McCane-Sondock Protection Systems, Inc. v. Emmittee
540 S.W.2d 764 (1976)
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Rule of Law:
A contractual clause limiting liability for a 'failure of performance' is inapplicable when a party's negligence consists of failing to complete the initial installation of the system. A third-party criminal act is a foreseeable intervening cause that does not sever the chain of proximate causation from the installer's original negligence.
Facts:
- James Roy Emmittee hired McCane-Sondock Protection Systems, Inc. to install a burglar alarm system, including hold-up buttons, at his business, the Bedford Package Store.
- The service contract contained a clause limiting McCane-Sondock's liability to $25 in the case of 'failure of the performance of the alarm system to operate.'
- During installation, McCane-Sondock's employees failed to connect the wires from the hold-up buttons to the main control panel.
- After the purported installation, McCane-Sondock failed to test the system to ensure the hold-up buttons were functional.
- A robber entered the store, and Mrs. Emmittee and the store manager pressed the hold-up buttons to activate the alarm.
- Because the buttons were not connected, the alarm did not activate, and police were not notified.
- The robber remained on the premises for five to ten minutes, completing the robbery and causing a financial loss to Emmittee.
- The police station was located two miles away, and a functioning alarm would have notified them within 30 to 45 seconds.
Procedural Posture:
- James Roy Emmittee sued McCane-Sondock Protection Systems, Inc. in a Texas trial court for negligent installation.
- After a jury trial, the jury found in favor of Emmittee.
- The trial court entered a judgment awarding damages to Emmittee, which was remitted to $6,839.
- McCane-Sondock, as appellant, appealed the judgment to the Texas Court of Civil Appeals, an intermediate appellate court, with Emmittee as the appellee.
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Issue:
Does a liquidated damages clause limiting liability for 'failure of performance' apply when an alarm company negligently fails to complete the initial installation of the system, and can such negligence be the proximate cause of a loss from a robbery?
Opinions:
Majority - Raleigh Brown
No, the liquidated damages clause does not apply, and yes, the negligent installation can be the proximate cause of the loss. A limitation of liability for 'failure of performance' is inapplicable where the system was never properly installed, and a criminal act is a foreseeable consequence of such negligence. The court reasoned that the concept of 'failure of the performance of the alarm system to operate' presumes that the system was properly installed and capable of functioning in the first place. Since McCane-Sondock never connected the hold-up buttons, it failed its duty to install a workable system, and the liquidated damages clause is therefore not triggered. Regarding proximate cause, the court held that the criminal act of a third-party robber was a foreseeable intervening cause. The very purpose of a hold-up alarm is to protect against robberies, making such an event foreseeable. Given the robber's lengthy presence in the store and the police's proximity, there was sufficient evidence for a jury to conclude that McCane-Sondock's negligence was a proximate cause of Emmittee's loss.
Analysis:
This decision distinguishes between a failure of performance and a failure to install, clarifying that contractual liability limitations for the former may not protect a party from negligence in the latter. It prevents service providers from using boilerplate limitation clauses to shield themselves from liability for failing to complete the fundamental task they were contracted to perform. The case also reinforces the established tort principle that a third party's criminal act does not break the chain of causation if that act was a foreseeable consequence of the defendant's negligence, which is particularly relevant for security and alarm service contracts.
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