Les Gold speaks to limited liability

Sunday, April 1, 2007

SANTA MONICA, Calif.--As the sun shined brightly outside the Loews Santa Monica hotel, site of the fifth annual Security Growth Conference, conference organizer Les Gold, of Mitchell, Silberberg & Knupp, addressed a potentially dark cloud hanging over the traditional alarm industry. He took his time during the keynote to discuss the legal issue that's of great concern: increasing case law regarding the protection of alarm companies from liability. Both particularly relevant cases involve ADT. One he pronounced "bad," the other, "very good."
The former is Synnex v. ADT, a New Jersey case where the state courts disallowed a limited liability clause in an alarm contract because the contract wasn't signed (search "Synnex" at www.secruritysystemsnews.com and see Eric Pritchard's guest commentary on page 20). One troubling aspect of the case, said Gold, is that a New Jersey court "has held in the past that home inspectors are professionals and don't have limited liability," and that was a factor in the court's denying ADT summary judgment.
Despite the fact that an industry-backed amicus brief was denied because it came too late in court proceedings, "we're fairly confident ... the case is going to be overturned on appeal," said Gold.
The other case is Spengler v. ADT, and "I love this case," said Gold. "It's great for those providing personal protection." In this case, the plaintiff had entered into a contract for a system protecting his disabled mother. She activated the system in distress and ADT dispatched to the wrong address. The woman died.
"The lawsuit was filed," Gold said, "ADT made a motion for summary judgment, and it was granted." Though the plaintiff claimed he was a victim of fraud, since the limited liability clause in the contract didn't allow him recourse, "the court said, 'You should have read the contract,'" Gold said. Particularly, the three-day period ADT allows for customers to consider the contract was a deciding factor for the court. "The defendant is not in the insurance business," the court ruled, "therefore limiting liability is not unconscionable."