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Carll v. Terminix International Company2/21/2002
had an agreement which included a clause limiting liability to the cost of repair of the alarm system. The court ultimately ruled that the clause limiting the appellee's liability to the cost of repair should be enforced, but the court stated that its conclusion extended only to the loss of damage to possessions. It stated that it expressed no opinion regarding the clause's validity if it had referred to loss or damage to persons. The court looked to the provisions of the Uniform Commercial Code in reaching its conclusion. It cited Section 2719(c) of the UCC which provides:
Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not. 13 Pa.C.S.A. §2719(c).
The court recognized that it was considering a loss of property not an "injury to the person" and thus the presumption of unconscionability did not apply to the limitation clause it was reviewing.
In this case the contract contained a clause denying the arbitrators the power to award damages for personal injury . The parties have not argued the applicability of the UCC's limitation of consequential damages provision found in 13 Pa.C.S.A. §2710(c) to this case. Therefore we will not determine whether this contract falls under the UCC provisions. However, we note that this provision recognizes that a limitation of consequential damages provision for injury to the person in the case of consumer goods is prima facie unconscionable. We find this statutory provision lends support to our conclusion that the provision of this contract which denies the arbitrator the authority to award consequential damages for injuries to the person is unconscionable and against public policy. As the trial court noted, these Appellants are in the business of applying insecticides in a residential setting. We agree with the trial court that in this situation a contract clause, which essentially limits liability for injury to the person, is unconscionable and unenforceable as against public policy.
The trial court also found that the limiting language found in the arbitration clause was on the reverse side of the form and was thus inconspicuous and did not adequately put plaintiffs on notice of the legal rights they were waiving. It further ruled that the arbitration provision did not apply to the minor children. Appellants argue against these rulings and offers citations to federal court decisions. We find no need to comment on these rulings as our decision finds this contract provision, by its terms, is against public policy and unenforceable.
Appellants also contend that the arbitration provision is severable from the limitation of damages provision and suggest that this court enforce the arbitration provision and allow the arbitrator to determine whether the limitation of damage language is against public policy. We cannot accept this argument because the arbitration provision is not independent of the limitation of damage provision. Contained under one heading of "Arbitration" the contract directs that all matters in dispute be settled exclusively by arbitration, by an arbitrator who shall have limited powers.
This arbitrator will not have the authority to hold Appellants responsible for the damages claimed by Appellees. The arbitration provision not only provides for arbitration but at the same time limits the arbitrator's authority.
The limitation of liability language is not independent of the agreement to arbitrate. These provisions are not distinct. The same contra
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