Monday, July 18, 2016
By Mario Sarto - Self-photographed, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=1015397
Here's a case with some interesting facts: Jacobsen Diamond Center, LLC v. ADT Security Services, Inc., Docket No. A-1578-14T1, out of New Jersey.
The plaintiff in the case is a jeweler, who suffered two consecutive thefts on Super Bowl weekends in 2010 and 2011. The first Super Bowl theft involved cutting through the wall that bordered a retail store next door and removing a safe positioned against the wall. Because the thieves cut through the wall, they didn't set off the ADT alarm system linked to the jeweler's doors.
After this robbery, the jeweler then moved its safes to the middle of the store, away from the walls. The second Super Bowl theft (perhaps by the same people, emboldened by their previous success?) involved the disabling of the ADT security system in place.
The Super Bowl thieves have never been apprehended, and the jeweler did not have any insurance on the stolen jewels, so the jeweler has sued ADT and a number of other companies that were involved with the jeweler's security systems, alleging various misrepresentations about the security, fraud, negligence, and breaches of contract. The jeweler lost on all of its claims, either by summary judgment or by jury verdict, and the jeweler now appeals.
Of special interest to this contracts law blog is the ruling on the limitation of liability clause in ADT's contract with the jeweler. This was a standard form contract used by ADT that limited its liability to $1,000 (far below the alleged worth of the stolen jewels). These limitations of liability clauses are enforceable and reasonable; the policy behind this stance is supposed to encourage the purchaser of the security system to maintain insurance coverage of its valuables, as it is the purchaser in the best position to know what the value is of the things it is seeking to protect. The court found that the jeweler knew it should have had insurance and it was not ADT's fault that the jeweler failed to obtain such insurance; therefore, ADT should not be held responsible for the jeweler's failure.