## Facts

- Veteran’s Liquors, Inc. contracted with Beltway Alarm Company to install and maintain a central-station “hold-up” alarm system for a liquor store.
- A 1980 superseding agreement required monthly payments and contained a clause stating Beltway was not an insurer and limiting Beltway’s total liability for loss or damage from breach of contract or negligence to $250 or six months’ service charges (whichever was less), with an option to pay more for greater protection.
- During a robbery at the store on August 31, 1981, Eugene Schrier was shot and seriously injured.
- Schrier alleged he activated two alarm buttons before being shot and that Beltway delayed about 14 minutes in notifying police, and that the delay caused his injury.
- Eugene and Sheila Schrier (principal shareholders of the corporation) sued Beltway for negligence, breach of contract, and breach of warranty, seeking damages far exceeding the contractual cap.

## Issues

1. Whether the contract’s damages-cap provision was an unenforceable liquidated-damages penalty or a valid limitation-of-liability clause.
2. Whether the limitation-of-liability clause was void as against public policy when applied to claims alleging negligence and resulting personal injury.
3. Whether plaintiffs could pursue an independent negligence claim not subject to the contractual limitation.
4. Whether Eugene and Sheila Schrier were bound by the limitation clause even though the corporation was the named contracting party.

## Decision

- The Maryland Court of Special Appeals affirmed.
- The court held the provision operated as a valid limitation-of-liability clause, not an invalid liquidated-damages penalty.
- The clause was enforceable and not contrary to Maryland public policy in this commercial context.
- The negligence claim was subject to the same contractual cap because the clause expressly covered negligence in performance, and plaintiffs could not avoid the cap by pleading in tort.
- The Schriers were bound by the contract’s limitation because they sought benefits tied to the contract and were direct participants/beneficiaries of the alarm arrangement.
- After the cap reduced the amount in controversy below the statutory threshold, dismissal for lack of subject matter jurisdiction was upheld.

## Legal Principles

- A contract term capping an alarm company’s liability may be construed as a limitation-of-liability clause (allocating risk in view of low service fees and potentially large losses) rather than as liquidated damages.
- In Maryland, clear and reasonable contractual limitations on liability for ordinary negligence are generally enforceable in commercial transactions absent unconscionability, overreaching, or a controlling public-policy bar.
- When a limitation clause expressly applies to negligence, a plaintiff cannot evade it by recharacterizing the claim as tort instead of contract.
- Non-signatory individuals who claim benefits within the scope of a corporate contract may be held to its limitations when suing for harms tied to the contracted services.

## Conclusion

The court enforced the alarm-service contract’s $250 liability cap against both contract and ordinary-negligence theories and treated the store owners as bound by that limitation, leaving no recovery above the contractual maximum and supporting dismissal once the remaining claim fell below the trial court’s jurisdictional amount.


Schrier v. Beltway Alarm Co., 73 Md. App. 281, 533 A.2d 1316 (Ct. Spec. App. 1987)