Timothy J. Puro and Steve Yoken v. Neil Enterprises, Inc.,
d/b/a Quechee Gorge Village
No. 531-9-06 Wrcv
SUPERIOR COURT OF VERMONT, WINDSOR COUNTY
2008 Vt. Super. LEXIS 39
May 21, 2008, Decided
NOTICE:
THE TEXT OF THIS VERMONT TRIAL COURT OPINION IS UNOFFICIAL. IT HAS BEEN
REFORMATTED FROM THE ORIGINAL. THE ACCURACY OF THE TEXT AND THE ACCOMPANYING
DATA INCLUDED IN THE VERMONT TRIAL COURT OPINION DATABASE IS NOT GUARANTEED.
JUDGES: Walter M. Morris, Jr., Presiding Judge.
OPINION BY: MORRIS
OPINION
MORRIS, J.
DECISION REGARDING: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Introduction
Plaintiffs Timothy Puro and Steve Yoken seek compensation from defendant Neil
Enterprises, Inc. for losses sustained when unknown third parties stole goods
from their respective display cases at defendant's antiques mall. Defendant has
filed for summary judgment, claiming that plaintiffs cannot sustain any cause of
action against it. Attorney Kaveh S. Shahi represents the plaintiffs. Attorney
Samuel Hoar, Jr. represents the defendant.
Summary Judgment
Summary judgment is appropriate "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any,
referred to in the statements required by Rule 56(c)(2), show that there is no
genuine issue as to any material fact and that any party is entitled to judgment
as a matter of law." V.R.C.P. 56(c)(3). The party moving for summary judgment
has the burden of proof, and the opposing party must be given the benefit of all
reasonable doubts and inferences in determining whether a genuine issue of
material fact exists. Price v. Leland, 149 Vt. 518 (1988). However, summary
judgment is mandated where, after an adequate time for discovery, a party fails
to make a showing sufficient to establish the existence of an element essential
to his or her case, and on which he or she has the burden of proof at trial.
Poplaski v. Lamphere, 152 Vt. 251 (1989).
Undisputed Facts
The court derives the undisputed facts from the parties' statements of fact
submitted under V.R.C.P. 56(c)(2) and the supporting documents. Boulton v. CLD
Consulting Engineers, Inc., 2003 VT 72, P 29, 175 Vt. 413, 427. The court need
not consider any facts not set forth in the parties' statements of facts, or any
facts set forth without specific citation to the record. The purpose of the rule
requiring statements of fact with citations to the record is "to focus summary
judgment arguments and allow courts to more readily determine the material facts
in issue." Webb v. Leclair, 2007 VT 65, P 4, 18 Vt.L.W. 235, 236. The court need
not sift through the record in a "needle in a haystack" approach. Id. at P 6. On
the other hand, the court may address a summary judgment motion based on
nonconforming documents. State v. Great Northeast Productions, Inc., 2008 VT 13,
P 6, 19 Vt.L.W. 37.
Here, the parties have submitted statements of fact, along with some
citations to the record, but they have still left it to the court to sift
through their supplemental materials to determine the specific material facts.
Both parties have submitted arguments relying heavily on facts that they omitted
from their respective statements of fact. As one example, they argue over the
effect of an exculpatory clause in the contract, but they have left it to the
court to add that clause to the undisputed facts. We have done so because the
existence of the contract is undisputed, but the better practice would have been
for the parties to include all of the material facts in their statements of
fact, to provide a clear basis for their arguments.
Based on the parties' statements of fact, and the court's independent review
of parts of the record, the undisputed facts for present purposes are as
follows:
Plaintiffs Timothy Puro and Steve Yoken seek to recover damages resulting
from a theft of goods from their respective display cases in the Antiques Mall
at Quechee Gorge Village, on or about September 7, 2005. It appears that the
theft was perpetrated by unknown third parties, without any direct involvement
by Defendant Neil Enterprises. Although plaintiffs suspect possible "insider
involvement," given a repeat burglary a month later, they have no evidence to
prove their suspicion at this time.
Plaintiffs Puro and Yoken were two dealers who had rented booths from Neil
Enterprises. The Antiques Mall contains display booths of about 450 dealers.
Dealers who rent booths from Neil Enterprises are provided with copies of the
"Quechee Gorge Village Dealer Handbook."
Before plaintiffs Puro and Yoken signed their respective Quechee Gorge
Village Dealer Contracts, each spoke with General Manager Michael Leathe about
the security system. Mr. Yoken alleges that Mr. Leathe told him that the
Antiques Mall had "cameras everywhere, video cameras everywhere." Mr. Puro
alleges that Mr. Leathe told him that the Mall had a "state-of-the-art security
system," and that the booths were "covered by cameras at all times." Mr. Leathe
said nothing to either plaintiff about when the video cameras were operational,
or when they were recording. Nevertheless, Mr. Puro believed that the booths
were covered by the cameras at all times and that the system was
state-of-the-art.
Plaintiffs Puro and Yoken both now say that, if they had understood the
limitations of the security system at the Antiques Mall, they would not have
rented their booths.
When they contracted to rent their respective booths in the Quechee Gorge
Village, the plaintiffs each signed a copy of the "Quechee Gorge Village Dealer
Contract." The contract contains the following provision:
The undersigned dealer/licensee agrees that Neil Enterprises, Inc.,
D/B/A Quechee Gorge Village (hereinafter "Quechee Gorge Village"), its
shareholders, directors, officers, agents, employees, and staff shall
not be held liable for any damages to or loss of property from any
cause whatsoever including but not limited to fire or theft, it being
understood that to the extent desired and at their option, that this
property shall be insured by the undersigned dealer/licensee. The
dealer/licensee further agrees to indemnify and hold harmless QUECHEE
GORGE VILLAGE from any loss, claims, damages or charge for any injury
to any person or damage to property arising out of the display or sale
of any items being displayed by dealer/licensee at QUECHEE GORGE
VILLAGE.
When the plaintiffs signed their first respective Quechee Gorge Village
Dealer Contracts, each received a copy of the "Quechee Gorge Village Dealer
Handbook." The Quechee Gorge Village Dealer Handbook contains the following
provisions:
Lost or Damaged Merchandise
Dealers are responsible for their own lost or damaged merchandise.
This does happen, and we encourage our dealers to get insurance for
the items in their booths.
* * *
Security
The Antique mall is equipped with cameras and customer service
personnel who watch over your merchandise. In addition, all dealers,
while stocking their booths, are asked to report any suspicious
activity to the manager. The building is secured by an alarm system
with a direct link to the central office. All doors are alarmed as
well as infrared motion detectors in strategic areas. The entire
building is covered by a sprinkler system in case of fire. All keys
for locks are accounted for on a daily basis. They are signed out and
in each business day.
Michael Leathe, the General Manager at Quechee Gorge Village, believed that
the security system in place prior to September 2005 was "state of the art,"
based on his communications with Tasco Security, Inc. Nevertheless, he was aware
that there were lapses and shortcomings in the system.
At that time, the security system at the Antiques Mall included a system of
video cameras. There were four cameras--including three on the ground floor of
the Antiques Mall where the break-in occurred--that recorded the events within
their range. They were overwritten every seven days. They recorded during the
hours of business operation. There were also 16 additional cameras that
monitored the premises during business hours, but they did not record. Those
cameras surveyed the entire Antiques Mall facility. There were also "dummy"
cameras here and there within the premises. The security system at the Antiques
Mall also included a burglar-alarm system on all of the doors, and infrared
motion detectors throughout the building. In the event of a break-in, a loud
siren would immediately sound.
Security systems expert James Cronan states, in an affidavit, that the
existing security system at Quechee Gorge Village fell short of a
"state-of-the-art" system, in the following ways:
4. As of September 7, 2005, the security system at the Quechee
Gorge facility was not state-of-the-art. In the field of security, a
state-of-the-art system would have had 24/7 surveillance coverage by
exterior cameras recording, interior cameras recording (night vision
or with the premises lit) with special attention to the booths
containing valuables, adequate monitoring/patrolling by private
security, access points such as doors sufficiently secured, and
deterrence measures such as warning signs employed.
On or about the night of September 7, 2005, after Quechee Gorge Village had
closed for the day, a thief or thieves broke and entered the rear door of the
Antiques Mall, grabbed some of the items in the booths of Yoken and Puro, and
left. The theft is believed to have occurred quickly, perhaps in as little as
three minutes. The alarm on the back door sounded, Tasco Security Inc. promptly
called the police, and officers promptly responded to the scene, but, by the
time the police arrived, the thief or thieves had fled and could not be found.
When the break-in occurred, the security system did what it was designed to
do. However, when the break-in occurred, the store was closed, and the cameras
were not operating. The security system failed to prevent the theft from
occurring, and it also failed to yield information that could lead to the
capture of the thieves and the recovery of plaintiffs' property.
As a result of the theft, Mr. Puro lost merchandise with a value of $
25,293.50, and Mr. Yoken lost merchandise with a value of $ 31,698.
Discussion
Plaintiffs have filed a five-count complaint, as follows: Count 1 alleges
that defendant "knowingly, intentionally, and fraudulently" misrepresented the
security of the premises, to induce them to enter into the rental agreements.
Count 2 alleges common law fraud as well as violation of the Consumer Fraud Act,
9 V.S.A. § 2453 et seq. Count 3 alleges common law negligent misrepresentation.
Count 4 alleges negligent failure to maintain the premises safe and secure.
Count 5 seeks declaratory relief that the exculpatory clause in the signed
contract is unenforceable and contrary to public policy. Defendant moves for
summary judgment on all claims, based on numerous arguments.
The key issue presented is whether the alleged causes of action are precluded
by the exculpatory clause in the signed contract. We assume, without deciding,
that defendant's representative made material misrepresentations beyond mere
"puffing." Viewing the evidence in a light favorable to the plaintiffs, Mr.
Leathe told them that the security system was "state-of-the-art," that there
were video cameras "everywhere," and that the booths were "covered by cameras at
all times." These statements differ from commercial puffery in that the truth or
falsity can be objectively determined. Compare Heath v. Palmer, 2006 VT 125, P
14, 17 Vt.L.W. 426 (explaining that terms such as "high quality" or "exceptional
value" cannot form the basis for a claim, because their truth or falsity cannot
be precisely determined). Mr. Leathe may have been stating his opinions, but
there were no cameras positioned to record the view outside the back door, and
the booths were not "covered by cameras" during the off hours. These
discrepancies could be viewed as material misrepresentations based on incomplete
disclosure. See Sarvis v. Vermont State Colleges, 172 Vt. 76, 82-83 (2001)
(citing Crompton v. Beedle, 83 Vt. 287, 298 (1910)).
Thus, the critical question on summary judgment is whether the exculpatory
clause effectively bars plaintiffs' claims. It is undisputed that each plaintiff
signed a contract containing the exculpatory clause, and that the clause itself
is broadly worded to preclude liability "for any damages to or loss of property
from any cause whatsoever including but not limited to fire or theft." The
parties disagree, however, on (1) whether enforcement of the clause would be
contrary to public policy, and (2) whether an exculpatory clause within the
contract can bar a claim based on material misrepresentations in the inducement.
Exculpatory clauses are "traditionally disfavored," and they are subject to
"more exacting judicial scrutiny." "[A] greater degree of clarity is necessary
to make the exculpatory clause effective than would be required for other types
of contract provisions," and exculpatory clauses "must be construed strictly
against the party relying on them." Fairchild Square Co. v. Green Mountain Bagel
Bakery, Inc., 163 Vt. 433, 436-37 (1995) (quoting from Colgan v. Agway, Inc.,
150 Vt. 373, 375 (1988)). In Fairchild Square, the Court upheld an exculpatory
clause which clearly and reasonably allocated the respective responsibilities of
landlord and tenant for the purchase of fire insurance.
The Vermont Supreme Court has also held that "[e]ven well-drafted exculpatory
agreements, however, may be void because they violate public policy." Dalury v.
S-K-I, Ltd., 164 Vt. 329, 332 (1995). According to the Restatement, "an
exculpatory agreement should be upheld if it is (1) freely and fairly made, (2)
between parties who are in an equal bargaining position, and (3) there is no
social interest with which it interferes." Id. (citing Restatement (Second) of
Torts, § 496B comment b (1965)). "The critical issue here concerns the social
interests that are affected." Id. The circumstances of Dalury implicated broad
social interests, primarily because the skiing facility attracted thousands of
customers per day, and a decision upholding the waivers of liability could have
had far-reaching effects on the law of premises liability. Id. at 334.
The circumstances of this case more closely resemble those of Fairchild
Square than those of Dalury. The contracts for renting booths at the Antiques
Mall are between business persons in relatively equal bargaining positions, and
they involve relatively long-term rental arrangements, as opposed to the
short-term arrangements by members of the public who wish to ski for a day.
Moreover, as applied to the facts of this case, the exculpatory clause in the
Quechee Gorge Village Dealer Contract serves to allocate the risks of loss
caused by criminal acts of third parties. In contrast to Dalury, this case does
not involve any allegations of personal injury caused by direct negligence of
one of the contracting parties. Enforcement of the exculpatory clause under
these circumstances does not violate public policy.
As applied to the claims in this case, the intent behind the exculpatory
clause is crystal clear. "Neil Enterprises, Inc. . . . shall not be held liable
for any damages to or loss of property from any cause whatsoever including but
not limited to fire or theft." The focus is on precluding a lawsuit against Neil
Enterprises for dealer losses due to fire or theft, even if the dealer succeeds
in showing that Neil Enterprises was negligent, and that its negligence played a
role in allowing the losses to occur. See Thompson v. Hi Tech Motor Sports, Inc
., 2008 VT 15, P 17, 19 Vt.L.W. 45 (where the language is clear, we must
implement the intent and understanding of the parties).
Moreover, the scope of the clause is broad enough to cover the plaintiffs'
claims that Neil Enterprises induced them to sign the agreements by over-stating
the extent of the existing security measures. The clause itself flatly
contradicts any suggestion that Neil Enterprises intended to take on a legal
duty to protect items in the booths, or to otherwise insure against the risk of
loss due to third-party theft. Reasonable dealers who are asked to sign this
contract might ask more questions about the security, or they might decide to
purchase insurance. It would be unreasonable to sign the contract, but to
nevertheless assume that Neil Enterprises would cover losses due to third-party
theft. See Sugarline Associates v. Alpen Associates, 155 Vt. 437, 445 (1990) (it
was not reasonable to rely upon information conveyed, when it was coupled with
an express disclaimer). The effect of the exculpatory clause differs from that
of an "as is" term, which merely indicates that there are no implied warranties.
Compare Silva v. Stevens, 156 Vt. 94, 112-13 (1991) ("as is" clause does not
address tort liability). Here, the language of the exculpatory clause is clear
enough, and broad enough, to exclude tort liability by Neil Enterprises,
especially where the primary fault lies with unknown third-party criminals.
The exculpatory clause is broad enough to preclude liability on all of the
plaintiffs' claims. Neil Enterprises is entitled to summary judgment as a matter
of law.
ORDER
Defendant's Motion for Summary Judgment is GRANTED.