Jewelers Mutual Insurance Co. v. Firstar Bank Ill

Notable Items:

Plaintiff: Jewelers Mutual Insurance Co.
Defendant: Firstar Bank Ill.
Venue: Supreme Court of Illinois

Issue(s) Before the Court:

Is the exculpatory clause in defendant's safety deposit box agreement enforceable under the facts of this case ....

Plaintiff's Claim(s):

Complaint alleged breach of contract and negligence.
[Third dealer] also separately sued defendant and sought recovery under the same theories.

Defendant's Claim(s):

Defendant argues that the court erred in finding the paragraph one ambiguous.
Defendant argues that, if we find this paragraph ambiguous, then the resolution of its meaning is a question of fact and the case cannot be decided on a motion for summary judgement....

Holding(s) and Disposition:

Held: No. Having assumed this duty [to exercise ordinary care to prevent unauthorized persons from opening the box], defendant cannot exculpate itself from liability for a breach of that duty.
Disposition: We affirm the appellate court's judgement reversing the summary judgement for the defendant, entering summary judgement for the plaintiffs, and remanding for proof of damages.

Material Facts:

More than $1 million worth of loose diamonds and jewelry was stolen from three safety deposit boxes that defendant leased to jewel dealers at one of its Chicago branches.
"... leasee assumes all risks in connection with the depositing of such contents, that the sum mentioned is for the rental of the safe alone, and that there shall be no liability on the part of said bank, for loss of ... the contents of said box.... The liability of said bank is limited to the exercise of ordinaty care to prevent th opening of said safe by andy person not authorized ...."
Two of the dealers ... had the contents of their boxes insured by the plaintiff. The third dealer, Bachu Vaidya, uninsured.
[Plaintiff paid losses to the insured] and then brought [suit] ... against defendant.
Complaint alleged breach of contract and negligence.
Vaidya also separately sued defendant and sought recovery under the same theories.
... defendant admitted that it had to some extent been negligent and had breached the agreement as alleged by the plaintiff.
A full recounting of the facts is available below

Procedural History:

Relying on the exculpatory clause, defendant moved for and was granted summary judgement in both cases.
Plaintiff's appealed, and the two cases were consolidated on appeal.
The appellatte court affirmed the dismissal of the negligence count in Vaidya's case....
However, the court reversed the summary judgement in favor of the defendant in both cases on the breach of contract counts, holding that the exculpatory clause was unenforceable.
... ambiguous ... "there shall be no liability" ... "liability of said bank is limited to the exercise of ordinary care."
ambiguity had to be resolved against the defendant because it drafted the contract....
... defendant had admitted that it allowed unauthorized access to the safety deposit boxes in both cases ... the court granted in part the [plaintiff's] motion for summary judgement and directed the entry of partial summary judgement for Vaidya.
The court demanded for proof of damages.
Presiding Justice McBride dissented from the majority's conclusion that the contract was ambiguous.
Allowed defendant petition for leave to appeal....

Rationale

Majority Opinion

Summary judgement is proper where the pleadings, ... when viewed in the light most favorable to the non-moving, reveal that there is no issue as to any material fact and that the movant is entitled to judgement as a matter of law ....
We review summary judgement orders de novo....
Defendant argues that the court erred in finding the paragraph one ambiguous.
... a general exculpatory clause ... from all liability for loss of or damage to the contents of the box.
... next sentence, however, defendant assumes one particular liability: it must exercise ordinary care to prevent unauthroized opening of the box.
... clauses can not be reconciled in the manner suggested by the defendant.
Defendant argues that, if we find this paragraph ambiguous, then the resolution of its meaning is a question of fact and the case cannot be decided on a motion for summary judgement....
We disagree.
Whatever the meaning ... cannot be applied to a situation in which defendant is alleged to have breached its duty to exercise ordinary care to prevent unauthorized persons from opening the box.
Having assumed this duty, defendant cannot exculpate itself from liability for a breach of that duty.
We affirm the appellate court's judgement reversing the summary judgement for the defendant, entering summary judgement for the plaintiffs, and remanding for proof of damages.
A full description of the rationale is available below

Full Recounting of Facts

More than $1 million worth of loose diamonds and jewelry was stolen from three safety deposit boxes that defendant leased to jewel dealers at one of its Chicago branches.
"... leasee assumes all risks in connection with the depositing of such contents, that the sum mentioned is for the rental of the safe alone, and that there shall be no liability on the part of said bank, for loss of ... the contents of said box.... The liability of said bank is limited to the exercise of ordinaty care to prevent th opening of said safe by andy person not authorized ...."
Two of the dealers ... had the contents of their boxes insured by the plaintiff. The third dealer, Bachu Vaidya, uninsured.
[Plaintiff paid losses to the insured] and then brought [suit] ... against defendant.
Complaint alleged breach of contract and negligence.
Vaidya also separately sued defendant and sought recovery under the same theories.
... defendant admitted that it had to some extent been negligent and had breached the agreement as alleged by the plaintiff.
Relying on the exculpatory clause, defendant moved for and was granted summary judgement in both cases.
Plaintiff's appealed, and the two cases were consolidated on appeal.
The appellatte court affirmed the dismissal of the negligence count in Vaidya's case....
However, the court reversed the summary judgement in favor of the defendant in both cases on the breach of contract counts, holding that the exculpatory clause was unenforceable.
... ambiguous ... "there shall be no liability" ... "liability of said bank is limited to the exercise of ordinary care."
ambiguity had to be resolved against the defendant because it drafted the contract....
... defendant had admitted that it allowed unauthorized access to the safety deposit boxes in both cases ... the court granted in part the [plaintiff's] motion for summary judgement and directed the entry of partial summary judgement for Vaidya.
The court demanded for proof of damages.
Presiding Justice McBride dissented from the majority's conclusion that the contract was ambiguous.
Allowed defendant petition for leave to appeal....
A list of the material facts is available above

Majority Full Argument

Summary judgement is proper where the pleadings, ... when viewed in the light most favorable to the non-moving, reveal that there is no issue as to any material fact and that the movant is entitled to judgement as a matter of law ....
We review summary judgement orders de novo....
Defendant argues that the court erred in finding the paragraph one ambiguous.
[liability in one sentence refers to amount of damages; in second sentence liabilty refers to the standard of care.]
... return of rental fee.
... paragraph one is not simply a limitations of damages clause.
The clause does not say that, in the event of a breach, the plaintiff's damages are limited to a return of the rental fee.
... a general exculpatory clause ... from all liability for loss of or damage to the contents of the box.
... next sentence, however, defendant assumes one particular liability: it must exercise ordinary care to prevent unauthroized opening of the box.
... clauses can not be reconciled in the manner suggested by the defendant.
... two sentences cannot be reconciled in the manner suggested by the appellate court dissent.
The dissent argued that the second sentence referred to the defendant's liability in the event that the parties entered into the "special agreement" listed in clause one.
... cannot be the case because ... [under special agreement] defendant would become a general insurer of the contents of the box. [relies on special agreement being full coverage, not allowing partial coverage by both parties consent]
... cannot be reconciled in the manner suggested by the appellant court dissent.
Defendant argues that, if we find this paragraph ambiguous, then the resolution of its meaning is a question of fact and the case cannot be decided on a motion for summary judgement....
We disagree.
Whatever the meaning ... cannot be applied to a situation in which defendant is alleged to have breached its duty to exercise ordinary care to prevent unauthorized persons from opening the box.
... specific duty ... the heart of the parties' agreement.
Here, plaintiffs have received nothing in return for their rental fee if they cannot hold defendant to its contractual obligation to exercise ordinary care to prevent unauthorized persons from accessing their safety deposit boxes.
Having assumed this duty, defendant cannot exculpate itself from liability for a breach of that duty.
We affirm the appellate court's judgement reversing the summary judgement for the defendant, entering summary judgement for the plaintiffs, and remanding for proof of damages.
The core of the rationale is available above