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Brower v. ADT LLC

United States District Court, D. Maine

September 14, 2016

STUART BROWER, Plaintiff,
v.
ADT LLC, Defendant.

          ORDER ON MOTION TO DISMISS

          JOHN A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE.

         A 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.

         I. BACKGROUND

         A. Procedural History

         On February 4, 2015, Stuart L. Brower filed a complaint against Tyco Integrated Security LLC[1] 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).

         B. Factual Allegations Contained in the Amended Complaint

         1. The Parties

         Stuart 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.

         2. The Alleged Facts[2]

         Mr. 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.

         According 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.

         Mr. 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.

         Weeks 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. ¶¶ 27-28.

         According 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.

         C. Counts in the Amended Complaint[3]

         1. Count I: Breach of Contract

         In 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.

         Mr. 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.

         2. Count III: Fraud

         In 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.

         II. THE PARTIES' POSITIONS

         A. Defendant's Motion to Dismiss

         ADT seeks dismissal of all counts in Mr. Brower's Amended Complaint.

         1. Count I: Breach of Contract

         ADT 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 exculpatory language:

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 (collecting cases).

         Alternatively, 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.

         a. The Claims of Ambiguity and Adhesion

         ADT 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 contractual language:

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.

         Moreover, 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. 1990)).

         2. Count III: Fraud

         ADT 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.

         Additionally, 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.

         More 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 ...


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