The "exculpatory clause" is one of several "protective" provisions that should be included in an alarm / security agreement. Simply drafted, the provision provides that the Company will not be responsible for damages even if caused by its failure to perform or negligent performance. It's certainly not a full proof guarantee that the Company will not be held liable for damage, but it's a good start. It's important that the exculpatory clause be carefully drafted and it's just as important to know when to raise that provision as a defense in an action. Courts typically look for any way to avoid enforcing the provision. Since this provision is such a staple in a properly drafted alarm contract we should take note of any court decision that refuses enforcement.
A security guard went to work for Allied Barton. His employment agreement included the following provision:
WORKER'S COMP DISCLAIMER
Payment on Work-Related Injuries
I understand that state Workers' Compensation statutes cover work-related injuries that may be sustained by me. If I am injured on the job, I understand that I am required to notify my manager immediately. The manager will inform me of my state's Workers' Compensation law as it pertains to seeking medical treatment. This is to assure that reasonable medical treatment for an injury will be paid for by Allied's Workers' Compensation insurance.
As a result, and in consideration of Allied Security offering me employment, I hereby waive and forever release any and all rights I may have to:
- make a claim, or
- commence a lawsuit, or
- recover damages or losses
from or against any customer (and the employees of any customer) of Allied Security to which I may be assigned, arising from or related to injuries which are covered under the Workers' Compensation statutes.
The guard fell down steps while on a customer's premises doing his job. He applied for and collected worker comp from his employer. He then sued the customer. The trial court noted:
"At the commencement of his employment with Allied Barton, plaintiff signed a disclaimer waiving his right to sue any of Allied Barton's customers “to which may be assigned, arising from or related to injuries which are covered under the Workers' Compensation statutes.”
The trial judge denied a motion for summary judgment based on the exculpatory clause and a jury awarded $900,000.00. The appellate court affirmed, deciding that:
"We affirm the trial court's determination that the contractual limitation on plaintiff's ability to sue defendant is unenforceable as against public policy as expressed in case law and in the Workers' Compensation Act (WCA), N.J.S.A. 34:15-1 to -142 ..."
The appellate court went into a lengthy discussion of why and how it finds the "waiver of liability" unenforceable in this workers comp scenario, also noting that an identical provision was upheld by both Pennsylvania and District of Columbia courts.
Arriving at its decision the court offered this bit of information that every alarm company owner needs to consider, carefully:
“As a general and long-standing matter, contracting parties are afforded the liberty to bind themselves as they see fit. Out of respect for that very basic freedom, courts are hesitant to interfere with purely private agreements.” Ibid. (citations omitted). Exculpatory clauses, however, are “disfavored in the law.” Hojnowski v. Vans Skate Park, 187 N.J. 323, 333 (2006). They “have been subjected to close judicial scrutiny,” Stelluti, supra, 203 N.J. at 303, because they undermine the principles of our tort system by encouraging “a lack of care,” Hojnowski, supra, 187 N.J. at 333.
Nevertheless, exculpatory agreements are enforceable if they “clearly and unambiguously reflect the 'unequivocal expression of the party giving up his or her legal rights that this decision was made voluntarily, intelligently and with the full knowledge of its legal consequences.”' Marcinczyk v. State Police Training Comm'n, 203 N.J. 586, 593 (2010) (quoting Gershon v. Regency Diving Ctr., Inc., 368 N.J. Super. 237, 247 (App. Div. 2004)). “Even if unambiguous, it is well-established that exculpatory contracts will not be enforced where they are contrary to public policy.” Id. at 594. “ources of public policy include legislation; administrative rules, regulations or decisions; and judicial decisions.” Hitesman v. Bridgeway Inc., 430 N.J. Super. 198, 218 (App. Div. 2013) (alteration in original) (quoting Pierce v. Ortho Pharm. Corp., 84 N.J. 58, 72 (1980)), aff'd, 218 N.J. 8 (2014)."
It is also interesting that this guard company would seek to protect its customers from claims by employees injury while on customer premises. Guard companies, this one in particular, apparently hasn't been reading my articles regarding alarm contracts, because I've never seen this kind of provision in an alarm contract and I'd never approve of it or rely on it. Why should an employer seek to prevent its employee from recovering from a negligent property owner - customer when that customer is negligent and caused the employee's injury? Workers Comp is not enough to to compensate for every injury. This provision is apparently included in the Guard Company's employment agreement. Could it be that every one of its customers demanded such a provision? Could it be that this Guard Company indemnifies the customer, even for injury to its employees caused by the negligence of the customer?
I've done a lot of guard defense work and never came across this kind of provision. Hopefully we won't see anything like this in an alarm contract. The alarm industry relies on the exculpatory clause and we can't afford to have it not enforced or exceptions made carving it until it's meaningless. Check your contracts today and make sure your contract has an exculpatory clause and that it makes sense to you. If you are not using one of our Standard Form Agreements [the All in One - updated after 2013 - and preferrably updated in 2016] then you need to get your contracts updated today at www.alarmcontracts.com. Call our Contract Administrator Eileen Wagda at (516) 747-6700 x 312 now and leave a message if it's the middle of the night.
PS the full decision will be posted on my website under Leading Cases,in NJ.
Click here: https://www.kirschenbaumesq.com/page/alarm-law-issues