A decision by the Georgia Court of Appeals has potentially far-reaching consequences for companies that include limitation-of-liability clauses in their customer contracts. In Monitronics International v. Veasley, the Georgia Court of Appeals upheld a $9 million jury verdict against an alarm company that had failed to properly warn a customer about repeated alarms at her home. A13A0090 (Ga. Ct. App, July 16, 2013).
The customer, who was brutally assaulted by an intruder, filed suit against the company alleging, among other claims, breach of contract and negligence. The alarm company argued that a limitation-of-liability clause in its customer contract limited liability to $250 for any loss resulting from the company’s service. The trial court, however, ruled that the clause was void as a matter of public policy, and allowed the case to be heard by a jury.
The Court of Appeals upheld that decision, although on different grounds. Notably, no majority opinion was reached on the limitation of liability issue. In the plurality opinion, which is physical precedent only (i.e., not binding precedent for other cases), Judge Stephen Dillard explained that it is “well settled that exculpatory clauses in which a business seeks to relieve itself from its own negligence are valid and binding in this State” and “are not void as against public policy unless they purport to relieve liability for acts of gross negligence or willful or wanton conduct.” Nonetheless, the clause in the contract at issue was “written in the same small, single-spaced typeface as the majority of the contract.” Because the exculpatory clause was neither “explicit” nor “prominent,” Judge Dillard concluded that the clause was unenforceable.
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