exculpatory clause, why you need it and how you get it June 13, 2017

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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exculpatory clause, why you need it and how you get it
June 13,  2017
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exculpatory clause, why you need it and how you get it  
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    Neuro surgeon had patient sign an agreement that stated that the doctor no longer carried malpractice insurance and that the patient understood that and therefore agreed that the doctor would no liability.  The doctor intended it as an exculpatory release.  The trial court held the exculpatory clause valid and dismissed.  On appeal that order was reversed; the exculpatory clause was not sufficient written to be enforced.
    If you're reading this you are most likely not a neuro surgeon who decided to go into the alarm business.  Hopefully, you're not as stupid as this neuro surgeon or the attorney he used, if he had one, to draft his exculpatory clause.
    You need an exculpatory clause in your alarm, security or fire contracts.  Unlike the neuro surgeon who might get sued if the surgery goes wrong, you install security or fire systems and you can get sued no matter who caused that fire, caused the water damage, caused the environmental condition that went undetected, failed to prevent the break-in, failed to prevent unauthorized intrusion or access to restricted or private areas, all causing harm to person or property.  Some subscribers are stupid enough to think you are their first and only line of defense against such situations, their insurance company or deep pocket to cover their losses and unfortunately some judges agree with that twisted logic.  The exculpatory clause needs to be the clearest provision in your contract that states that you are not going to be liable for any losses suffered by the subscriber, for any reason, period.  It's not the only provision you will rely on, but it's the start of more  provisions to come in the agreement.  
    I've warned you that your contract needs to be written with precision.  I just don't know how else to say it.  You should not be drafting your contract.  Your lawyer better be "top notch" and specialize in drafting alarm contracts before you let him give it a try.  I'm going to venture a guess; he's not and he's going to screw up the contract.  If you try and write it, you're definitely going to screw up the contract.  So unless you're OK with "save a buck and lose your company" I suggest you get your contracts at www.alarmcontracts.com.  Not tomorrow; as soon as you finish this article.
    Here's what this appeals court had to say about enforcement of the exculpatory clause:

• “An exculpatory clause purports to deny an injured party the right to recover damages from the person negligently causing his injury.”
• "Exculpatory clauses are disfavored in the law because they relieve one party of the obligation to use due care and shift the risk of injury to the party who is probably least equipped to take the necessary precautions to avoid injury and bear the risk of loss.” 
• "Further, such clauses “will be strictly construed against the party claiming to be relieved of liability.”
• “ ‘Such clauses are enforceable only where and to the extent that the intention to be relieved was made clear and unequivocal in the contract, and the wording must be so clear and understandable that an ordinary and knowledgeable party will know what he is contracting away.’ ”

    Let's have a look at what the neuro surgeon had in his contract, a form he was so confident using he gave up his malpractice insurance and continued operating on people.
    "As of January 1, 2003, Dr. Michael D. Paul, and the professional corporation of MacMillan, Paul and Burkarth, P.A., also known as Treasure Coast Neurosurgery, will not carry any medical malpractice insurance. Being of sound mind and sound body, I hereby acknowledge this fact and agree not to sue Dr. Michael D. Paul, or the professional corporation of MacMillan Paul and Burkarth, P.A. for any reason. My reason for doing this is that I realize that Dr. Michael D. Paul and his staff will do the very best to take care of me according to community medical standards."
    Now in all fairness, the trial judge bought it.  "The trial court entered summary judgment in favor of the defendants, finding the release to be “completely unambiguous” in releasing claims of negligence."  
    But the appeals court reversed.  After reviewing other cases where exculpatory clauses were enforced or not enforced [and you can read the entire decision on our website under Leading Cases, Florida, [https://www.kirschenbaumesq.com/article/myra-l-brooks-and-ronald-r-brooks-appellants-michael-d-paul-md-macmillan-paul-and-burkarth-pa-d-b-a-treasure-coast-neurosurgery-andrene-m-loyola-md-appellees-district-court-of-appeal-of-florida-4th-district] Myra L. BROOKS and Ronald R. Brooks, Appellants, v. Michael D. PAUL, M.D. et al] the appeals court held: 
    "Here, the purported release is rife with ambiguity and uncertainty. The exculpatory provision appears in smaller font below a statutory notice regarding the doctor's decision not to carry malpractice insurance. The provision is not thorough or detailed. It does not expressly release any particular type of claims and it comprises three sentences which, read together, are contradictory. The first sentence reiterates the fact that the doctor and his practice do not carry malpractice insurance. The second sentence acknowledges that Myra understands this and agrees not to sue for “any reason.” The third sentence provides Myra's reason for agreeing not to sue—because she believes the doctor and his staff will do their “very best to take care of me according to community medical standards.”
*5 The first two sentences, read in isolation, are broad and arguably encompass a negligence claim. However, as in Goyings, Murphy, and UCF Athletics Ass'n, Inc., there is additional language in the release that creates ambiguity about exactly what type of claims are being released. The third sentence, which qualifies the first two sentences, creates an ambiguity. Indeed, if the defendants intended to be released from their own negligence, it begs the question as to why the third sentence is included in the release. Unlike the release in Sanislo, the language in the release here could lead “a person of ordinary intelligence [to] believe that the release could most reasonably be taken merely as driving home the fact that the defendant was not to bear any responsibility for injuries that ordinarily and inevitably would occur, without any fault of the defendant.” Sanislo, 157 So. 3d at 271 (quoting Gross v. Sweet, 400 N.E.2d 306, 311 (N.Y. 1979)).
Based on the foregoing, we reverse and remand for further proceedings."
    If the court is reviewing the terminology used in your agreement for the exculpatory clause (or other provisions) then, in my opinion, that's your fault.  There should be no confusion or reason for interpretation.  If the court is reviewing the terminology used in the exculpatory clause or rest of the contract to decide if it will enforce those provisions, as a matter of law, then you can't help that, though you can try and come up with other provisions that will be enforced and protect you from liability.  That's what the Standard Form Agreements do.  Should you get the new updated contracts today?   yes, you deserve it and everyone who depends on you for your support or their livelihood will be most appreciative; I know I will be.  
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Good News Announcements:
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 Sword & Shield Enterprise Security, a leading national cybersecurity firm based in Knoxville, Tennessee, was named by CRN®, a brand of The Channel Company, to its 2017 Solution Provider 500 list, an annual ranking of the largest technology integrators, solution providers, and IT consultants in North America by revenue.
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Kirschenbaum & Kirschenbaum PC adds two new attorneys to its Alarm Division:  Jonathan Rogoff, Esq., has been promoted from Law Clerk to Staff Attorney in the Alarm Licensing Division.  Kieran Bastible,Esq. has joined the firm as counsel in the Complex Litigation Division.
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THE ALARM EXCHANGE

Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com
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