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Hillsborough Rare Coins, LLC v. ADT LLC

United States District Court, D. New Jersey

May 2, 2017

HILLSBOROUGH RARE COINS, LLC, Plaintiff,
v.
ADT LLC, f/k/a ADT SECURITY SERVICES, INC, et al., Defendants.

          MEMORANDUM OPINION

          Mary L. Cooper, United States District Judge

         This matter originates from a 2015 heist at Hillsborough Rare Coins, a business engaged in the selling of rare coins, where three burglars broke in and stole merchandize. Plaintiff Hillsborough Rare Coins sued Defendant ADT in New Jersey Superior Court, Somerset County, alleging causes of action related to ADT's provision of an alarm system and alarm monitoring service. (Dkt. 1-2.)[1] Defendant removed the matter to the United States District Court for the District of New Jersey. (Dkt. 1.)

         Plaintiff filed an Amended Complaint. (Dkt. 30). Defendant filed this motion to dismiss the Amended Complaint. (Dkt. 32.) Plaintiff filed a brief in opposition (dkt. 33), and Defendant filed a reply brief (dkt. 35). We have considered these filings, and will resolve the matter without oral argument. See L.Civ.R. 78.1(b).[2]

         For the following reasons, we will grant the motion to dismiss in part, dismissing with prejudice as to Count Two, Count Three, and Count Five, and dismissing without prejudice as to Count Four, Count Six, Count Seven, and Count Eight, and deny the motion to dismiss in part as to Count One.

         BACKGROUND

         We glean the following background from the allegations in HRC's Amended Complaint, which we accept as true at this stage in the pleadings. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Plaintiff Hillsborough Rare Coins, LLC (“HRC”) is a business located in Green Brook, New Jersey, and is engaged in the collection and sale of rare coins. (Dkt. 30 at 2.) In approximately 2001, HRC contracted with Defendant ADT Security Services, Inc. (“ADT”)[3]to install an alarm system at the store. (Id. at 3.) HRC has had an ADT burglary alarm system since then. (Id.)

         HRC alleges that a 2006 Sales Proposal/Agreement from ADT contains a signature dated May 7, 2006, purporting to be from Victor Fabricatore, HRC's Managing Member/owner, but was forged by ADT. (Dkt. 30 at 3.)

         On September 26, 2014, HRC and ADT entered into a separate contract to upgrade and convert the burglary system to ADT's “Pulse” system. (Id. at 3-4; dkt. 32-3 at 2, 4.) The contract covered “Alarm Monitoring and Notification Services” for burglary at a monthly service charge of $63. (Dkt. 30 at 3; dkt. 32-3 at 4.) HRC contracted for the upgraded system because ADT informed HRC that ADT would immediately contact the police and HRC if the alarm was triggered so that law enforcement could attempt to intervene and stop a possible burglary. (Dkt. 30 at 4.) ADT made this representation to HRC on the day that the contract was signed. (Id.)

         The contract contained the following relevant provision:

B. Services
2. Signal Receiving and Notification Service.

Signal Receiving and Notification Service shall be provided by ADT if this Contract includes a charge for Service. If an alarm signal registers at ADT's CMC, ADT shall endeavor to notify the appropriate Police or Fire Department and the designated representative of Customer. If a burglar alarm signal or fire signal registers at ADT's CMC, ADT at its sole discretion may endeavor to contact Customer's premises by telephone (or, in the case of a burglar alarm signal only, by Two-Way Voice if such monitoring service has been elected by Customer) to verify that the alarm is not false. Failing to contact Customer promptly or questioning the nature of the response received upon such contact, ADT shall endeavor to notify the appropriate Police Department or Fire Department. Customer agrees that ADT shall have no liability pertaining to any Two-Way Voice communication or its publication. If a supervisory signal or trouble signal registers at ADT's CMC, ADT shall endeavor to notify the designated representative of Customer.

(Dkt. 32-3 at 7.)[4]

         On June 1, 2015, at approximately 10:30 p.m., three burglars broke into HRC to steal merchandise from the store. (Dkt. 30 at 4.) The burglars remained in HRC for about three hours. (Id. at 5.) ADT's monitoring station was alerted to the break-in. (Id. at 6-7.) The burglars stole “numerous valuable rare coins” and “other merchandise.” (Id. at 5.) They also caused “extensive physical damage” to the HRC store. (Id.)

         The burglars cut through the wall of the adjoining business next to HRC to access the rear room in the store. (Id.) They used power tools, such as a cutting wheel and hammer drill, to attempt to cut through the lining to the store's main safe. (Id.) They also cut, or attempted to cut, the ADT alarm panels' cables, before ultimately ripping the alarm system boxes and panels from the wall. (Id.)

         Upon the burglars' entry into the store, the ADT alarm system was triggered and the ADT monitoring station was alerted to the entry. (Id.) ADT sent a computer-generated email to HRC stating that the alarm system's “silent panic alarm” had been triggered at 10:36 p.m. because sensors in the front and rear areas of the store alerted. (Id.) HRC did not learn of the email until after the burglary was over because the email was marked as spam and went into HRC's spam folder. (Id. at 5-6.) HRC alleges that pursuant to ADT's contractual promises, HRC had an additional obligation at that time to call both the police and Fabricatore's cell phone. (Id. at 6.) ADT called neither Fabricatore nor the police. (Id.)

         An ADT employee called Fabricatore at 11:20 p.m. to alert him that there had been a power outage at the store and that the alarm system was still functioning on a backup battery, and that ADT would inform him if it stopped working. (Id.) According to HRC, these statements were false. (Id.) No power outage occurred at the HRC store, and at the time of the phone call, the burglars had already ripped the alarm system out of the walls. (Id.) At the time, however, HRC believed ADT's representations that there was a power outage but the alarm system was still functioning on a backup battery, that “nothing was wrong, ” and that ADT would call back if anything else happened. (Id. at 7.)

         HRC discovered that its store was burglarized the following morning. (Id.) ADT assigned an investigator who inspected the store and spoke with Fabricatore. (Id.) ADT has not furnished any report or findings to HRC resulting from the investigation. (Id.)

         HRC filed suit against ADT in New Jersey Superior Court, Somerset County on December 2, 2015. (Dkt. 1-2.) On February 19, 2016, ADT filed a Notice of Removal to the United States District Court for the District of New Jersey, 28 U.S.C. § 1441, on the basis of diversity jurisdiction, 28 U.S.C. § 1332(a). (Dkt. 1.)

         ADT moved to dismiss the Complaint. (Dkt. 11.) We denied the motion without prejudice, and directed HRC to move for leave to file an Amended Complaint. (Dkt. 22.) HRC thereafter filed an Amended Complaint. (Dkt. 30.)

         The Amended Complaint alleges: 1) breach of contract; 2) promissory estoppel; 3) equitable estoppel; 4) breach of the implied covenant of good faith and fair dealing; 5) breach of warranty; 6) violation of the New Jersey Consumer Fraud Act; 7) products liability; and 8) theft/civil conspiracy to commit theft. (Id. at 7-17.) ADT filed this motion to dismiss the Amended Complaint. (Dkt. 32.)

         DISCUSSION

         I. Legal Standard

         Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a complaint for failure to state a claim upon which relief can be granted. When evaluating a motion to dismiss, a court must accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). In other words, a complaint survives a motion to dismiss if it contains sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         In evaluating the sufficiency of a plaintiff's factual pleadings, a court must take three steps:

First, the court must take note of the elements a plaintiff must plead to state a claim. Second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.

Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010) (citations and quotation marks omitted). However, “a court need not credit a plaintiff's ‘bald assertions' or ‘legal conclusions' when deciding a motion to dismiss.” Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007) (quotation omitted).

         II. Analysis

         A. Breach of Contract (Count One)

         HRC alleges that ADT breached the contract between them by promising to immediately notify HRC and the police if the alarm system triggered at the store, and then failing to do so on June 1, 2015, the night of the burglary. (Dkt. 30 at 8.)

         ADT asks that we enforce the insurer provision of the contract, through which, according to ADT, HRC acknowledged that ADT was not its insurer and HRC would look exclusively to its insurance provider to recover for any loss, such as a burglary. (Dkt. 32-2 at 17-18; dkt. 35 at 8-10.) Alternatively, if we were to deny the motion to dismiss and allow Count One to proceed, ADT argues that we should enforce the contract provision limiting recoverable damages to $1, 000 and dismiss with prejudice Count One to the extent that it seeks damages in excess of that limit. (Dkt. 32-2 at 20-21 (citing dkt. 32-3 at 3); dkt. 35 at 10-11.)

         HRC argues that the insurer provision and damages limitation clauses of the contract are unenforceable because the print was so small and inconspicuous as to be effectively hidden from a reader and that the clauses are void as unconscionable because they would effectively eliminate any liability for the services ADT agreed to provide. (Dkt. 33 at 13-17.) According to HRC, the insurer clause is further inapplicable because by its language, it would only apply if HRC had insurance, which it did not. (Id. at 17-18.) HRC argues that the claims are not against ADT as insurer or guarantor to protect it from burglary, but rather for failing to call HRC or law enforcement after the alarm was triggered as contracted to.[5] (Dkt. 33 at 17.) HRC also argues that the damage limitation clause violates New Jersey law because it is a “reverse liquated damages” provision. (Id. at 18-19.) The contract provisions at issue state:

E. LIMITATIONS ON LIABILITY.
1. ADT IS NOT AN INSURER. THE AMOUNTS ADT CHARGES CUSTOMER ARE NOT INSURANCE PREMIUMS. SUCH CHARGES ARE BASED UPON THE VALUE OF THE SERVICES, SYSTEM AND EQUIPMENT ADT PROVIDES AND ARE UNRELATED TO THE VALUE OF CUSTOMER'S PROPERTY, ANY PROPERTY OF OTHERS LOCATED IN CUSTOMER'S PREMISES OR ANY RISK OF LOSS ON CUSTOMER'S PREMISES.
2. ADT'S SERVICES, SYSTEMS AND EQUIPMENT DO NOT CAUSE AND CANNOT ELIMINATE OCCURRENCES OF THE EVENTS THEY ARE INTENDED TO DETECT OR AVERT. ADT MAKES NO GUARANTY OR WARRANTY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, THAT THE SERVICES, SYSTEM OR EQUIPMENT SUPPLIED WILL DETECT OR AVERT SUCH EVENTS OR THE CONSEQUENCES THEREFROM. ACCORDINGLY, ADT DOES NOT UNDERTAKE ANY RISK THAT CUSTOMER'S PERSON OR PROPERTY, OR THE PERSON OR PROPERTY OF OTHERS, MAY BE SUBJECT TO INJURY OR LOSS IF SUCH AN EVENT OCCURS. THE ALLOCATION OF SUCH RISK REMAINS WITH CUSTOMER, NOT ADT. INSURANCE, IF ANY, COVERING SUCH RISK SHALL BE OBTAINED BY CUSTOMER. ADT SHALL HAVE NO LIABILITY FOR LOSS, DAMAGE OR INJURY DUE DIRECTLY OR INDIRECTLY TO EVENTS, OR THE CONSEQUENCES THEREFROM, WHICH THE SYSTEM OR SERVICES ARE INTENDED TO DETECT OR AVERT. CUSTOMER SHALL LOOK EXCLUSIVELY TO ITS INSURER AND NOT TO ADT TO PAY CUSTOMER IN THE EVENT OF ANY SUCH LOSS, DAMAGE OR INJURY. CUSTOMER RELEASES AND WAIVES FOR ITSELF AND ITS INSURER ALL SUBROGATION AND OTHER RIGHTS TO RECOVER FROM ADT ARISING AS A RESULT OF PAYING ANY CLAIM FOR LOSS, DAMAGE OR INJURY OF CUSTOMER OR ANOTHER PERSON.
3. IF NOTWITHSTANDING THE PROVISIONS OF THIS PARAGRAPH E, ADT IS FOUND LIABLE FOR LOSS, DAMAGE OR INJURY UNDER ANY LEGAL THEORY DUE TO A FAILURE OF THE SERVICES, SYSTEM OR EQUIPMENT IN ANY RESPECT, ITS LIABILITY SHALL BE LIMITED TO A SUM EQUAL TO 10% OF THE ANNUAL SERVICE CHARGE OR $1, 000, WHICHEVER IS GREATER, AS AGREED UPON DAMAGES AND NOT AS A PENALTY, AS CUSTOMER'S SOLE REMEDY. THIS WILL BE THE SOLE REMEDY BECAUSE IT IS IMPRACTICAL AND EXTREMELY DIFFICULT TO DETERMINE THE ACTUAL DAMAGES, IF ANY, WHICH MAY RESULT FROM ADT'S FAILURE TO PERFORM ANY OF ITS OBLIGATIONS UNDER THIS CONTRACT. IF CUSTOMER REQUESTS, ADT MAY ASSUME GREATER LIABILITY BY ATTACHING A RIDER TO THIS CONTRACT STATING THE EXTENT OF ADT'S ADDITIONAL LIABILITY AND THE ADDITIONAL ...

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