A majority of this court votes to grant summary judgment dismissing the plaintiffs’ complaint against the defendant Honeywell Inc. (hereinafter Honeywell) on two grounds: first, that as a matter of law, any negligence on the part of Honeywell constituted "nonfeasance” rather than "misfeasance”, and second, that as a matter of law, any negligence on the part of Honeywell was "ordinary” rather than "gross”. *111The distinction between "gross” negligence and "ordinary” negligence, as well as the distinction between "misfeasance” and "nonfeasance”, should, under the particular circumstances of this case, be drawn by the trier of fact, rather than by the court. I therefore vote to uphold the Supreme Court’s denial of summary judgment.
I
Initially, I note my agreement with the opinion of Justice Balletta to the extent that it holds that, as a matter of law, the plaintiffs cannot be considered third-party beneficiaries of the contract between Honeywell and the codefendant Lido Knitting, Mills, Inc. (hereinafter Lido). However, the denial of summary judgment should be upheld if there appears, from the papers submitted, that the plaintiffs might have an unpleaded cause of action (see, Alvord & Swift v Muller Constr. Co., 46 NY2d 276; Ayala v V & O Press Co., 126 AD2d 229, 234; Afco Time Payment v Security Ins. Co., 111 AD2d 634, 635; Gee v Gee, 113 AD2d 736). The plaintiffs’ submissions, read together with those of codefendant Lido, establish the existence of a cause of action sounding in negligence.
I do not agree with so much of Justice Balletta’s opinion as holds that plaintiffs have no valid cause of action against Honeywell sounding in negligence. I recognize the general rule that the "failure to perform [a contract] at all is a nonfeasance which constitutes no more than a breach of contract actionable only by one in privity of contract” (Hamill v Foster-Lipkins Corp., 41 AD2d 361, 362-363; see also, Rozner v Resolute Paper Prods. Corp., 37 AD2d 396, 398, affd 31 NY2d 934; Rosenbaum v Branster Realty Corp., 276 App Div 167; 59 NY Jur, Torts, § 17; 1A Warren, Negligence, Actionable Negligence, § 3.05 [1]). However, application of this rule to Honeywell in the present case is, in my view, unwarranted for two reasons: first, Honeywell’s negligence cannot be held to consist of nonfeasance alone; and second, the rule is inapplicable where there is evidence that a party such as the plaintiff directly relied upon the contractual undertaking of a third party.
A
It has been recognized in a wide variety of contexts that a party (such as Honeywell) who undertakes to perform a con*112tract may be liable in tort to noncontracting parties that rely to their detriment on the contractual undertaking (see, Restatement [Second] of Torts §§ 324 A, 323; see also, Scott & Fetzer Co. v Montgomery Ward & Co., 112 Ill 2d 378, 493 NE2d 1022; American Centennial Ins. Co. v Wells Fargo Alarm Serv., 152 Ill App 3d 503, 504 NE2d 742; Danny’s Cabinet Shop v G & M Fire Extinguisher Sales & Serv., 149 Ga App 215, 253 SE2d 802; McClinton v Reid, 391 So 2d 506 [La]; 1 Lee and Lindahl, Modern Tort Law § 3.40; 1 Frumer & Friedman, Products Liability § 2.02 [3], at 2-88). Several New York cases have recognized that the duty of a service contractor extends to those persons who might foreseeably rely on the proper performance of the service contract (see, e.g., Wroblewski v Otis Elevator Co., 9 AD2d 294; see also, D’Andria v County of Suffolk, 112 AD2d 397, 399; Miller v Higgins, 57 AD2d 1010; cf., Brooks v Gatty Serv. Co., 127 AD2d 553, 554-555; Annotation, Breach of Assumed Duty to Inspect Property as Ground of Liability for Damage or Injury to Third Person, 6 ALR2d 284 [1949]). More recently, the Court of Appeals has emphasized the importance of foreseeable reliance by noncontracting parties in defining the tort liability of contractors for economic losses (see, Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417). Of course, tort liability for personal injuries or property damages has always been more widely defined than tort liability for economic losses (see, Key Intl. Mfg. v Morse/Diesel, Inc., 142 AD2d 448, 450-451).
The element of reliance has been crucial in defining the scope of the duty of a landlord to provide security services (see, Nallan v Helmsley-Spear, Inc., 50 NY2d 507, 522-523 [adopting the rule of Restatement (Second) of Torts § 323 (b)]), and is also crucial in determining the scope of tort liability based on the negligent exercise by the State of its police powers (see, Kircher v City of Jamestown, 74 NY2d 251; see also, Riss v City of New York, 22 NY2d 579, 592 [Keating, J., dissenting]; Schuster v City of New York, 5 NY2d 75, 82; Gannon Personnel Agency v City of New York, 103 Misc 2d 60, 75).
Thus, the existence of detrimental reliance by a noncontracting plaintiff upon a defendant’s contractual undertaking is critical to the determination of the scope of potential tort liability based upon the defendant’s nonfeasance in the performance of a contract. In none of the cases cited in Justice Balletta’s opinion did the courts address this issue, so that none of those cases is controlling (see, e.g., Nieves v Holmes *113Protection, 56 NY2d 914, 916; Northbrook Prop. & Cas. Ins. Co. v D.J.L. Warehouse Corp., 146 AD2d 574). Here, we have essentially unrebutted averments by the plaintiffs’ representative that "[m]y company relied on Lido Knitting and Honeywell for full fire and sprinkler services”. This officer further swore that "[w]ithout such protection [plaintiffs] would not have entrusted our property to Lido Knitting”. If these assertions are proved at trial, and Honeywell knew or should have known of its reliance, then I believe that the plaintiffs may recover damages based on Honeywell’s negligence.
B
I also disagree with the proposition that Honeywell’s actions in this case may be characterized, as a matter of law, as "nonfeasance”. Honeywell installed the alarm system in question; it did not merely promise to do so. Both Lido and the plaintiffs had every right to think that the alarm would function properly, which it obviously did not. Furthermore, Honeywell sent inspectors to the premises in question on several occasions. Nevertheless, these inspectors failed to complete the task assigned them. There is an issue of fact as to why these inspectors could not gain access to the alarm.
The distinction between misfeasance and nonfeasance, which is of questionable theoretical merit (see, Prosser and Keeton, Torts § 92, at 660 [5th ed]; Bohlen, The Moral Duty to Aid Others as a Basis of Tort Liability, Part I, 56 U Pa L Rev 217, 219-220 [1908]) should be the basis for granting judgment as a matter of law only when it is clear that the allegedly negligent defendant did nothing (see, e.g., Anderson v Radio Corp., 29 Misc 2d 611 [Bernard Meyer, J.]; Rozner v Resolute Paper Prods. Corp., 37 AD2d 396, supra). Here, it is clear that Honeywell did something: it installed an alarm that later malfunctioned. Just why the alarm malfunctioned (see, e.g., Landahl v Chrysler Corp., 144 AD2d 926, 927; Narciso v Ford Motor Co., 137 AD2d 508; Brandon v Caterpillar Tractor Corp., 125 AD2d 625, 626 [fact that product malfunctioned is circumstantial evidence of defect sufficient to preclude summary judgment]) is not clear.
II
I also do not agree that the terms of Honeywell’s contract result in its complete exemption from liability for ordinary negligence, although I do agree that the contract imposes a *114valid limitation upon Honeywell’s potential liability for ordinary negligence to Lido. The Court of Appeals dealt with this precise sort of alarm system in the case of Melodee Lane Lingerie Co. v American Dist. Tel. Co. (18 NY2d 57, 68-69) and held that the provisions of Real Property Law former § 235 (now General Obligations Law § 5-323) prohibit an alarm system contractor such as Honeywell from exempting itself from liability for ordinary negligence. However, the court went on to hold that the liability of such an alarm system company may be contractually limited, as it was in this case, provided that the subscriber is offered the option of obtaining increased limits on liability (see also, 80-82 Greene St. Corp. v AFA Protective Sys., 100 Misc 2d 334, 337 [App Term]). In holding that Honeywell has completely exempted itself from liability, notwithstanding the holding in the Melodee Lane case, the opinion of Justice Balletta relies on cases which are distinguishable because they involve different types of alarm systems (see, e.g., Florence v Merchants Cent. Alarm Co., 51 NY2d 793; Feldman Furs v Jewelers Protection Servs., 134 AD2d 171, 172; Antical Chems. v Westinghouse Sec. Sys., 86 AD2d 768).
It is also problematic to suggest that the terms of Honeywell’s agreement with Lido may serve as a source for a limitation on Honeywell’s liability to the plaintiffs. This issue was not addressed in the Melodee Lane case (supra), and I can see no basis for holding that a tort-feasor’s liability to one party may be limited because of the content of his agreement with another party (see, Scott & Fetzer Co. v Montgomery Ward & Co., 112 Ill 2d 378, 493 NE2d 1022, 1027, supra; American Centennial Ins. Co. v Wells Fargo Alarm Serv., 152 Ill App 3d 503, 504 NE2d 742, supra).
Furthermore, even assuming that the terms of Honeywell’s contract with Lido may properly furnish a limit on Honeywell’s tort liability to the plaintiffs, the court is unanimous in observing that such a limitation would be of no effect if Honeywell is guilty of "gross” rather than "ordinary” negligence. While I recognize the existence of authority for the proposition that the question whether a particular species of negligence may be characterized as "gross” should be decided by the court, I nonetheless adhere to the view that, in most cases, whether a particular variety of negligence is or is not "gross” is paradigmatically a question of fact (see, e.g., Gentile v Garden City Alarm Co., 147 AD2d 124). I note that in some cases which appear to be factually similar, it has been held *115that this question should be reserved until after the completion of discovery (see, e.g., Alter v Advance Alarm Co., 131 AD2d 406, 407; Modern Settings v American Dist. Tel. Co., 121 AD2d 266, 269; Pan Am. World Airways v Dennison Ticket Co., 117 AD2d 526, 527). Given the possibility that the evidence might ultimately show that Honeywell took a significant amount of money from Lido in return for its installation of a defective fire alarm system which it never cared to test or inspect, I am not prepared to state that no rational jury could conclude that Honeywell’s negligence was "gross”.
Ill
Finally, I agree with Justice Lawrence that, assuming that the plaintiffs’ action against Honeywell must be dismissed, it does not follow that Lido’s cross claim against Honeywell should also be dismissed. Given the existence of the contract between Lido and Honeywell, this should be viewed as a case in which it is possible for a prime defendant (Lido) to seek contribution or indemnification from a third-party defendant (Honeywell), even though the latter might be found to owe no duty directly to the plaintiffs (see, e.g., Garrett v Holiday Inns, 58 NY2d 253).
I note that this result might be different if Honeywell had asserted, as a basis for its motion, the terms of its contract whereby Lido agreed to indemnify it (Honeywell) against claims made by third parties such as the plaintiffs. This issue was not raised and should not be reviewed upon a search of the record pursuant to CPLR 3212 (b) (Conroy v Swartout, 135 AD2d 945). It is therefore unnecessary to decide whether Honeywell would be entitled to summary judgment against Lido based upon a theory of contractual indemnification (cf., Austro v Niagara Mohawk Power Corp., 66 NY2d 674, 676).
For the foregoing reasons, I vote to modify the order appealed from, on the law, by deleting the provision thereof which denied that branch of Honeywell’s motion which was to dismiss the complaint insofar as it is asserted against it, and substituting therefor a provision granting that branch of the motion with leave to the plaintiffs to serve an amended complaint asserting causes of action against Honeywell sounding in negligence; as so modified, the order should be affirmed insofar as appealed from, without costs or disbursements.
Harwood, J., concurs with Balletta, J.; Lawrence, J., concurs in part and dissents in part in an opinion; Bracken, *116J. P., concurs in part and dissents in part in a separate opinion in which Eiber, J., concurs.
Ordered that the order is modified, on the law, by deleting the provision thereof which denied that branch of the motion of the defendant Honeywell, Inc. which was for summary judgment dismissing the complaint insofar as it is asserted against it, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements, and the cross claim against Honeywell, Inc. is deemed a third-party complaint.