The Legal Side: The N.J. Case - A Problem for the Alarm Industry?

Here's what we know about this case. ADT installed a burglar alarm system for a commercial subscriber called Synnex Corporation, which is a distributor of computer systems.

Negotiations took place over an extended period of time. A two-page ADT contract was signed. It was never however signed by ADT's "home office" as required by the contract. The parties nevertheless performed under the contract for 3 years. During that time two riders were executed for additional equipment.

Eventually, the subscriber suffered a burglary to the tune of $8 million and the subscriber's insurance company, suing under its subrogation rights, sued the alarm company and another defendant. Though ADT did move for summary judgment during the discover stages of the case, the judge denied the motions.

The case was complicated by the fact that ADT's contract required that it be signed by more than one of its company representatives. As it turned out, one of the authorized signatories from ADT did not sign the contract. I am simplifying the case, but basically the judge held that there was no written contract because one of ADT's multiple signatures was not present. Thus, the judge would not enforce the Waiver of Subrogation clause in the contract, which the judge mentioned in passing that he would have found to be controlling if there had been an enforceable contract.

The judge also commented that he would not have enforced the limitation of liability clause because he thought New Jersey's licensing statute now prohibited the provision. This, however, was not a determinative ruling on the judge's part. Once the judge decided to throw the contract out, it was no longer necessary to rule on the particular provisions in the contract.

The case went to a jury, which found that the subscriber lost $8 million and that ADT was liable for half that amount. ADT has since filed an appeal to the Appellate level court, arguing in the first instance that the judge should not have tossed the contract out merely because one of the ADT countersignatures was omitted. The contract had in fact been signed by two other ADT representatives, and the parties had both performed under the contract. ADT's counsel has filed a well-thought-out and comprehensive brief, and I predict a reversal by the Appellate Court.

The ADT appellate brief does emphasis the importance this case has to the alarm industry, not just in NJ but nationwide. No case that whittles away at the solid foundation of case law the alarm industry has built up should be ignored or taken lightly. While the trial judge's comments regarding the particular provisions of the ADT contract are not in published decisions, those comments are now going to be before the Appellate Court. And if that court's comments on the issues the Appellate Court decision is almost certain to be published, which means all lawyers and judges researching the issues will find it and use it in their arguments. Suffice it to say that it is important that ADT have a decisive victory on its appeal.

The NBFAA, I believe that the request of the NJ Burglar and Fire Alarm Association, has decided to engage competent counsel to offer a national perspective to the court in an amicus brief. I should add that ADT's trial counsel, at least from my limited review of the appeal papers, seems to have done a competent job. I think this trial judge is out on a thin limb and will be reversed or ignored in future cases. The Appellate Court has to first agree that an amicus brief can be filed. This "friend of the court' brief will in many ways mirror the brief by ADT's counsel, but will likely have a more nationwide emphasis and strengthen ADT's argument that this decision has potential to impact beyond NJ.

The trial record and the briefs in the case are extensive and I have not read though the papers but wanted to share what I know so far. I am sure there is going to be more discussion on this topic.

About the author: Ken Kirschenbaum, Esq., is a New York-licensed lawyer practicing with Kirschenbaum & Kirschenbaum PC, a Long Island legal firm with a rich history of assisting clients in security and alarm related matters. Ken can be contacted via email at ken@kirschenbaumesq.com. His website, www.kirschenbaumesq.com, features a great supply of legal information and court rulings relevant to the security industry. You can also sign up for Ken's discussion list from his homepage.

Loading