Usaa Group v. Universal Alarms, Inc , 158 Mich. App. 633 ( 1987 )

158 Mich. App. 633 (1987) 405 N.W.2d 146

USAA GROUP
v.
UNIVERSAL ALARMS, INC

Docket Nos. 89712, 89828.

Michigan Court of Appeals.

Decided February 5, 1987.

Menmuir, Zimmerman, Rollert & Kuhn (by R. Jay Hardin), for USAA Group.

Thomas J. Demetriou, P.C. (by Thomas J. Demetriou), for plaintiffs Meuller.

Kurt M. Meeuwenberg, for defendant.

Before: BEASLEY, P.J., and R.B. BURNS and G.D. LOSTRACCO,^[*] JJ.

PER CURIAM.

In this consolidated appeal, plaintiffs appeal from an order of summary disposition in favor of defendant under MCR 2.116(C)(4), lack of subject matter jurisdiction. We affirm.

Plaintiffs Mueller owned a cottage in Grand Traverse County. That cottage was insured by plaintiff USAA Group. The previous owners of the cottage had had a burglar/fire alarm system installed by defendant. After the Muellers purchased the cottage, an agent of defendant approached them to obtain a central monitoring service contract. Under such a contract, defendant would monitor the alarm system and report any fire or intrusion to the authorities. Mr. Mueller entered into the contract.

Thereafter, in 1981, the cottage was consumed by fire, resulting in damages in excess of $215,000. Plaintiff USAA paid to the policy limit of $140,000. The remaining damages were not covered by any insurance policy. Thereafter, USAA brought a subrogation claim against defendant, taking the position that defendant proximately caused the fire destruction because either the alarm system malfunctioned or defendant failed to notify the appropriate authorities when the alarm sounded. Eventually, the Muellers also filed suit, alleging the same causes of action as USAA. Those suits were consolidated in the trial court.

Among other motions, defendant moved for summary disposition on the grounds that the circuit court lacked subject matter jurisdiction. MCR 2.116(C)(4). The service contract entered into by Mr. Mueller and defendant had a liquidated damages clause which limited defendant's liability to $250. The trial court concluded that the clause was enforceable and that, since liability was limited to $250, the circuit court lacked jurisdiction over the subject matter. Accordingly, the trial court granted the motion.

This case is controlled by St Paul Fire & Marine Ins Co v Guardian Alarm Co of Michigan, 115 Mich. App. 278; 320 NW2d 244 (1982), which arose under a nearly identical fact situation. In Guardian Alarm, a burglar alarm failed to function and the alarm company was sued. A similar liquidated damages clause, limiting liability to $250 or the aggregate of six monthly payments, whichever was greater, was present. This Court affirmed the trial court's finding of a lack of subject matter jurisdiction.

Plaintiffs argue that the service agreement was a contract of adhesion and unconscionable. These arguments were addressed and rejected in Guardian Alarm. The only meaningful distinction between Guardian Alarm and the instant case which could buttress plaintiffs' position is that, in Guardian Alarm, the alarm company's customer was a corporation, while in the instant case Mr. Mueller was acting as an individual consumer. Thus, Mr. Mueller might have a stronger argument for the proposition that he was the victim of an adhesion contract.

This Court set forth the elements of an adhesion contract in Cushman v Frankel, 111 Mich. App. 604, 607; 314 NW2d 705 (1981):

The essence of an adhesion contract is that it is offered on a take it or leave it basis to a consumer who has no realistic bargaining strength and who cannot obtain the desired services or goods without consenting to the contract terms. Wheeler v St Joseph Hospital, 63 Cal App 3d 345, 356; 133 Cal Rptr 775 (1976).

The contract was sent to Mr. Mueller through the mail for his review and approval. While Mueller is an individual consumer and defendant is a corporation, there is no indication that Mueller was in a disadvantageous bargaining position. In fact, in his deposition, Mueller indicated that he was able to convince defendant not to raise its rates. Furthermore, there is no indication in the record that the Muellers were at the mercy of defendant in obtaining the needed services. We are not aware of any limitations preventing the Muellers from obtaining a central monitoring arrangement from another source or from obtaining some other protection system, such as a noise-generating system or a sprinkler system. Accordingly, we conclude that plaintiffs have not made a showing that the service agreement was a contract of adhesion.

Affirmed. Costs to defendant.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.