Tag Archives: Exculpatory Clause

Beware: A Security Company’s Contract May Eliminate Your Causes of Action


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In Jewels by Iroff, Inc. v. Securitas Tech. Corp., No. 1:23-CV-556-TWT, 2023 U.S. Dist. LEXIS 172391, a Georgia federal court addressed a suit against a security/alarm company arising from a break-in at a jewelry store where the thieves stole over $1 million in jewelry. The court addressed numerous provisions in the alarm company’s contract – such as a waiver of subrogation, exculpatory and limitation of liability provision – and concluded that the provisions were enforceable. Thus, the court dismissed the plaintiff’s complaint (although it gave the plaintiff the opportunity to try and amend its complaint to state a cause of action).

In February 2022, a break-in occurred in Alpharetta, Georgia at Jewels by Iroff, Inc. (Iroff). Iroff’s insurer, Jewelry Mutual Insurance Company (Insurer), reimbursed Iroff for more than $1.2 million in losses following the incident. Insurer then filed a subrogation action against Iroff’s alarm security contractor, Securitas Tech. Corp. (Securitas), alleging gross negligence, breach of contract and fraudulent misrepresentation.

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This entry was posted in Contracts, Georgia, Limitation of Liability, Subrogation, Waiver of Subrogation and tagged , , , , , , .
Broken Bricks

Wisconsin Supreme Court Holds that Subrogation Waiver Does Not Violate Statute Prohibiting Limitation on Tort Liability in Construction Contracts


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In Rural Mut. Ins. Co. v. Lester Bldgs., LLC 2019 WI 70, 2019 Wisc. LEXIS 272, the Supreme Court of Wisconsin considered whether a subrogation waiver clause in a construction contract between the defendant and the plaintiff’s insured violated Wisconsin statute § 895.447, which prohibits limitations of tort liability in construction contracts. The Supreme Court affirmed the lower court’s decision that the waiver clause did not violate the statute because it merely shifted the responsibility for the payment of damages to the defendant’s insurance company. The waiver clause did not limit or eliminate the defendant’s tort liability. This case establishes that while
§ 895.447 prohibits construction contracts from limiting tort liability, a subrogation waiver clause that merely shifts responsibility for the payment of damages from a tortfeasor to an insurer does not violate the statute and, thus, is enforceable. Continue reading →

This entry was posted in Construction Defects, Subrogation, Waiver of Subrogation, Wisconsin and tagged , , , , .

In Georgia, A Waiver of Subrogation Clause is not an Exculpatory Clause That Must be Prominently Displayed


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In Allstate Insurance Company v. ADT, LLC, No. 1:15-cv-517-WSD, 2016 U.S. Dist. LEXIS 120880 (N.D. Ga.), the United States District Court for the Northern District of Georgia addressed the question of whether a contract’s insurance and waiver of subrogation clause was an exculpatory clause that was unenforceable because it did not pass Georgia’s Prominence Test. The court held that a waiver of subrogation clause is not an exculpatory clause and, thus, its enforceability does not depend on the clause being prominently displayed.

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This entry was posted in Georgia, Waiver of Subrogation and tagged , , .

The Fourth Circuit Applies a Consequential Damages Exclusionary Clause and the Economic Loss Doctrine to Bar Claims by a Subrogating Insurer Seeking to Recover Over $19 Million in Damages


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In Severn Peanut Company, Inc. v. Industrial Fumigant Company, 807 F.3d 88 (4th Cir. (N.C.) 2015), the United States Court of Appeals for the Fourth Circuit (Fourth Circuit), applying North Carolina law, considered whether a consequential damages clause in a contract between the Severn Peanut Company, Inc. (Severn) and Industrial Fumigant Company (IFC) barred Severn and its subrogating insurer, Travelers Property Casualty Company of America (Travelers), from recovering over $19 million in damages that Severn suffered as the result of a fire and explosion at its Severn, North Carolina plant. The Fourth Circuit, rejecting Severn’s unconscionability and public policy arguments related to the consequential damages clause and finding that the economic loss doctrine barred Severn from pursuing negligence claims, affirmed the trial court’s judgment granting summary judgment in IFC’s favor.

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This entry was posted in Economic Loss Rule, Limitation of Liability, North Carolina and tagged , , .

In Florida, Exculpatory Clauses Do Not Need Express Language Referring to the Exculpated Party’s Negligence


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By: Edward Jaeger and William Doerler

In Sanislo v. Give Kids the World, Inc., 157 So.3d 256 (Fla. 2015), the Supreme Court of Florida considered whether a party to a contract, in order to be released from liability for its own negligence, needs to include an express reference to negligence in an exculpatory clause. The court held that, unlike an indemnification clause, so long as the language in an exculpatory clause is clear, the absence of the terms “negligence” or “negligent acts” in an exculpatory clause does not, for that reason alone, render the exculpatory clause ineffective.

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This entry was posted in Contracts, Florida, Litigation and tagged , .