ALARM FAILURE IS A SEPARATE CAUSE OF ACTION

Commercial Property

Breach of Contract

M.A. Federal suffered a multi-million dollar equipment burglary loss in 2010 and was paid for that loss by its insurer, United States Fire Insurance Company (USFI). It was discovered by USFI that M.A.’s monitored alarm system did not work once the hard wired, on-site alarm was disabled and both systems were purchased in 2006 from ADT.

The alarm systems were purchased in 2006 and the service included a backup that notified ADT if the onsite alarm was disabled. However, the backup system in ’06 used analog signals. ADT knew that, beginning in ’08, the FAA would require that such systems convert to digital signals. At the time of the sale ADT did not advise Federal that, once the conversion took place, the backup alarm would no longer work.

USFI acquired M.A.’s subrogation rights and sued ADT for breach of contract. ADT argued that, due to language in the contract, USFI was barred from bringing action against it. A lower court agreed with ADT and USFI’s suit was dismissed. USFI appealed.

Upon appeal, the higher court believed an error was made. In its opinion, the fact that ADT knew of the upcoming signal conversion, did not warn M.A. of the change that would render the backup system inoperable and, at the time of conversion, did not replace the backup with a digital system, was a separate cause of action. It reasoned that the lower court, which based its decision strictly upon the operation of the contract provisions, erred for not considering the extra-contractual, separate cause for a claim of negligence. The higher court reversed and remanded the case for hearing in light of its findings.

United States Fire Insurance Company, a foreign corporation a/s/o M.A. Federal, Inc. Appellant v. ADT Security Services, Inc. a foreign corporation, Appellee. District Court of Appeal of Florida, Second District. Case No.2D12-1956. September 18, 2013. Reversed and Remanded. Westlaw, 134 S.O. 3d.477