ATTORNEYS FOR APPELLANT
: ATTORNEYS FOR APPELLEE:
JAMES R. FISHER ANDREW P. WIRICK
DEBRA H. MILLER DEBRA G. RICHARDS
Ice Miller Hume, Smith, Geddes, Green & Simmons, LLP
COURT OF APPEALS OF INDIANA
MONTY YOUNG, Personal Representative )
of the Estate of MICHAEL K. YOUNG, Deceased , )
) No. 18A02-0109-CV-631
TRI-ETCH, INC., d/b/a )
SONITROL SECURITY SYSTEMS )
OF MUNCIE, INC., )
APPEAL FROM THE DELWARE CIRCUIT COURT
The Honorable Steven R. Caldemeyer, Judge
Cause No. 18C01-9908-CT-12
OPINION - FOR PUBLICATION
May 17, 2002
Monty Young, personal representative of the estate of Michael Young (the estate), appeals
from the trial courts grant of summary judgment in favor of Tri-Etch (d/b/a
Sonitrol Security Systems of Muncie). We affirm.
The estate presents two issues for review; those issues are consolidated and restated
here as whether the trial court erred in determining that a liability limitation
in the service contract between Tri-Etch and Muncie Liquors applied to the estates
claim against Tri-Etch.
Facts and Procedural History
In 1992, Muncie Liquors purchased a security system and contracted for alarm monitoring
services for their store on Tillotson Avenue in Muncie, Indiana, from Tri-Etch.
Michael Young (Young), an employee at the Tillotson store, worked the closing shift
on August 12, 1997. At some time before the closing time of
12:00 a.m., a man robbed Young at gunpoint, kidnapped him, drove him to
a nearby park, beat him severely, and left him tied to a tree
in the park. Young was found alive at approximately 6:00 a.m., but
he died later that day as a result of his injuries.See footnote
Tri-Etch provided a service to Muncie Liquors in addition to monitoring the alarm.
If the stores alarm were not set within a certain amount of
time after the usual closing time for the store, Tri-Etch would call the
store, then notify the stores general manager, then call the police. This
notification service is not described in the service contract between Muncie Liquors and
Tri-Etch, and the parties do not agree on exactly what the warning service
consisted of or at what times the service would be provided. However,
Tri-Etch customarily notified the Tillotson store by 12:30 a.m. in the event the
alarm was not set, as the stores usual closing time was 12:00 a.m.
On August 13, 1997, Tri-Etch did not call the store or the
general manager until approximately 3:00 a.m to notify Muncie Liquors that the alarm
was not set at the normal time after closing.
The estate filed a wrongful death action, claiming it was entitled to recovery
because Tri-Etch failed to notify Muncie Liquors of the alarm not being set
by 12:30 a.m. on August 13, 1997. Tri-Etch filed a motion for
summary judgment; in that motion, Tri-Etch requested that the court enter judgment in
its favor for the reason that under the terms of the service contract
between Muncie Liquors and Tri-Etch, any action against Tri-Etch must be brought within
one year of the incident giving rise to the cause of action.
The trial court found that more than one year had passed between Youngs
murder and the filing of the complaint, and it ruled in favor of
Tri-Etch based upon the service contracts liability limitation.
The estate then appealed
the trial courts ruling.
Discussion and Decision
A. Standard of Review
When we review a grant or denial of summary judgment, our well-settled standard
of review is the same as it is for the trial court:
whether there is a genuine issue of material fact, and whether the moving
party is entitled to judgment as a matter of law.
Indiana Univ. Medical Center, Riley Hosp. for Children v. Logan, 728 N.E.2d 855,
858 (Ind. 2000). Summary judgment should be granted only if the evidence
sanctioned by Indiana Trial Rule 56(C) shows that there is no genuine issue
of material fact and that the moving party deserves judgment as a matter
of law. Id. All evidence must be construed in favor of
the opposing party, and all doubts as to the existence of a material
issue must be resolved against the moving party. Id.
In this case, the trial court entered specific findings of fact and conclusions
of law. Specific findings and conclusions are neither required nor prohibited in
the summary judgment context. McBride ex rel. Estate of McBride v. Cole
Associates, Inc., 753 N.E.2d 730, 735 (Ind. Ct. App. 2001). Although specific
findings aid appellate review, they are not binding on this court. Id.
Instead, when reviewing an entry of summary judgment, we stand in the
shoes of the trial court. Id.
Finally, our proper role includes the careful scrutiny of the trial court's determination
to assure that the non-prevailing party is not improperly prevented from having her
day in court. R.R. Donnelley & Sons Co. v. North Texas Steel
Co., Inc., 752 N.E.2d 112, 121 (Ind. Ct. App. 2001), trans. denied.
Trial Courts Judgment and Parties Arguments on Appeal
While this case is not factually complicated, the trial courts ruling and the
parties legal arguments require considerable explanation. Therefore, this section shall be devoted
to summarizing the parties arguments and the trial courts ruling in order to
lay a foundation for more thorough discussion later.
At the trial court level, the estate argued it was entitled to recovery
from Tri-Etch under two different theories: one sounding in contract and the other
in tort. In its summary judgment order, the trial court found no
issues of material fact existed. Regarding the contract claim, it ruled that
as a matter of law, the claim could not stand because the service
contract specifically provided a one-year limitation on actions, and [the estate] did not
file [its] action within that one-year time period. Plaintiff-Appellants Brief at 28.
The trial court then responded to the estates tort claim as follows:
Tri-Etch responds by arguing that all actions it took were performed under the
agreement, and so [the estate] cannot escape the application of the contract to
this theory of liability, regardless of whether [the estate] is proceeding under a
contractual or tort theory of liability. (Reply Brief, p. 17.) Tri-Etch
cites Orkin Exterminating Co. v. Walters, 466 N.E.2d 55 (Ind. Ct. App. 1984)
[trans. denied; abrogated on other grounds in Mitchell v. Mitchell, 695 N.E.2d 920,
922 (Ind. 1998)], to support its argument. The Court agrees with Tri-Etch
that Orkin controls in this case, and [the estate] cannot avoid the contracts
one year limitation clause.
Plaintiff-Appellants Brief at 29.
See footnote A discussion of the holding in
in the next section below.The Holding in
In its argument on appeal, the estate attempts to revive the tort claim
it argued before the trial court; the estate notes that its claim against
Defendant is based upon Defendants breach of a common law tort duty .
. . . Plaintiff-Appellants Reply Brief at 1. The estate makes
an argument in two parts on appeal regarding how the trial court erred
in its entry of judgment. First, the estate argues that the contract
time limitation should not apply to this wrongful death action because Young was
not a party to the contract between Muncie Liquors and Tri-Etch; in other
words, Young did not agree to the one-year limitation as did Muncie Liquors,
and so the limitation should not apply to his claim. This argument
appears to be an attempt to distinguish this case from Orkin, which the
trial court found controlling. Next, the estate argues the 12:30 a.m. warning
call practice constituted a separate oral agreement between Tri-Etch and Muncie Liquors, and
that separate oral agreement contained no one-year liability limitation.
In response, Tri-Etch argues that all its duties to Young, if any, should
be determined by reference to the written contract between Tri-Etch and Muncie Liquors;
in other words, the trial court was correct in finding the holding in
Orkin to be controlling. To bolster its argument, Tri-Etch notes cases from
other jurisdictions in which contract terms are found to apply to third-party beneficiaries
under those contracts.
See footnote Tri-Etch also disputes the estates claim that a separate
oral agreement existed regarding the notification call service. Finally, Tri-Etch argues that
even if there existed a separate oral agreement, Young was not a third-party
beneficiary to that agreement, and therefore Tri-Etch had no duty to Young upon
which liability could be based.
The trial court found the holding in Orkin to be controlling regarding the
one-year limitations period, and so it did not reach the elements of the
underlying contract and tort claims the estate made. In Orkin, plaintiff Walters
contracted with Orkin exterminating company for pest control services, including termite control, in
her home. Orkin treated Walters home initially in 1976, then again in
1979 and 1980 after Walters discovered additional termite damage. The 1979 and
1980 treatments were not charged to Walters because at the time of the
initial treatment she purchased a Continuous Protection Guarantee and paid an annual fee
to keep that guarantee active. Despite these treatments Walters still had pest
problems, and she sued Orkin in 1980 for negligent breach of contract.
The trial court awarded her $54,000.00 for damage to property and for discomfort,
inconvenience, mental stress, and aggravation. The trial court concluded that [w]here the
damage results from a breach of duty and would not have occurred but
for Defendants negligent performance, Defendants negligence constitutes malfeasance and Plaintiff may sue in
tort . . . . Where Defendant performs in such a defective way
as to amount to tortious malfeasance, Plaintiffs damages are not limited to contract
terms. Orkin, 466 N.E.2d at 57.
The Orkin court reversed the trial courts judgment, noting that:
Indiana law recognizes that Walters had an option of suing in tort or
in contract for the negligent performance of a contractual duty . . .
Walters suit based in tort does not change the fact that Orkins duty
to Walters is based on the contract. Moreover, bringing a suit in
tort does not allow Walters to avoid the limitation of liability clause in
Orkin, 466 N.E.2d at 58. The Orkin court cited a rationale for
this rule from Better Food Markets, Inc. v. American Dist. Tel. Co., 253
P.2d 10, 15-16 (Cal. 1953): Although an action in tort may sometimes
be brought for the negligent breach of a contractual duty . . .
still the nature of the duty owed and the consequences of its breach
must be determined by reference to the contract which created that duty.
Orkin, 466 N.E.2d at 58.
D. The Arguments Under CSX
The estate argues that this case is distinguishable from
Orkin because plaintiff Walters
in Orkin was a party to the contract in which Orkin limited its
liability, whereas Young was not a party to the contract between Tri-Etch and
Muncie Liquors. The estate urges us to hold that a third partys
tort claim cannot be denied due to a one-year liability limitation in a
contract without that third partys knowledge and consent.
The estate asserts that no private contract can be effective in extinguishing or
limiting [a partys] legal liabilities to third persons. Plaintiff-Appellants Brief at 18.
In support of this proposition the estate cites CSX Transportation, Inc. v.
Kirby, 687 N.E.2d 611 (Ind. Ct. App. 1997), trans. denied. CSX, a
railroad company, contracted with the city of Terre Haute to repair railroad crossings
within the city. The contract provided that the city would be responsible
for erecting signs warning oncoming automobile drivers of the construction. Members of
the Kirby family were injured when their vehicle fell into a hole created
by the construction that was not clearly marked by a warning sign, and
they sued the city and CSX. CSX filed for summary judgment, claiming
the contract relieved it of liability for injuries due to the construction because
the city bore responsibility for warning signs under the contract. The trial
court denied the summary judgment motion, and this court affirmed that denial, noting
that [r]ailroad companies owe to the traveling public the duty of exercising reasonable
care to avoid injury to persons at places where the tracks and the
highway cross. CSX, 687 N.E.2d at 615. This court further noted
that a party may not contract against his own negligence . . .
CSX could not contract away the duty of reasonable care which it owed
the Kirbys. Id.
Tri-Etch favors the use of the Orkin rule relied upon by the trial
court, and it attempts to distinguish away CSX by arguing that unlike the
previously existing duty owed by the railroad company to the general public, Tri-Etch
had no comparable common law duties to Young. Tri-Etch asserts that its
only obligation was to perform under the written contract between it and Muncie
E. Contract Liability Limits Apply
Neither Orkin nor CSX directly addresses the issue in this case, namely whether
contract liability limits apply to third parties suing in tort. However, we
find the holding in Orkin instructive, and we rely on its theory for
our holding. We acknowledge that the estate is situated differently than the
plaintiff in Orkin in that Young was not a party to the contract
and so the estate could not bring an action directly under the service
contract. Still, we hold, just as in Orkin, that whether the estate
brings its claim in contract or tort, it cannot escape the liability
limitations in the service contract. It is immaterial that Young himself did
not agree to the liability limitations because Young would have no relationship with
Tri-Etch at all were it not for the service contract.
As a non-party, Young was never in a position to accept or reject
liability limitations in the service contract. Any rights Young had were derivative
of the business relationship between Muncie Liquors and Tri-Etch; therefore, any benefit to
Young as a result of this business relationship could not have come to
exist without the service contract. Were we to find that the liability
limits do not apply to the estates claim, in effect we would be
granting Young, a non-party, greater rights under the contract than the parties themselves
had under that contract.
As for the estates attempt to escape the liability limitations by relying heavily
on the idea of a separate duty arising from the alleged oral agreement
Tri-Etch made to provide notification calls, we find it unnecessary to determine whether
such a separate oral contract existed. We agree with Tri-Etch that even
if a separate oral contract existed, it would still have its genesis in
the relationship established by the written contract. Thus, such an oral contract
would not exist independently of the written contract, and it would therefore be
interpreted with reference to and bound by the terms of the service contract.
We also find it unnecessary to resolve the question of whether Tri-Etch actually
owed a duty to Young.See footnote The estate argues extensively under section 324A
of the Restatement (Second) of Torts that Tri-Etch owed a common law duty
to Young independent of the contract.See footnote The source of this duty, according
to the estate, is the separate oral agreement Tri-Etch made with Muncie Liquors
when it voluntarily undertook the notification call service. Should Tri-Etch owe any
duty at all to Young, that duty could not exist without Muncie Liquors
contractual purchase of security services from Tri-Etch. And as we noted previously,
without the service contract, Young and Tri-Etch would have no relationship at all.
Therefore, the one-year limitation in the contract applies to any such duty
that might exist, and the trial court did not err in ruling in
favor of Tri-Etch.
The trial court did not err in granting summary judgment for Tri-Etch after
determining that the one-year liability limitation in the contract between Tri-Etch and Muncie
Liquors applied to the estates claim.
KIRSCH, J., and RILEY, J., concur.
Footnote: We heard oral argument on this case on February 19, 2002, at
Wabash College in Crawfordsville, Indiana. We thank the attorneys for their capable
advocacy and the students and faculty for their gracious reception.
Footnote: The record includes some evidence from the estate indicating that had Young
been found earlier, he might have survived; however, Tri-Etchs position on this issue
is not apparent from the record before us.
The estate filed its complaint on August 6, 1999.
The contract provides that [a]ll claims, actions or proceedings, legal or equitable,
against DEALER must be commenced in court within one (1) year after the
cause of action has occurred or the act, omission or event occurred from
which the claim, action or proceeding arises, whichever is earlier . . .
. Appendix to Plaintiff-Appellants Brief at 55. This clause is referred
to as a liability limitation throughout this opinion.
Tri-Etch also cites Indiana caselaw allowing a contractual shortening of the time
within which a plaintiff may bring suit.
See Meridian Mut. Ins. Co.
v. Caveletto, 553 N.E.2d 1269, 1270 (Ind. Ct. App. 1990) (A contractual limitation
of actions provision which shortens the time within which plaintiffs must bring suit
is valid and enforceable in Indiana if the parties mutually consented and agreed
to the provision.).
The estate makes an argument under
CSX Transportation, Inc. v. Kirby,
687 N.E.2d 611 (Ind. Ct. App. 1997), trans. denied.
At different times during this proceeding both parties raised the issue of
whether Young was, in fact, a third party beneficiary to the contract.
The resolution of this question does not affect our holding one way or
the other; thus, we leave it for another day.
Footnote: The existence of a duty is a question of law for the
court . . . the court balances three factors in determining whether a
duty exists: (1) the relationship between the parties; (2) the reasonable
foreseeability of harm to the person injured; and (3) public policy concerns.
Barnes v. Antich, 700 N.E.2d 262, 266 (Ind.Ct.App.1998), trans. denied.
That section provides in part as follows:
One who undertakes, gratuitously or for consideration, to render services to another, which
he should recognize as necessary for the protection of a third person or
his things, is subject to liability to the third person for physical harm
resulting from his failure to exercise reasonable care to protect his undertaking, if
his failure to exercise reasonable care increases the risk of such harm, or
he has undertaken to perform a duty owed by the other to the
third person, or
the harm is suffered because of the reliance of the other or the
third person from the undertaking.
Indiana has adopted this principle; see Harper v. Guaranty Auto Stores, 533 N.E.2d
1258, 1262 (Ind. Ct. App. 1989), trans. denied.