Timothy J. PURO and Steven Yoken v. NEIL ENTERPRISES, INC.
d/b/a Quechee Gorge Village

No. 08-254


2009 VT 95; 987 A.2d 935; 2009 Vt. LEXIS 117

September 4, 2009, Decided

Appeal from Windsor Superior Court. Docket No. 531-9-06 Wrcv. Trial Judge:
Walter M. Morris, Jr., J.

JUDGES: Paul L. Reiber, Chief Justice, John A. Dooley, Associate Justice,
R. Johnson, Associate Justice, Marilyn S. Skoglund, Associate Justice,
Brian L.
Burgess, Associate Justice.


Two separate dealers of jewelry and coins appeal from summary judgment in
favor of a company from which they leased display booths in the Antiques
Mall at
Quechee Gorge Village (the Mall). Following losses from theft, plaintiffs,
Timothy Puro and Steven Yoken, alleged negligence on the part of the
and that they were fraudulently induced to lease the display booths by the
owner's misrepresentation of the Mall's security system and practices.
Based on
the same facts, plaintiffs also alleged negligent misrepresentation and a
violation of the Consumer Fraud Act. See 9 V.S.A. §§ 2453, 2461(b). In
defendant argued that an exculpatory clause in its agreement with
precluded any recovery. The superior court granted defendant summary
judgment on
that basis. Since we find that defendant is not entitled to summary
judgment on
the fraud and negligent misrepresentation counts based on the exculpatory
clause, we reverse and remand.

The Mall contains about 450 booths. Plaintiff Puro leased a display booth
2005 to sell coins and currency. Plaintiff Yoken leased a display booth in
to sell high-end custom jewelry. After hours on September 7, 2005, a thief
thieves broke into the Mall through the rear door and quickly stole
jewelry and
coins from plaintiffs' display booths. The alarm sounded and the security
company notified the police. By the time police arrived, the thieves had
The Mall contains security cameras, some of which were attached to video
recorders, but the images of the thieves were not recorded because the
were not operating at the time. The stolen merchandise was never recovered.
Plaintiff Puro lost goods valued at $ 25,293; plaintiff Yoken lost goods
at $ 31,698.

Central to this case are defendant's representations to plaintiffs about
presence of security at the Mall. Both plaintiffs received information
about the
Mall's security system from at least three sources on which they might have
relied, in addition to any observations they may have made themselves.
each spoke with the Mall's general manager, who was in charge of security.
Second, each signed an agreement including the exculpatory clause. Third,
received a handbook with information on the Mall's security practices at
time each signed the agreement.

Before signing the agreement, each plaintiff discussed the Mall generally
and its security system specifically with the Mall's general manager. The
manager allegedly stated to plaintiff Yoken that the Mall had "video
everywhere" and that he lived "within minutes of [the Mall], and if
ever happened [he] would be there first." In a similar conversation with
plaintiff Puro, the manager allegedly stated that the Mall had an alarm
infrared sensors, and cameras covering every booth at all times. He also
described the alarm system as "state-of-the-art." 1

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alleged statements by the general manager are taken from depositions by
plaintiffs and are somewhat more extensive than those in the trial court's
decision. The deposition of the general manager suggests that these
could be in keeping with information he typically provided, although he
that he could not remember the specific statements he made to plaintiffs,
the number of conversations he had with potential dealers.
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Each plaintiff signed the "Quechee Gorge Village Dealer Contract." The
agreements were identical and included exculpatory language stating in
part that defendant's:

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 [the dealer's]
option, that this property shall be insured by the undersigned

At the time of signing, each plaintiff received a copy of the "Quechee
Village Dealer Handbook." In a section headed "Security," the handbook

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.

Another section of the handbook, headed "Lost or Damaged Merchandise,"
that "[d]ealers are responsible for their own lost or damaged merchandise.
does happen, and we encourage our dealers to get insurance for the items in
their booths." Neither plaintiff obtained insurance for his merchandise.

The Mall did, in fact, have security cameras and an alarm system, although
plaintiffs argue that important information about the Mall's security was
misrepresented or omitted. Three black and white cameras on the ground
recorded onto a VCR, but during business hours only. The video footage was
retained for seven days, but not routinely reviewed. As they were
mall staff monitored a rotation of live images from these cameras at the
checkout-counter. They additionally monitored unrecorded images from
other cameras that were displayed at the checkout-counter on a screen
divided to
show views from four cameras at once. The Mall also used non-functioning
cameras as a theft deterrent. The Mall's exterior was not monitored by

Along with the cameras, the Mall had an alarm system administered by a
security company with infrared motion sensors and sensors on all of the
When triggered, the alarm alerted the security company directly, which
defendant's security manager and then the police. A loud on-site siren
also sound. There was no signage to indicate the existence of this alarm.

Plaintiffs filed a joint complaint seeking relief on a number of counts.
complaint sought a declaratory judgment that the exculpatory clause in the
was invalid. It sought a rescission of the lease contracts based on
fraud. Finally, it sought damages based on theories of fraud, negligent
misrepresentation, consumer fraud, and negligence. Defendant moved for
judgment on numerous grounds, including its contention that there were no
material misrepresentations and that the action was barred by the
clause. The superior court granted summary judgment solely on the latter

Summary judgment is appropriate only when the moving party has demonstrated
that there are no genuine issues of material fact and it is entitled to
as a matter of law. Goldman v. Town of Plainfield, 171 Vt. 575, 575, 762
854, 855 (2000); V.R.C.P. 56(c)(3). This Court "review[s] an award of
judgment de novo, construing all doubts and inferences in favor of the
party." Collins v. Thomas, 2007 VT 92, ¶ 6, 182 Vt. 250, 938 A.2d 1208

Plaintiffs' first argument on appeal is that the exculpatory clause is
invalid as against public policy and cannot bar any of the counts of their
action. Plaintiffs present an argument based on the various factors we
have used
primarily in consumer transactions in evaluating the validity of
clauses. See Behr v. Hook, 173 Vt. 122, 126-27, 787 A.2d 499, 502-03
Dalury v. S-K-I, Ltd., 164 Vt. 329, 332-33, 670 A.2d 795, 797-98 (1995).
As the
trial court found, however, the parties in this case are business persons
relatively equal bargaining power and were using the clause to determine
party would bear the cost of necessary insurance. We agree with the trial
that the relevant precedent is Fairchild Square Co. v. Green Mountain Bagel
Bakery, Inc., 163 Vt. 433, 437, 658 A.2d 31, 33 f(1995), where we upheld an
exculpatory clause covering fire or casualty loss between a landlord and a
commercial tenant. We note additionally that exculpatory clauses relating
security services are routine in business agreements and are virtually
unanimously upheld by the courts. See generally M. Shields, Annotation,
Validity, Construction, and Application of Exculpatory and Limitation of
Liability Clauses in Burglary, Fire, and Other Home and Business Monitoring
Service Contracts, 36 A.L.R. 6th 305, 338-52, § 9 (2008). We reject
argument that the exculpatory clause is invalid.

Plaintiffs have not contested the superior court decision with respect to
their negligence count if the exculpatory clause is valid, and, therefore,
affirm the summary judgment as to the negligence count. We agree with
plaintiffs, however, that the exculpatory clause does not bar the fraud,
negligent misrepresentation, or consumer fraud counts.

We have not addressed whether an exculpatory clause defeats a claim of
in the inducement. We have, however, considered whether a contract for
sale of a
house, which included a clause that no representation had been made as to
"condition" of the house, would defeat a claim of negligent
with respect to the condition of the house. See Silva v. Stevens, 156 Vt.
589 A.2d 852 (1991). Relying upon decisions from numerous jurisdictions,
we held
that the "as-is" clause did not defeat the negligent misrepresentation
claim. Id
. at 112-13, 589 A.2d at 862-63.

Whether we view the issue as one of fair construction of the exculpatory
clause or implementation of a policy that denies a party the benefit of a
fraudulent act, we conclude that the result here should be the same as in
that is, the exculpatory clause does not defeat the fraud or negligent
misrepresentation claim. The decisions from other jurisdictions uniformly
support this result, at least as to fraud claims. See AirFreight Express
LTD. v.
Evergreen Air Ctr., 215 Ariz. 103, 158 P.3d 232, 239-40 (Ariz. Ct. App.
(collecting cases); Mankap Enters., Inc. v. Wells Fargo Alarm Servs., 427
So. 2d
332, 333-34 (Fla. Dist. Ct. App. 1983) (exculpatory clause in burglary
contract ineffective against claim of fraud because "a party cannot
against liability for his own fraud"); Osterhaus v. Toth, 39 Kan. App. 2d
187 P.3d 126, 135 (Kan. Ct. App. 2008) (law will not sustain covenant of
immunity that protects against consequences of fraud); Bates v. Southgate,
Mass. 170, 31 N.E.2d 551, 558 (Mass. 1941) (contracts protecting party
consequences of party's fraud are unenforceable); Morgan Co. v. Minn.
Mining &
Mfg. Co., 310 Minn. 305, 246 N.W.2d 443, 448 (Minn. 1976) (exculpatory
clause in
burglar alarm contract does not apply to fraud and misrepresentation
Cirillo v. Slomin's Inc., 196 Misc. 2d 922, 768 N.Y.S.2d 759, 769 (N.Y.
Sup. Ct.
2003) (exculpatory clauses in burglary alarm contract do not exculpate the
defendant from its own fraud); Houghland v. Sec. Alarms & Servs., Inc., 755
S.W.2d 769, 773 (Tenn. 1988) (exculpatory "clauses do not ordinarily
against liability for fraud or intentional misrepresentation"); but see
Techniques, Inc. v. Hoffman, 50 Mass. App. Ct. 425, 737 N.E.2d 920, 926
App. Ct. 2000) (exculpatory clause defeats negligent misrepresentation

We reach the same result under the Consumer Fraud Act, 9 V.S.A. §§ 2453,
2461(b), which the Legislature enacted "to protect this State's citizens
unfair and deceptive business practices and to encourage a commercial
environment highlighted by integrity and fairness." Gramatan Home Investors
Corp. v. Starling, 143 Vt. 527, 536, 470 A.2d 1157, 1162 (1983). 2 For the
reasons that the exculpatory clause does not prohibit a fraud remedy, we
that it does not prohibit a consumer fraud remedy. See Gloucester Holding
v. U.S. Tape & Sticky Prods., LLC, 832 A.2d 116, 126-27 (Del. Ch. 2003);
Wall v.
Planet Ford, 159 Ohio App. 3d 840, 2005-Ohio-1207, 825 N.E.2d 686, PP
First Title Co. of Waco v. Garrett, 860 S.W.2d 74, 77 (Tex. 1993).

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not resolve in this case whether the Act itself precludes the enforcement
of an
exculpatory clause. See 9 V.S.A. § 2461(b) (language which attempts to
recovery "of the penalty or reasonable attorney's fees" is unenforceable).
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In the event that we reverse and remand on the effect of the exculpatory
clause, defendant urges that we reach its other grounds for summary
judgment. As
they were not reached by the superior court, we decline to do so here.

Reversed and remanded for proceedings consistent with this decision.