Merchants Mut. Ins. Co. v. Saxon Industries Inc., 170 A.D.2d 654, 566 N.Y.S.2d 933 (N.Y.A.D. 2 Dept., Feb 25, 1991) (NO. 3556E)

Supreme Court, Appellate Division, Second Department, New York.
MERCHANTS MUTUAL INSURANCECOMPANY, etc.,Plaintiff-Respondent,v.SAXON INDUSTRIES INC., et al., Defendants,AFA Protective Systems, Inc., Appellant,SXP Warehouse Corp., Defendant-Respondent.

Feb. 25, 1991.

 Tenant brought action against landlord, installer of sprinkler alarm service, and subscriber to recover for damage resulting from burst sprinkler pipe. Installer sought reimbursement of reasonable attorney fees from subscriber. The Supreme Court, Queens County, Nahman, J., denied installer's motion for summary judgment.   Installer appealed.   The Supreme Court, Appellate Division, held that:  (1) installer owed no duty to tenant, and (2) indemnification clause entitled installer to reasonable attorney fees from subscriber.
 Affirmed as modified.

West Headnotes
[1] Negligence  1205(1)272k1205(1)Most Cited Cases (Formerly 272k2)
Installer of sprinkler alarm service owed no duty to tenant that suffered water damage as result of burst sprinkler pipe;  contract stated that installer was not insurer, that installer's liability was limited to 10% of annual charge for subscription or $250, and that installer had no responsibility to maintain the system.
[2] Indemnity  37208k37 Most Cited Cases (Formerly 208k9(2))
Subscriber's agreement in indemnification clause to hold installer of sprinkler alarm service harmless against any claims arising from loss of property damage occasioned by installer's performance entitled installer to recover reasonable attorney fees in defending tenant's action to recover for water damage as result of burst sprinkler pipe. **934 Kirschenbaum & Kirschenbaum, P.C., Garden City (Kenneth Kirschenbaum, of counsel), for appellant.

 Before THOMPSON, J.P., and KUNZEMAN, LAWRENCE and MILLER, JJ.


 *654 MEMORANDUM BY THE COURT.
 In an action, inter alia, to recover damages for property loss arising from the alleged negligent installation and maintenance of a sprinkler alarm system, the defendant AFA Protective Systems Inc., appeals, as limited by its brief, from so much of an order of the Supreme Court, Queens County (Nahman, J.), dated August 31, 1988, as denied those branches of its motion which were for summary judgment dismissing the complaint as asserted against it, and for summary judgment on its cross claim against the defendant SXP Warehouse Corp. for contractual indemnification, including counsel fees.
 ORDERED that the order is modified, on the law, by deleting therefrom the provisions which denied those branches of the motion which were for summary judgment dismissing the complaint insofar as asserted against AFA Protective Systems, Inc., and for summary judgment on that branch of the cross claim against SXP Warehouse Corp., which is for reimbursement of reasonable attorneys fees incurred by AFA Protection Systems, Inc., in the defense of the action brought by the plaintiff, and substituting therefor provisions granting those branches of the motion;  as so modified, the order is affirmed insofar as appealed from, with costs to the appellant, and the action against the remaining defendants is severed.
 On December 15, 1982, the defendant AFA Protective Systems, Inc. (hereinafter AFA) and the codefendant SXP Warehouse Corp. (hereinafter SXP) entered into a "Central Station Service Contract", whereby AFA agreed to install and maintain a sprinkler alarm or supervisory service for the premises owned by the defendant Saxon Industries Inc.   On or about *655 December 24, 1983, the plaintiff's subrogor Transworld Surplus, Inc., a commercial tenant in the premises, suffered water damages to its stock and merchandise as a result of a burst sprinkler pipe.   The instant action ensued.
 [1] In determining the liability of the defendant AFA to the noncontracting plaintiff for the alleged negligent performance of its obligations pursuant to the contract, the proper inquiry is "whether the defendant has assumed a duty to exercise reasonable care to prevent foreseeable harm to the plaintiff" (Eaves Brooks Costume Co. v. Y.B.H. Realty Corp., 76 N.Y.2d 220, 226, 557 N.Y.S.2d 286, 556 N.E.2d 1093).   Ultimately however, "[I]t remains for the courts to determine the fundamental question whether, as a matter of policy, the alleged negligence should result in liability" **935(Eaves Brooks Costume Co. v. Y.B.H. Realty Corp. supra, at 226, 557 N.Y.S.2d  286, 556 N.E.2d 1093).   The contractual provisions in the case at bar, as well as the prices paid for the sprinkler alarm services, clearly indicate the parties' understanding that the risk of loss would remain with the subscriber (see, Eaves Brooks Costume Co. v. Y.B.H. Realty Corp., supra, at 227, 557 N.Y.S.2d 286, 556 N.E.2d 1093).   The contract contains an exculpatory clause providing in pertinent part that:  "It is understood that neither the contractor nor any third party designated by the contractor which provides service to the subscriber is an insurer, that insurance, if any, shall be obtained by the subscriber".   Further, AFA's liability, if any, was limited to 10% of the annual charge or $250, whichever was greater.   Under these circumstances, liability should not be imposed, as AFA had "no cognizable duty owing to the plaintiff" (Eaves Brooks Costume Co. v. Y.B.H. Realty Corp., supra, at 227, 557 N.Y.S.2d 286, 556 N.E.2d 1093), and the trial court's denial of AFA's motion for summary judgment dismissing the complaint insofar as asserted against it was in error.   Under the express terms of the contract, AFA undertook no responsibility with respect to the maintenance of the sprinkler system, and the plaintiff's allegations in its pleadings to the effect that AFA negligently maintained the sprinkler system, are insufficient as a matter of law to cast AFA into liability (see Melodee Lane Lingerie Co. v. Amer. Dist. Tel. Co., 18 N.Y.2d 57, 63, 271 N.Y.S.2d 937, 218 N.E.2d 661).
 [2] Moreover, AFA's motion seeking indemnification from SXP pursuant to the contract is granted to the extent of directing SXP to reimburse AFA for reasonable attorney fees in defending the action brought by the plaintiff.  The contract contains a broad indemnification clause whereby SXP agreed to hold AFA and its employees harmless against "any claims, suits, losses, demands and expenses arising from * * * any loss or damage to property occasioned [by AFA's] performance * * * *656 under this agreement, whether due to * * * negligence or otherwise", which is in all relevant respects identical to that upheld by this court in Failla v. A.F.A. Protective Sys., 139 A.D.2d 693, 527 N.Y.S.2d 448 [indemnification clause was not violative of General Obligation Law §  5-323], and thereby enforceable (see also, McCabe v. Queensboro Farm Prods., 22 N.Y.2d 204, 208, 292 N.Y.S.2d 400, 239 N.E.2d 340; Blair v. County of Albany, 127 A.D.2d 950, 951, 512 N.Y.S.2d 552).
 In view of our determination, it is not necessary to address AFA's remaining contentions.
566 N.Y.S.2d 933, 170 A.D.2d 654
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