United States District Court, D. Maine
ORDER ON MOTION TO DISMISS
A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE.
resident of California owning real estate in Boothbay Harbor,
Maine, claims that a home security provider failed to notify
him of a low temperature alarm at his Boothbay Harbor
property and as a consequence, the water pipes in the
residence burst, causing extensive damage. In addition to a
breach of contract claim, the property owner asserts that the
home security provider committed fraud. The Court grants the
home security provider's motion to dismiss the
homeowner's amended complaint to the extent the claim
exceeds $500, the maximum amount of the damages limitations
clause in the contract.
February 4, 2015, Stuart L. Brower filed a complaint against
Tyco Integrated Security LLC in the Superior Court of Lincoln
County, Maine. Notice of Removal Attach. 1
Compl. (ECF No. 1) (Compl.). On
August 20, 2015, ADT LLC (ADT) filed a notice of removal
based on diversity of citizenship. Notice of Removal
(ECF No. 1). Following removal, ADT filed a motion to dismiss
for failure to state a claim on August 27, 2015.
Def.'s Mot. to Dismiss (ECF No. 5). Mr. Brower
subsequently filed an amended complaint on September 16,
2016. Am. Compl. (ECF 12). As a result, ADT withdrew
its initial motion to dismiss (ECF No. 15) and filed a motion
to dismiss Mr. Brower's Amended Complaint on October 7,
2015. Def.'s Mot. to Dismiss (ECF No. 18)
(Def.'s Mot.). On October 28, 2015, Mr. Brower
filed a response in opposition to ADT's motion to
dismiss. Pl.'s Opp'n to Def.'s Mot. to
Dismiss (ECF No. 19) (Pl.'s Opp'n). On
November 3, 2015, the parties agreed to the dismissal of two
counts in the Amended Complaint. Stipulation (ECF
No. 22). On November 12, 2015, ADT filed a reply.
Def.'s Reply in Supp. of Mot. to Dismiss (ECF
No. 25) (Def.'s Reply).
Factual Allegations Contained in the Amended
L. Brower is a resident of Pasadena, California, who owns
real estate located on Crest Avenue, Boothbay Harbor, Maine.
Am. Compl. ¶¶ 1-2. ADT is a Delaware
limited liability company that provides security and
environmental monitoring equipment and services. Id.
¶ 3, 5.
The Alleged Facts
Brower alleges that he purchased the Crest Avenue real estate
in early 2005. Am. Compl. ¶ 6. He explains that
he lived in California at the time of the purchase and
intended to use the property for investment and vacation
purposes. Id. ¶ 7, 10. Mr. Brower asserts that
his principal occupation is unrelated to the purchase and
sale of real estate, or to real estate management.
Id. ¶ 8.
to Mr. Brower, ADT advertised heavily in his market and sent
mailers to his residence. Am. Compl. ¶¶
11-12. ADT allegedly held itself out as “America's
#1 Home and Business Security Company.” Id.
¶ 9. Mr. Brower ordered a security and environmental
monitoring system from ADT for the property in Boothbay
Harbor. Id. ¶ 14. ADT provided Mr. Brower with
a preprinted form contract, and Mr. Brower claims that nearly
none of the material terms of the contract was subject to
negotiation. Id. ¶ 15. Under the contract, ADT
agreed to provide, among other things, low temperature
monitoring services. Id. ¶ 16. Mr. Brower set
the alarm to activate at 40 degrees. Id. ¶ 19.
Brower asserts that in February and March 2014, the property
stood vacant. Am. Compl. ¶ 17. On February 5,
2014, the interior temperature at the property fell below the
40 degree threshold. Id. ¶ 18. According to Mr.
Brower, ADT received the low temperature alarm and
subsequently made one telephone call each to Mr. Brower and
Mr. Brower's designated representative. Id.
¶¶ 21-22. However, ADT did not connect with either
individual, and ADT allegedly did not leave any messages.
Id. ¶¶ 22-23. Instead, Mr. Brower contends
that ADT silenced the alarm at its monitoring station and
took no further action to alert anyone of the low temperature
alarm. Id. ¶¶ 24-25.
later, Mr. Brower's agent visited the property and
discovered a local alarm continuing to sound on the premises.
Am. Compl. ¶ 26. Mr. Brower states that one or
more water pipes in the house broke, and that water flowed
into the house over the course of several weeks, causing more
than $200, 000 in damage to the property. Id.
to Mr. Brower, ADT represented that “it would notify
[Mr. Brower] of a low temperature condition.”
Id. ¶ 48. Mr. Brower contends, however, that
ADT actually adhered to “a policy by which it would
make a very limited attempt to provide notification.”
Id. ¶ 6.
Counts in the Amended Complaint
Count I: Breach of Contract
Count I, Mr. Brower asserts a claim for breach of contract.
Am. Compl. ¶¶ 29-34. He alleges that a
breach occurred when ADT silenced its alarm and failed to
take steps to actually notify Mr. Brower of the low
temperature alarm. Id. ¶¶ 31-33.
Brower also seeks declaratory judgment pursuant to 14 M.R.S.
§ 5955. In particular, he asks the Court to declare that
the contract is insufficiently definite because it is
impossible to determine what ADT contracted to do in the
event that the alarm sounded. Am. Compl.
¶¶ 37-38. To the extent that the document can be
construed as a contract, he asks that the Court declare it a
contract of adhesion. Id. ¶ 39. Additionally,
Mr. Brower suggests that the Court should not enforce any
otherwise valid limitations on liability and damages
contained in the contract due to ADT's “willful
and/or wanton misconduct[.]” Id. ¶ 33.
Count III: Fraud
Count III, Mr. Brower alleges fraud. Am. Compl.
¶¶ 44-52. Mr. Brower claims that ADT represented
that it would notify him of a low temperature condition.
Id. ¶48. Mr. Brower asserts that ADT made this
representation when, in reality, ADT “had in place a
policy by which it would make a very limited attempt to
provide notification.” Id. ¶ 49. Because
ADT knew or should have known that he would rely on its
representations, and because his property suffered damage as
a result of his reliance, Mr. Brower asserts that ADT
committed fraud. Id. ¶¶ 51-52.
THE PARTIES' POSITIONS
Defendant's Motion to Dismiss
seeks dismissal of all counts in Mr. Brower's Amended
Count I: Breach of Contract
first contends that Mr. Brower's breach of contract claim
“fails because he agreed to waive his right to recover
those damages when he entered into the contract.”
Def. Mot. at 7. ADT points to the contract's
YOU AGREE THAT WE…ARE EXEMPT FROM LIABILITY
FOR ANY LOSS, DAMAGE, INJURY, OR OTHER CONSEQUENCE ARISING
DIRECTLY OR INDIRECTLY FROM THE SERVICES WE PERFORM OR THE
SYSTEMS WE PROVIDE UNDER THIS CONTRACT.
Id. at 7. ADT asserts that courts applying Maine law
enforce similar exculpatory provisions. Id. at 7
ADT argues that the contract limits Mr. Brower's
recoverable damages to $500. ADT references the
contract's limited liability provision:
IF IT IS DETERMINED THAT WE…ARE DIRECTLY OR
INDIRECTLY RESPONSIBLE FOR ANY SUCH LOSS, DAMAGE, INJURY OR
OTHER CONSEQUENCE, YOU AGREE THAT DAMAGES SHALL BE LIMITED TO
THE GREATER OF $500 OR 10% OF THE ANNUAL SERVICE CHARGE YOU
PAY UNDER THIS CONTRACT. THESE AGREED UPON DAMAGES ARE NOT A
PENALTY. THEY ARE YOUR SOLE REMEDY NO MATTER HOW THE LOSS,
DAMAGE, INJURY OR OTHER CONSEQUENCE IS CAUSED, EVEN IF CAUSED
BY OUR NEGLIGENCE, GROSS NEGLIGENCE, FAILURE TO PERFORM
DUTIES UNDER THIS CONTRACT, STRICT LIABILITY, FAILURE TO
COMPLY WITH ANY APPLICABLE LAW, OR OTHER FAULT.
Def.'s Mot. at 8. Again, ADT contends that
“courts nationwide uphold limitation-of-damages
provisions in alarm-service contracts.” Id.
(collecting cases). Thus, ADT asserts that the Court
“may dismiss with prejudice all portions of
Brower's contract claim seeking damages above
$500.” Id. at 9.
The Claims of Ambiguity and Adhesion
next urges the Court to dismiss Mr. Brower's claims
regarding the construction of the contract. ADT insists that
Mr. Brower's claims are “transparent attempt[s] to
void Brower's contractual promises that bar his contract
claim or alternatively limit his recoverable damage.”
Def.'s Mot. at 10. Responding to Mr.
Brower's assertion that the agreement is a contract of
adhesion, ADT argues that Mr. Brower “had the option
for ADT to assume greater liability but chose not to do
so.” Id. at 10. ADT identifies the relevant
AT YOUR REQUEST, WE MAY ASSUME ADDITIONAL LIABILITY
BY ATTACHING AN AMENDMENT TO THIS CONTRACT STATING THE EXTENT
OF OUR ADDITIONAL LIABILITY AND THE ADDITIONAL COST TO YOU.
YOU AGREE THAT WE ARE NOT AN INSURER EVEN IF WE ENTER INTO
ANY SUCH AN AMENDMENT.
Id. at 10. According to ADT, this language
demonstrates that the terms of the contract were subject to
negotiation, and thus Mr. Brower's claim that the
contract was one of adhesion should fail. Id. at 10.
ADT maintains that public policy considerations dictate
“strict enforcement of risk-allocation provisions in
security-alarm contracts.” Def.'s Mot. at
11. This is because “security-alarm companies are not
insurers and  mitigating exposure to indefinite
consequential damages is essential to the survival of the
security-alarm industry.” Id. at 11. ADT
explains that courts nationwide are “mindful of these
concerns, ” id. at 11 n.6 (collecting cases),
and that these courts consistently acknowledge “the
need for and validity of risk-allocation provisions in alarm
service contracts.” Id. Indeed, ADT claims
that “parties have been sanctioned for raising the very
argument that Brower attempts to assert here.”
Id. at 11 n.5 (citing E.H. Ashley & Co. v.
Wells Fargo Alarm Servs., 907 F.2d 1274 (1st Cir.
Count III: Fraud
advances a number of reasons why Mr. Brower cannot properly
assert a fraud claim against ADT. First, ADT insists that
“the failure to perform as promised, without more, does
not constitute fraud.” Def.'s Mot. at 13
(citing Lavery v. Kearns, 792 F.Supp. 847, 864 (D.
Me. 1992)). According to ADT, Mr. Brower's allegation
that ADT had “a policy by which it would make a very
limited attempt to provide notification” is not an
allegation of fraud, but rather an allegation that ADT failed
to perform one of its contractual obligations. Id.
at 12. This alone, ADT alleges, does not constitute fraud.
ADT contends that Rule 9(b) mandates dismissal of Mr.
Brower's fraud claim. ADT points out that Rule 9(b)
requires plaintiffs who allege fraud to “state with
particularity the circumstances constituting fraud or
mistake.” Def.'s Mot. at 14 (quoting
Fed.R.Civ.P. 9(b)). ADT further explains that “to
adequately state a fraud claim with particularity, plaintiffs
must identify ‘not only the statements that they
contend are false or misleading, but also the circumstances
demonstrating that fraud has been committed.'”
Id. (quoting In re One Bancorp Sec. Litig.,
135 F.R.D. 9, 14 (D. Me. 1991)). ADT contends that Mr. Brower
“fails to state his fraud allegations with any
particularity, ” and thus his fraud claims should fail.
Id. at 15.
specifically, ADT argues that Mr. Brower fails to allege any
statements or representations by ADT indicating that ADT
would actually notify Mr. Brower of an alarm. Def.'s
Mot. at 12. Here, ADT relies on Jhaveri v. ADT Sec.
Servs., Inc., No. 2:11-CV-4426-JHN, 2012 WL 843315, 2012
U.S. Dist. LEXIS 38100 (C.D. Cal. Mar. 6, 2012),
aff'd in part, rev'd in part and remanded on
other grounds, 583 F.App'x 689 (9th Cir. 2014).
Id. at 13. ADT explains that in Jhaveri,
the District Court granted the defendant's judgment on
the pleadings as to the Jhaveris' fraud claim and held
that the plaintiffs “did not ...