Lawsuit filed against installer

ADT and First Protection battle over contracts
Sunday, August 1, 2004

SCOTTSDALE, Ariz. - ADT Security Services has filed a lawsuit against First Protection, a former member of its authorized dealer program, claiming breach of contract, but the Arizona-based security system provider has turned around and countersued for more than $3 million in damages.

ADT’s lawsuit, filed in March of this year, centers on allegations that First Protection failed to meet minimum monthly production goals and the maximum attrition rate for consecutive months when it was part of the program. According to court documents, ADT states that First Protection failed to pay $71,491 in attrition chargebacks and $58,314 in revenue sharing overpayment. ADT is seeking a settlement of no less than $130,056.

But First Protection owner, David Fursman, said the company had fulfilled its dealer requirements on both ends - specifically citing that the company had consistently met the minimum 15 system sales per month ADT requires of its dealers.

“We had an average of 191 per month,” Fursman said. “That part we’re kind of at a loss to understand. We’ve never actually sold them less than 100 per month.”

As for the high attrition rate, Fursman said his research revealed that ADT cancelled existing accounts with First Protection customers and re-signed them with the local corporate office and those cancellations attributed to First Protection’s attrition rates. Stephen Rich, an attorney with Hebert Schenk who represents First Protection, said the rates were also incorrectly calculated by ADT.

“These guys had a systematic approach to calculating attrition rates that allowed them to terminate dealers,” he said.

Ann Lindstrom, a spokesperson for ADT, declined to remark on the lawsuit, citing the its policy to refrain from commenting on pending litigation.

Rich said Fursman, along with other First Protection officials, were “meticulous record keepers” - a move they hope will assist the company in winning its case.

“We have significant documentation,” Rich said.

This habit possibly assisted the company in past arbitration experiences. First Protection won an undisclosed six-figure settlement from Protection One in 2001 after the company had problems under that firm’s authorized dealer program.

The recent lawsuits, both filed in Colorado where ADT’s dealer program headquarters are located, are set to be argued in March 2005, although that date is tentative. Regardless of when it does go to trial, First Protection is preparing for its day in court - sifting through more than 50,000 documents. “It will take us some time to get everything together,” Rich said.