• August 14, 2012

Update #3 (August 14, 2012):  Alarm companies are a little like insurance companies in that their products are not triggered unless some bad risk materializes.  Many of us have alarm systems that are never tested by actual intruders, fires, or other triggers.  We pay month after month for nothing, really, except, perhaps, some slightly increased feeling of security or peace of mind.  

One might wonder whether or how alarm companies are regulated to prevent them from being Ponzi schemes in which monthly subscription payments are collected for ineffective, faulty, or non-functioning systems.  For the rare instance when an alarm system is triggered by a real threat and fails, a Ponzi alarm company could litigate and defend fiercely, delaying recovery for years, all the while enjoying the pipeline of money from secure homes (secure with our without an alarm system) — to finance the litigation and save up for the ultimate pay-out.

Is this too cynical a view?  Probably.  On the other hand, Minnesota Litigator covered the Swenson v. ADT litigation, where system failure appeared to have had devastating consequences (followed by years of litigation defending what seemed indefensible) and Gage v. Stanley Convergent Security Solutions may be another unflattering alarm system fail (followed by years of litigation).

The Gage case, as discussed below, has already been up to the Eighth Circuit and is now back down.  Defendant’s defense is nothing if not tenacious, like ADT’s.  But, like ADT’s, it would seem that plaintiff could well end up with a recovery after a bruising and lengthy battle.

Update #2 (September 15, 2011): A win for the appellant, represented by Steve Theesfeld of Yost & Baill, in the case discussed below. Plaintiff reverses defendant’s award of summary judgment in this action against an alarm company, so the case goes back to U.S. District Court Judge Ann D. Montgomery (D. Minn.), who had awarded summary judgment.  (Judge Montgomery recused herself on remand and the case is now before U.S. District Court Judge Patrick J. Schiltz (D. Minn.)).  

Update #1 (February, 2011):  Steven Theesfeld of Yost & Baill argued the appeal last week before the U.S. Court of Appeals for the Eighth Circuit (U.S. Dist. Judge Audrey Fleissig (E.D. Mo.) sitting by designation) for the plaintiff/victim/appellant.   The defendant/tortfeasor/appellee was represented by Wendy Canaday, who recently left the firm formerly known as Flynn Gaskins to move her practice to Leonard Street & Deinard.

Was this catastrophe “mere negligence” (described below) or something worse, which, if it were the case, might allow the case to go to the jury rather than losing on summary judgment before U.S. District Court Judge Ann Montgomery (D. Minn.)?

Canaday faced tough questioning; reversal is by no means certain but clearly the plaintiff has a shot of snatching victory from the jaws of defeat…

Original post (June 15, 2010):  The tragic case of Swenson v. ADT has gotten a fair amount of media attention and another home security system case was decided this week in the U.S. District Court, District of Minnesota.

Stanley Convergent Security Solutions offered a security system to plaintiff Christine Gage.  One service it offered was to monitor home temperatures and contact the home-owner in the event the temperature dipped below a low threshold.  As Minnesotans know well, insufficiently heated homes in the winter months present a serious risk of water-pipe rupture.  Notwithstanding her deal with Stanley, the risk was realized for Ms. Gage, resulting in damages over $230,000, and, her property insurer, to whom her claim was subrogated, alleged liability on Stanley for its failure to follow through on its obligations in providing home security.

The Stanley system provided that, when the home temperature dipped, the system would sense this and the Stanley security system would call the home-owner.  The evidence in the case suggested that the Stanley system picked up the temperature drop but a temporarily employed worker may have incorrectly noted on the Stanley system that she contacted the homeowner when, in fact, she did not.

The crux of the case and U.S. District Court Judge Ann Montgomery’s grant of summary judgment for the defendant alarm company was contract language that barred subrogation, capped damages, and included an exculpatory clause.  Plaintiff sought an end-around these clauses by alleging “gross negligence” as well as fraud and similar wrongful and intentional misconduct.  The alarm company, of course, argued for summary judgment that it was negligent at worst and successfully relied on the contract language.

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