Sonitrol loses 8-year-old lawsuit

Who's left holding the $18.3 million bag? What does this mean for verification?
Thursday, September 2, 2010

DENVER—Jurors here in the Colorado Court of Appeals have decided in favor of the co-plaintiffs in a nearly decade-long legal battle against Sonitrol Corp. The lawsuit stems from a 2001 fire in which a warehouse owned by co-plaintiff Core-Mark Midcontinent was broken into and burned. The original decision in the lawsuit said Sonitrol Corp., because of the exculpatory clauses in its contract, was only liable for $500 in damages. That decision was appealed, and the result of that appeal, announced on Aug. 18, is that the three co-plaintiffs—insurers Commonwealth Insurance and United States Fire Insurance, and the insured, food distributor Core-Mark Midcontinent—are now owed a total of $18.3 million. Pre-judgment interest of 8 percent per year in Colorado could add millions to that number, according to Cozen O'Connor, attorney for the insurance companies.

At the time of the incident, Tyco International owned Sonitrol Corp. Tyco sold the company to Spire, Carlyle and Wachovia for $125.5 million in 2004. Stanley Works then bought Sonitrol in June 2008.

However, Stanley’s not paying the bill. Lynda Murphy, a Stanley spokesperson, said, “that was all Tyco’s thing. There’s no implication for Stanley now … It’s got nothing to do with us.”

Ann Lindstrom, spokesperson for Tyco property ADT confirmed Tyco’s relationship with Sonitrol Corp. at the time of the loss. “We can confirm the claim arises from a discontinued business operation of Tyco International,” Lindstrom said. “Tyco is unable to comment further as the litigation is still ongoing.”

Who foots the financial bill aside, what ramifications does this decision hold for Sonitrol specifically and for the verified-alarms in general? Leo Wanstreet, president of the Sonitrol National Dealers Association, was quick to point out the loss and subsequent jury decision in the Colorado Court of Appeals do not detract from what Sonitrol offers. “A lot’s changed since 2002 and verification’s a lot bigger topic now,” Wanstreet said. “The important thing to take away from this is that the system worked. It wasn’t a system failure and verification should not get a bad rap. It was a management failure. They didn’t solve the problems in the manner they should have.”

Vocal verified alarm advocate Keith Jentoft, RSI Video Technologies president agreed. “I believe that what got Sonitrol in trouble was the fact that they essentially turned off the microphones that they claimed were operational,” Jentoft said. “In essence, they said they could hear, but they really couldn’t.”

Published reports claim a string of false alarms at the Core-Mark warehouse led to a tech being sent at least twice to the protected premises to numb down the threshold on the microphones, leading to what jurors decided was a situation in which the system did not work and Sonitrol was negligent. On Dec. 21, 2002, burglars broke into the Core-Mark Midcontinent warehouse in question and burned it to the ground. Police were not dispatched.

Calls to Shook Hardy & Bacon partner Paul A. Williams, attorney for Sonitrol in the Colorado case, were not returned by press time.

Calls to Watkins & Letofsky partner Brian Letofsky, attorney for Core-Mark, were not returned by press time.