After reading the Monitronics decision one of our client's house counsel asked:
“I wonder what success the industry has had, if any, in getting state legislatures to adopt statutory limitations on the liability of alarm companies. I know the plaintiffs' bar would oppose any such thing, but it is something we should know about."
The court in Monitronics did not enforce the exculpatory or limitation of liability clause, finding that it didn't apply to the facts of that case. The essence of the decision is that the court found that the action by the central station operator was beyond the scope of the alarm contract - therefore it was an act done without the benefit of the contract protective provisions. [dont shoot the messenger - and I also may be simplifying the decision]. Thus even the court in Montronics did not hold that the exculpatory and limitation of liability clauses would not be enforced under appropriate circumstances.
So what are the chances of a state legislature enaction a law that essentially adopts the reasoning in the court cases accepting the enforcement of these provisions? Slim to none would give you more hope than intended. None. That about sums it up. What we see are legislatures looking for ways to avoid or outright void the exculpatory clause in alarm contracts - something that so far, as far as I know, hasn't happened. It may not. Just about every state has court decisions upholding the enforcement of the exculpatory and limitation of liability clause justifying the decision on public policy and sound contract law reasoning. All we in the industry can do is hope that this way of thinking continues.
What can we in the industry do to help insure that adverse legislation does not becomes law? We can better manage the defense cases. Some claims should be paid. Some claims will fall out of the purview of contract protection. These claims need to be managed and settled prior to receiving notariety and attention by the legislature. I don't happen to think the Monitronics case is in this category. That case went wrong and I think only the dissenting judge got it right.