 (11th Cir. 2006).

Opinion

PER CURIAM:

The Hartford Insurance Company (“Hartford”), as subrogee of Fragrance’s *953 Mart, Inc., appeals the district court’s order granting judgment as a matter of law to BellSouth Telecommunications, Inc. (“BellSouth”) in this diversity negligence action. Fragrance’s Mart, a wholesaler of perfumes and other fragrances, bought a burglar alarm for its merchandise warehouse from Continental Technology, Inc. (“Continental”). Included in the burglar alarm package was a monitoring service provided by Horizon Electronics, Inc. (“Horizon”). If the burglar alarm detected an unauthorized entry, it was supposed to notify Horizon, which would then call the police.

The effectiveness of the monitoring service depended directly on the integrity of the telephone line connecting the alarm and Horizon. To prevent burglars from cutting the line and circumventing the monitoring service, the alarm system also included the WatchAlert service. A WatchAlert transmitter at the warehouse sent a signal every twenty-six seconds over the telephone line to BellSouth. If BellSouth missed a signal, it would presume the line had been cut and notify Horizon, who would treat it as a positive alert and dispatch the police.

Over the Thanksgiving holiday weekend in 2001, the Fragrance’s Mart warehouse was burglarized. Hartford compensated its insured Fragrance’s Mart for its losses under a general liability policy. Hartford then filed suit against BellSouth, alleging that BellSouth’s negligent operation of the WatchAlert system allowed the burglars to enter undetected. After Hartford presented its case to a jury, the district court granted judgment as a matter of law to BellSouth under Fed.R.Civ.P. 50(a)(1). The court found that a limitation of liability clause in the contract between Fragrance’s Mart and Continental applied to BellSouth and capped its liability at $250. BellSouth then stipulated to the entry of a final judgment in the amount of $250.

On appeal, Hartford argues that the limitation of liability clause does not apply to BellSouth, and that on remand, judgment must be entered against Bell-South because it admitted liability. We conclude that the plain language of the limitation of liability clause applied to Bell-South, and thus need not address the effect of BellSouth’s admission of liability.

We review grants of judgment as a matter of law de novo. Abel v. Dubberly, 210 F.3d 1334, 1337 (11th Cir.2000). Judgment as a matter of law is proper if, viewing the evidence in the light most favorable to the non-moving party, and drawing all reasonable inferences in favor of the non-moving party, no reasonable jury could arrive at a contrary verdict. Combs v. Plantation Patterns, Meadowcraft, Inc., 106 F.3d 1519, 1525 (11th Cir. 1997).

The district court granted judgment as a matter of law on the basis of a limitation of liability clause in the Electronic Alarm Agreement (“EAA”) between Fragrance’s Mart and Continental. The agreement provides, “Any company which renders monitoring or other services in connection with this alarm agreement may invoke the provisions herein against the Customer and against any claims made by the Customer, and Customer agrees to be bound by the provisions of the Agreement.” The limitation of liability clause, also in the EAA, states,

Since it is impractical and extremely difficult to fix actual damages which may arise from the failure on the part of the Company to perform any of its obligations hereunder, or the failure of the system to operate properly, if not, withstanding [sic] the above provisions, there should arise any liability on the part of the Company, such liability shall be limited, to an amount equal to six (6) times the monthly service charge shown herein, or the sum of Two Hundred Fifty *954 Dollars ($250.00) whichever is less.... The Company is not hable for the gross negligence or the ordinary negligence of its employees, agents and assigns.

The district court found that BellSouth was a company that rendered services in connection with the alarm agreement, and accordingly was protected by the agreement’s limitation of liability clause.

We agree that the clause unambiguously applies to limit BellSouth’s liability. We first note that Florida enforces limitation of liability clauses in burglar alarm service contracts. Ace Formal Wear v. Baker Protective Serv., Inc., 416 So.2d 8, 9 (Fla.3d Dist.Ct.App.1982). Such clauses are valid to limit liability for negligence. Cont’l Video Corp. v. Honeywell, Inc., 422 So.2d 35, 36 (Fla.3d Dist.Ct.App.1982). Further, in Florida, third-party beneficiaries may enforce limitation of liability clauses. Florida Power & Light Co. v. Mid-Valley, Inc., 763 F.2d 1316, 1321 (11th Cir.1985). Thus, if the clause applies to BellSouth, its liability is capped under Florida law.

The interpretation of a contract is a question of law to be decided by the court. Barone v. Rogers, 930 So.2d 761, 764 (Fla.4th Dist.Ct.App.2006). The clause in the EAA applies to “any company which renders monitoring or other services in connection with this alarm agreement.” BellSouth was clearly such a company. The EAA itself provided for the WatchAlert service. On the face of the EAA, a box beside “telephone line security” is checked. Then, in the “payment” section, the term ‘WatchAlert” is written beside a payment term of “$250.00,” which was the cost of installing the WatchAlert transmitter. Further, the same day Fragrance’s Mart signed the EAA, it also signed the “WatchAlert Service Letter of Authorization,” which authorized BellSouth to perform the WatchAlert service. It was thus clear from the very day that Fragrance’s Mart signed the EAA that the alarm system included the WatchAlert service and that BellSouth was going to provide it. The parties clearly contemplated that Bell-South would render services in connection with the EAA.

But even if the EAA and Letter of Authorization had not mentioned WatchAlert or BellSouth, the service was still rendered “in connection with” the EAA because it was a crucial component of the alarm system that the EAA provided. Hartford acknowledges in its brief that “[t]he WatchAlert service is an important enhancement to a burglar alarm system because the signal transmitted by a burglar alarm system is conducted over telephone lines.” The success of the alarm system in the EAA depended directly on the WatchAlert system, which ensured the integrity of the telephone connection between the alarm and Horizon. Further, the WatchAlert system depended on Bell-South’s involvement. BellSouth was responsible for monitoring the transmission that occurred every twenty-six seconds and notifying Horizon if that transmission was interrupted. BellSouth thus obviously provided services “in connection with” the EAA and may take advantage of the limitation of liability clause.

Hartford’s attempts to evade the clear language of the limitation of liability clause are unsuccessful.

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Related

Abel v. Dubberly
210 F.3d 1334 (Eleventh Circuit, 2000)
Acceleration National Service Corp. v. Brickell Financial Services Motor Club, Inc.
541 So. 2d 738 (District Court of Appeal of Florida, 1989)
Ace Formal Wear, Inc. v. Baker Protective Service, Inc.
416 So. 2d 8 (District Court of Appeal of Florida, 1982)
Dows v. Nike, Inc.
846 So. 2d 595 (District Court of Appeal of Florida, 2003)
Escobar v. United Auto. Ins. Co.
898 So. 2d 952 (District Court of Appeal of Florida, 2005)
Continental Video Corp. v. Honeywell, Inc.
422 So. 2d 35 (District Court of Appeal of Florida, 1982)
Barone v. Rogers
930 So. 2d 761 (District Court of Appeal of Florida, 2006)

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Bluebook (online)
206 F. App'x 952, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hartford-insurance-v-bellsouth-telecommunications-inc-ca11-2006.