Walter H. Banzhaf and M. Rose Banzhaf, Individually and as Representatives
of the Estate of Frederick John Banzhaf; Angie King; and Herman's Sporting
Goods, Inc., Appellants Vs. ADT Security Systems Southwest, Inc., Appellee
COURT OF APPEALS OF TEXAS, ELEVENTH DISTRICT, EASTLAND- 28 S.W.3d 180; 2000
Tex. App. LEXIS 6162- September 7, 2000, Decided
September 7, 2000, Filed
SUBSEQUENT HISTORY: Petition for Review Denied January 25, 2001.
PRIOR HISTORY: Appeal from 192nd District Court of Dallas County.
DISPOSITION: Reversed in part, affirmed in part, and remanded.
CASE SUMMARY
PROCEDURAL POSTURE: Appellant store employee, appellant parents of deceased
employee, and appellant store challenged a decision from the 192nd District
Court of Dallas County (Texas), granting summary judgment for appellee
security systems company and denying appellant store's motion for summary
judgment in suit against appellee alleging negligence, design defect, and
violations of Tex. Bus. & Com. Code Ann. § 17.01 et seq. (1987 & Pamph.
Supp. 2000).
OVERVIEW: Appellant employee was severely injured, and decedent was killed
during a robbery of appellant store. Appellant employee and appellant
parents of decedent sued appellee security systems, which had provided a
security system under contract to appellant store. Appellants alleged
negligence, design defect, and violations of the Texas Deceptive Trade
Practices - Consumer Protection Act (DTPA). On appeal, the court reversed
and remanded that portion of appellee's summary judgment against appellant
parents on their DTPA claim because appellee failed to include the appellant
parents in their motion for summary judgment. As to appellant employee,
appellee owed no duty to her, in either contract or tort, and no duty was
owed to her as a consumer. Appellee also owed no duty under contract or tort
to appellant parents. Appellants failed to introduce more than a scintilla
of evidence that appellee had specific control over the security of the
premises. Appellants failed to show a defectively designed product. The
trial court did not err in denying appellant store's summary judgment on
appellee's claim for indemnity. The court affirmed the remainder of
appellee's judgment.
OUTCOME: Summary judgment was reversed as to appellant parents statutory
consumer protection claim as appellee failed to name appellant parents in
the motion for summary judgment. As to the remaining claims, summary
judgment for appellee was affirmed. Appellee owed no duty under contract or
tort to appellants. Defective design of the security system was not shown.
COUNSEL: FOR APPELLANT: Charles W. Mcgarry, Law Offices Of Charles W.
Mcgarry, Dallas, TX, Kimberly Munson, J. Brantley Saunders, The Barbknecht
Firm, Dallas, TX, Randall R. Moore, Tony D. Crabtree, Hyatt, Crabtree &
Moore, Attorneys At Law, Dallas, TX, Malcolm Guy Renwick, Renwick & Pierret,
Attorneys at Law, Arlington, TX.
FOR APPELLEE: Jeffrey Tillotson, John T. Cox III, Lynn, Stodghill,
Melsheimer & Tillotson, Attorneys At Law, Dallas, TX.
JUDGES: TERRY McCALL, JUSTICE. Panel consists of: W. G. Arnot, III, Chief
Justice, and Jim R. Wright, Justice, and Terry McCall, Justice.
OPINIONBY: TERRY McCALL
OPINION: [*183]
Angie King was severely injured, and Frederick John Banzhaf was killed
during a robbery of the Herman's Sporting Goods, Inc. (Herman's) store in
Richardson. n1 Both were employees of Herman's. The robbery was committed by
another Herman's employee and his accomplice. King and the parents of
Banzhaf sued ADT Security Systems Southwest, Inc. (ADT), which had provided
the security system for Herman's. Plaintiffs alleged negligence, design
defect, and violations of the Texas Deceptive Trade [**2] Practices -
Consumer Protection Act (DTPA), TEX. BUS. & COM. CODE ANN. § 17.01 et seq.
(Vernon 1987 & Pamph. Supp. 2000). ADT subsequently filed a third-party
claim against Herman's, seeking indemnification based upon the written
contracts between ADT and Herman's. The trial court granted summary judgment
to ADT against plaintiffs and, after a bench trial, granted ADT a judgment
against Herman's. We reverse and remand that portion of ADT's summary
judgment against the Banzhafs on their DTPA claim because ADT failed to
include the Banzhafs in their motion for summary judgment on that claim. We
affirm the remainder of ADT's judgment against the plaintiffs and ADT's
judgment against Herman's.
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n1 Banzhafs estate is represented by his parents who also made their claims
based upon his death. We will refer to King and the Banzhafs collectively as
"plaintiffs."
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Background Facts The following facts are undisputed. Prior to its
liquidation in bankruptcy, Herman's was a nationwide [**3] chain of
sporting goods stores. Herman's had a national contract with ADT for ADT to
install and monitor alarm systems in all of the Herman's stores throughout
the country. The national contract set out certain basic alarm services that
ADT would provide the various stores, but an individual store could vary
those basic services by executing a separate written agreement with ADT. The
Richardson store executed a separate agreement with ADT.
Herman's had its own internal department in charge of security, and Herman's
selected the alarm services to be used in each store. When negotiating the
national contract, ADT offered Herman's the opportunity to contract for any
alarm monitoring service that ADT made available. One of the features
offered by ADT was a "duress code" feature; however, Herman's expressly
refused the duress code feature. The duress code feature allows a designated
user of the security system to silently trigger the alarm to indicate that
the user is being held hostage. To trigger the alarm, the user enters a
special single-digit code, along with his or her own password.
Even after the national contract was signed, Herman's continued to refuse
any duress [*184] code feature [**4] for its new stores. n2 That policy
was in effect at the time of the robbery of the Richardson store. Herman's
did select a feature known as the "late opening/closing" feature that ran on
a pre-set 14-hour cycle. Upon the expiration of the cycle, Herman's either
had to open the store and turn the alarm off or leave the store and turn the
system on. If a particular Herman's store needed to have employees remain in
the store past the normal 14-hour cycle for inventory or for other purposes,
certain authorized Herman's employees could extend the cycle by entering
their passcode and the number of hours they wished to extend the cycle.
King, as assistant manager of the Richardson store, was authorized to extend
the cycle.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n2 Herman's viewed the duress code feature as potentially dangerous to its
employees, one that could create a situation in which Herman's employees
might be held hostage. Herman's had a written security policy that
encouraged its employees to cooperate during a robbery and to not endanger
themselves.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**5]
The alarm system selected by Herman's for all its stores was designed to be
activated only when the store was closed and when all employees had left the
premises. ADT did not provide daytime monitoring services or guards to
Herman's, and ADT never responded to daytime security matters at Herman's in
Richardson.
King, Banzhaf, and one other employee were closing the Richardson store one
evening. King had locked the main front door but left a metal gate over the
door partly open to allow employees to exit through the door after setting
the alarm. Just before the three employees were ready to leave, they were
confronted in the store by James Langston, another Herman's employee, who
was armed and had an accomplice. Langston asked King for the code to the
alarm. King gave Langston her code and explained to him how to extend the
store's closing time. Langston extended the closing time. Either Langston or
his accomplice then killed Banzhaf and the other employee and tried to kill
King. King suffered a blunt force injury to her head and a slashing of her
throat. She survived, however, and Langston and his accomplice were caught
and convicted.
King's and Banzhafs' Claims
ADT's [**6] motion for summary judgment against King and the Banzhafs
contained not only a motion for traditional summary judgment under
TEX.R.CIV.P. 166a(b) & (c), but also a motion for a "no evidence" summary
judgment under TEX.R.CIV.P. 166a(i). n3 The motion for traditional summary
judgment asserted that ADT owed no duty to King and the Banzhafs, that there
was not a design defect or the design defect claim of plaintiffs was barred
because the alleged defect was "open and obvious," and that King was not a
consumer within the DTPA. n4 ADT's motion for a "no evidence" summary
judgment asserted that, even if ADT had a duty, there was no evidence that
ADT breached that duty and that there was no evidence to support a
conclusion that any act or omission of ADT caused King's injuries or
Banzhaf's death. In granting summary judgment to ADT, the trial court did
not state on what grounds it relied. Therefore, plaintiffs must defeat each
summary judgment ground urged by ADT. Carr v. Brasher, 776 S.W.2d 567, 569
(Tex. [*185] 1989); Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 79
(Tex. 1989).
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 We again suggest that the better practice is to file separate motions
relating to conceptually distinct Rule 166a(c) and Rule 166a(i) summary
judgments. Under a motion for a "no evidence" summary judgment, we review
only the evidence presented by the non-movant. Rule 166a(i). Analysis is
made more difficult when it appears that the movant may be relying on his or
her summary judgment evidence yet is asserting that there is no evidence on
a particular element of the non-movant's case. Kelly v. LIN Television of
Texas, 27 S.W.3d 564 (Tex.App. - Eastland, 2000, no pet'n h.)(not yet
reported). [**7]
n4 It is not apparent from the record why ADT failed to include the Banzhafs
in their motion on the DTPA claim.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
A trial court must grant a motion for a traditional summary judgment if the
moving party establishes that no genuine issue of material fact exists and
that the moving party is entitled to judgment as a matter of law. Rule
166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). A
trial court properly grants summary judgment in favor of a defendant if the
defendant conclusively establishes all elements of an affirmative defense or
conclusively negates at least one element of the plaintiffs claim. American
Tobacco Company, Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). When
reviewing a traditional summary judgment, we take as true evidence favorable
to the non-movant and indulge every reasonable inference and resolve any
doubts in favor of the non-movant. American Tobacco Company, Inc. v.
Grinnell, supra; Nixon v. Mr. Property Management Company, Inc., 690 S.W.2d
546, 548-49 (Tex.1985).
When the motion is for a [**8] "no evidence" summary judgment, we review
only the evidence presented by the non-movant. Rule 166a(i); Hight v. Dublin
Veterinary Clinic, 22 S.W.3d 614 (Tex.App. - Eastland, 2000, no pet'n h.).
As we do when there is a motion for a traditional summary judgment, we
accept as true evidence favorable to the non-movant and indulge every
reasonable inference and resolve all doubts in favor of the non-movant.
Hight v. Dublin Veterinary Clinic, supra. If the non-movant presents
evidence that is more than a scintilla, a no evidence summary judgment is
improper. Hight v. Dublin Veterinary Clinic, supra.
1. The Duty Question
Plaintiffs' negligence claim required proof of three elements: a legal duty
owed by ADT to them; a breach of that duty; and damages proximately
resulting from that breach. Greater Houston Transportation Co. v. Phillips,
801 S.W.2d 523, 525 (Tex.1990). ADT's motion for a traditional summary
judgment asserted that ADT owed no legal duty to plaintiffs, and ADT
presented evidence to negate each duty theory presented by plaintiffs. In
their second issue, plaintiffs claim that the trial court [**9] erred in
granting summary judgment because ADT had a legal duty "to exercise
reasonable care in providing security for the persons it was hired to
protect"; there is evidence of a breach of the duty; and that breach was a
proximate cause of damages to each plaintiff. We need only discuss the duty
question.
Plaintiffs advance several theories to support their contention that ADT
owed them a duty. They claim that the contracts between Herman's and ADT
created a duty to protect employees. Similarly, plaintiffs claim that ADT's
"control" of the premises created the duty to protect employees. According
to plaintiffs, ADT's duty could also be based on RESTATEMENT (SECOND) OF
TORTS § 324A (1965) because ADT undertook the providing of security services
to Herman's employees. Plaintiffs finally contend that their claim sounds in
tort as well as contract; therefore, ADT owed a duty separate and apart from
the contracts.
Plaintiffs' claim of a contractual legal duty is premised on an assumption
that ADT's being in the security business required it to protect Herman's
employees. That premise is too broad. ADT is in the business of providing
security services for both property and employees, [**10] but it provides
those services only pursuant to contracts with its customers. The customer
selects the services for which it will pay. The uncontroverted testimony,
including that by Herman's director of security, was that the alarm system
selected by Herman's, including the late open/close feature, was to protect
Herman's property and merchandise after closing when no employees were in
the store. The alarm was only on when there were no employees in the store.
The uncontroverted evidence [*186] was that, by written contract, Herman's
selected the alarm security devices it wanted and the monitoring service it
wanted ADT to provide and that it expressly rejected the duress code
feature. The uncontroverted evidence by ADT also demonstrated that the alarm
system and monitoring service provided to Herman's pursuant to the national
contract and the local contract did not fail. There was no duty owed to
plaintiffs under the contracts.
Plaintiffs also contend that ADT "controlled" Herman's premises and,
therefore, that ADT had a duty to exercise ordinary care to protect invitees
from the criminal acts of third parties. As a general rule, a defendant has
no legal duty to protect another from the [**11] criminal acts of a third
person, but there is an exception where one who controls the premises has
reason to know of an unreasonable and foreseeable risk of harm to invitees.
Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995). We agree
with plaintiffs that, in determining who controlled the Herman's premises
for purposes of imposing a legal duty to protect against criminal acts of
third parties, we must focus on who had specific control over the safety and
security of the premises. Exxon Corporation v. Tidwell, 867 S.W.2d 19, 23
(Tex. 1993). We must find that plaintiffs have introduced more than a
scintilla of evidence that ADT had specific control over the security of the
premises where the criminal act took place. Centeq Realty, Inc. v. Siegler,
supra at 197. Plaintiffs have failed to do so. The uncontroverted evidence
shows that Herman's internal security department selected Herman's security
measures, instructed Herman's employees on security-related matters, and set
Herman's security policies. Herman's employees reported any criminal
activity or suspicious activity to Herman's internal security department,
not to ADT. The uncontroverted [**12] evidence shows that Herman's did not
have ADT furnish guards or other daytime security. The fact that ADT
monitored Herman's activated alarm after the store closed does not
demonstrate the control required by Centeq Realty and Exxon Corporation.
Plaintiffs cite Section 324A as a basis for ADT's duty. Section 324A does
not support a finding of duty here because it refers only to "one who
undertakes, gratuitously or for consideration, to render services to
another." An undertaking is required, and the person undertaking the
affirmative course of conduct must recognize that the particular services
undertaken are necessary for the protection of a third party. See Colonial
Savings Association v. Taylor, 544 S.W.2d 116, 119 (Tex.1976). As previously
discussed, the uncontroverted evidence showed that ADT provided only those
security devices and services for which Herman's contracted, and there was
no evidence that ADT undertook to protect King and Banzhaf. Plaintiffs'
evidence to the effect that ADT is in the security business to protect
people and property did not contradict the evidence of ADT that ADT limited
its obligations to Herman's by contract.
Plaintiffs contend [**13] that ADT owed a duty under tort principles
because ADT, as a security company, had a duty to prevent foreseeable crimes
and that the violent crime against King and Banzhaf was foreseeable to
someone in the security business. We disagree with placing such a broad
non-contractual duty on security companies. Plaintiffs' argument would shift
the responsibility for protection against crime, without any contractual
basis, from law enforcement agencies to security companies. Purchasers are
free to contract for the particular security devices and services that they
consider to be necessary. We are not aware of any case extending the duty of
security companies beyond their contracts as suggested by plaintiffs, nor
have plaintiffs cited any. ADT owed no duty to plaintiffs based on tort
principles. We overrule plaintiffs' second issue.
[*187] 2. The Design Defect Claim
In their third issue, plaintiffs claim that ADT marketed a product with a
design defect because the alarm system did not have the duress code as a
standard feature. To support a design defect claim under products liability
law, a plaintiff must show that the product was defective and unreasonably
dangerous and that the dangerous [**14] condition was a producing cause of
the plaintiff's injury. Lucas v. Texas Industries, Inc., 696 S.W.2d 372, 377
(Tex.1984). There is a design defect when a product is manufactured in
compliance with the manufacturer's specifications, but the product is
considered defective because some aspect of the design configuration is
deemed to render the product unreasonably dangerous. Turner v. General
Motors Corporation, 584 S.W.2d 844, 851-52 (Tex. 1979). A plaintiff
demonstrates a design defect by evidence of a safer alternative design for
the product. Caterpillar, Inc. v. Shears, 911 S.W.2d 379, 384 (Tex.1995).
Plaintiffs only claim of a design defect is that ADT should have made the
duress code a standard feature of the alarm system, not an optional one.
Plaintiffs' expert compared the duress feature to an air bag in an
automobile, stating that safety features should not be made optional.
Automobile safety features are the subject of extensive federal regulation.
See Geier v. American Honda Motor Company, 529 U.S. 861, 120 S. Ct. 1913,
146 L. Ed. 2d 914 (2000). The deterrence of crime involves many complex
issues. Herman's [**15] adopted a policy of refusing the duress code
because it believed that the use of the duress code might endanger
employees. Herman's selected a security system to protect its property when
its employees were not there. We refuse to abrogate a store owner's right to
select the security devices and services that it deems best to protect its
property or its employees. We find, as a matter of law, that plaintiffs have
shown no defectively designed product in this case. Plaintiffs' third issue
is overruled.
3. King's DTPA Claims
In their sixth issue, plaintiffs contend that the trial court erred in
granting summary judgment on King's DTPA claim because King was a consumer.
King had to demonstrate that she was a "consumer" to bring a claim under the
DTPA. The DTPA defines a "consumer" as "an individual ... who seeks or
acquires by purchase or lease, any goods or services." TEX. BUS. & COM. CODE
ANN. § 17.45(4) (Vernon Pamph. Supp. 2000). When an employer purchases goods
or services for the benefit of an employee, the employee "acquires" those
goods and services and is considered to be a consumer. Kennedy v. Sale, 689
S.W.2d 890, 892 (Tex.1985). [**16] For the same reasons that we discussed
in finding that ADT owed no duty to King, we find that she was not a
consumer. Herman's selected a security system and monitoring services that
would protect its property after the store closed. Plaintiffs' sixth issue
is overruled.
4. The Banzhafs' DTPA Claim
Plaintiffs' first issue complains that the trial court erred in granting
summary judgment on the Banzhafs' DTPA claim because ADT's motion for
summary judgment does not address that claim. We agree. Summary judgment may
only be granted on grounds expressly presented in the motion. Science
Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex. 1997). Plaintiffs'
first issue is sustained.
Because we have found that the trial court correctly based the remainder of
its summary judgment on the grounds we have discussed, we need not reach
plaintiffs' fourth and fifth issues. Carr v. Brasher, supra; Rogers v.
Ricane Enterprises, Inc., supra.
ADT's Indemnification Claim Against Herman's
Plaintiffs' petition included a claim that ADT was negligent in installing
and monitoring [*188] the Herman's security system. ADT filed a third
party claim against [**17] Herman's, alleging that the contract required
Herman's to indemnify ADT against plaintiffs' claim.
Prior to a bench trial on ADT's claim of indemnification, Herman's filed two
separate motions for summary judgment against ADT. In both motions, Herman's
argued that (1) ADT's claim for indemnity was barred by Texas Workers'
Compensation laws, (2) the express negligence doctrine barred any recovery
by ADT against Herman's, and (3) the indemnity provisions ADT seeks to
enforce were not conspicuous. After extensive briefing and separate
hearings, two different judges in the trial court reached the same
conclusion and denied Herman's motions for summary judgment. Following a
subsequent bench trial, the trial court again reached the same conclusion in
a written opinion and upheld ADT's claim for indemnity. In its appeal,
Herman's makes the same arguments. We agree with both the conclusion and the
reasoning of the trial court.
1. Texas Workers' Compensation Act Does Not Bar ADT's Claim
The Texas Workers' Compensation Act specifically provides that a party may
seek indemnification from a subscribing employer for a claim asserted by
that employer's employee if there existed a written [**18] indemnity
agreement prior to the employee's injury or death. Enserch Corporation v.
Parker, 794 S.W.2d 2, 7 (Tex. 1990)(quoting TEX.REV.CJV.STAT.ANN. art. 8306,
§ 3(d) (Vernon Supp. 1989)). n5 Herman's acknowledges that both the national
contract and the Richardson contract contained an indemnity agreement but
argues that the indemnity language is insufficient to show that Herman's
expressly assumed liability for injuries to its employees. We disagree.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n5 Article 8306 is now recodified in TEX. LAB. CODE ANN. § 417.004 (Vernon
1996).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Herman's and ADT were the only parties to the two contracts. The indemnity
provision is identical in both contracts and covers any claims against ADT
"for failure of its equipment or service in any respect" brought by "any
person, not a party to this agreement." According to the testimony of
Herman's executives, Herman's selected an alarm system to protect its
property when employees were not in the store. The employees were not
parties [**19] to the agreement in any sense. We overrule Herman's first
issue.
2. The Express Negligence Doctrine
To be enforceable, an indemnity provision must afford fair notice of its
existence if the provision relieves a party of liability for its own
negligence in advance. The fair notice requirements include the express
negligence doctrine and the conspicuousness requirement. Dresser Industries,
Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex.1993); Enserch
Corporation v. Parker, supra at 8. The compliance with both of the fair
notice requirements is a question of law for the court. Dresser Industries,
Inc. v. Page Petroleum, Inc., 853 S.W.2d at 509-10.
The "express negligence doctrine" requires that a party seeking indemnity
from the consequences of that party's own negligence must express that
intent in specific terms within the four corners of the contract. Dresser
Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d at 508; Ethyl
Corporation v. Daniel Construction Company, 725 S.W.2d 705, 707-08
(Tex.1987). The supreme court described the reason for adopting the
doctrine:
The intent of the scriveners is to [**20] indemnify the indemnitee for its
negligence, yet be just ambiguous enough to conceal that intent from the
indemnitor.
Ethyl Corporation v. Daniel Construction Company, supra. ADT made no
attempt to conceal its purpose to be indemnified by Herman's in either
contract.
The indemnity provision expresses the intent that Herman's would [*189]
indemnify ADT for the latter's own negligent acts. Herman's agreed that:
IN THE EVENT ANY PERSON, NOT A PARTY TO THIS AGREEMENT, SHALL MAKE ANY CLAIM
OR FILE ANY LAWSUIT AGAINST ADT FOR FAILURE OF ITS EQUIPMENT OR SERVICE IN
ANY RESPECT, CUSTOMER [HERMAN'S] AGREES TO INDEMNIFY, DEFEND, AND HOLD ADT
HARMLESS FROM ANY AND ALL SUCH CLAIMS AND LAWSUITS INCLUDING THE PAYMENT OF
ALL DAMAGES, EXPENSES, COSTS, AND ATTORNEYS' FEES.
The express negligence doctrine does not require that the indemnity
provision use the specific word "negligence." Arthur's Garage, Inc. v.
Racal-Chubb Security Systems, Inc., 997 S.W.2d 803, 814 (Tex.App. -Dallas
1999, no writ). The test is whether the parties made it clear in the
agreement that it was their intent to provide for indemnification of the
indemnitee's own negligent [**21] acts. Enserch Corporation v. Parker,
supra at 8. The quoted language "for failure of its equipment or service in
any respect" covers claims against ADT for negligence.
There is an additional reason for finding that plaintiffs' claims are
covered by the indemnity provision. The agreement expressly makes the
indemnity provisions applicable to loss, damage, or injury from "negligence,
active or otherwise, of ADT." The indemnity provision is found in Paragraph
E of the contracts. The first part of Paragraph E deals with ADT's liability
to Herman's. It provides that ADT is not an insurer, that the customer shall
obtain its own insurance, and that the value of ADT's services are unrelated
to the value of the customer's property or property of others located in
customer's premises." The last part of Paragraph E deals with Herman's
indemnity of ADT. In the middle of Paragraph E, the parties agreed that:
THE CUSTOMER [HERMAN'S]...AGREES THAT ADT SHALL BE EXEMPT FROM LIABILITY FOR
LOSS, DAMAGE OR INJURY DUE DIRECTLY OR INDIRECTLY TO OCCURRENCES, OR
CONSEQUENCES THEREFROM, WHICH THE SERVICE OR SYSTEM IS DESIGNED TO DETECT OR
AVERT; THAT IF ADT SHOULD BE FOUND LIABLE [**22] FOR LOSS, DAMAGE OR
INJURY DUE TO A FAILURE OF SERVICE OR EQUIPMENT IN ANY RESPECT, ITS
LIABILITY SHALL BE LIMITED TO A SUM EQUAL TO 100% OF THE ANNUAL SERVICE
CHARGE OR $ 10,000, WHICHEVER IS LESS...AS THE EXCLUSIVE REMEDY; AND THAT
THE PROVISIONS OF THIS PARAGRAPH SHALL APPLY IF LOSS, DAMAGE. OR INJURY,
IRRESPECTIVE OF CAUSE OR ORIGIN, RESULTS DIRECTLY OR INDIRECTLY TO PERSON OR
PROPERTY FROM PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS IMPOSED BY THIS
CONTRACT OR FROM NEGLIGENCE, ACTIVE OR OTHERWISE, OF ADT, ITS AGENTS OR
EMPLOYEES. (Emphasis added)
Herman's first contends that the reference to ADT's negligence is not
contained within the same sentence as the actual indemnity language as
required by the express negligence doctrine. The Texas Supreme Court has
rejected this contention; it is not a requirement of the express negligence
doctrine. Enserch Corporation v. Parker, supra at 8.
Herman's also contends that the language concerning ADT's negligence refers
only to the first part of Paragraph E dealing with ADT's attempt to limit
its liability to Herman's. To adopt Herman's construction, we would have to
ignore the phrase: "And that the provisions [**23] of this paragraph shall
apply." The indemnity agreement is included in the provisions of Paragraph
E; and, therefore, the indemnity provisions "shall apply if loss, damage,
[*190] or injury...results...from negligence, active or otherwise, of ADT."
This language, which specifically references ADT's own negligence, also
satisfies the express negligence rule. Atlantic Richfield Company v.
Petroleum Personnel, Inc., 768 S.W.2d 724, 726 (Tex.1989). Herman's second
issue is overruled.
3. The Indemnity Provision is Conspicuous
Herman's third issue is that the indemnity provision is not conspicuous;
and, therefore, it is not enforceable. To be conspicuous, "something must
appear on the face of the [contract] to attract the attention of a
reasonable person when he looks at it." Dresser Industries, Inc. v. Page
Petroleum, Inc., 853 S.W.2d at 508. In Dresser, the Texas Supreme Court
adopted the standard for conspicuousness found in the Uniform Commercial
Code:
A term or clause is conspicuous when it is so written that a reasonable
person against whom it is to operate ought to have noticed it. A printed
heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) [**24] is
conspicuous. Language in the body of a form is "conspicuous" if it is in
larger or other contrasting type or color. But in a telegram any stated term
is "conspicuous."
TEX. BUS. & COM. CODE ANN. § 1.201(10) (Vernon Supp. 2000); Dresser
Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d at 510.
The indemnity provision in this case satisfies the standard. The indemnity
provision is set forth in enlarged, all capital lettering. The lettering is
in dark, boldface type so that it contrasts with the lighter, smaller type
of the remaining contractual paragraphs. As in Enserch, where the court held
that the indemnity language was sufficiently conspicuous, the entire
Herman's national contract appears on one page. The indemnity provision in
Paragraph E is directly above the signature line. A reasonable person's
attention is attracted to the indemnity provision when looking at the
contract.
In the Richardson store agreement, the indemnity provision is on the back
page, but the contract itself specifically directs the reader's attention to
the paragraph in which it is contained. On the front of the contract, just
above the signature line [**25] for Herman's, is the directive:
ATTENTION IS DIRECTED TO THE WARRANTY, LIMIT OF LIABILITY
AND OTHER CONDITIONS ON REVERSE SIDE.
Again, this language and the indemnity provision are in large, capital
lettering and boldface typeset. Drawing attention to the "Limit of
Liability" provision of the contract, which contains the indemnity
provision, also makes the indemnity provision conspicuous. Enserch
Corporation v. Parker, supra at 7. The different lettering of the indemnity
agreement, its placement in the national contract, and the directing of
attention to it in the Richardson contract satisfy the conspicuousness
requirement. Herman's third issue is overruled.
In a fourth issue, Herman's argues that there is insufficient or no evidence
to support the trial court's findings that Herman's expressly promised to
indemnify ADT from claims based on ADT's own negligence and that the
provision was prominently displayed. The contracts provide the evidence.
Herman's fourth issue is overruled.
This Court's Rulings
The summary judgment is reversed insofar as it provides that Walter H.
Banzhaf and M. Rose Banzhaf take nothing on their DTPA claims, and those
[**26] causes are remanded; the remaining portions of the trial court's
judgments are affirmed.
TERRY McCALL
JUSTICE
September 7, 2000
Panel consists of: Arnot, C.J., and Wright, J., and McCall, J.