Travis v. ADT Sec. Servs., Inc.

884 F.Supp.2d 629

Fred TRAVIS, Plaintiff,

v.ADT SECURITY SERVICES, INC., and John Doe, Defendants.

Case No. 12–11822.

United States District Court,

E.D. Michigan,

Southern Division.

Aug. 16, 2012.

Robert L. Hamburger, Team Hamburger, PLLC, West Bloomfield, MI, for Plaintiff.

Charles C. Eblen, Shook, Hardy, Kansas City, MO, for Defendants.

OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS COUNTS II AND III OF PLAINTIFF'S COMPLAINT AND TO LIMIT PLAINTIFF'S RECOVERABLE DAMAGES ON COUNT I TO $500 (ECF NO. 3)

PAUL D. BORMAN, District Judge.

This matter is before the Court on Defendant ADT Security Services, Inc.'s (“ADT”) Motion to Dismiss. (ECF No. 3.) Plaintiff filed a response (ECF No. 7) and ADT filed a reply (ECF No. 8). The Court held a hearing on Wednesday, August 8, 2012. For the reasons that follow, the Court GRANTS Defendant's Motion, DISMISSES Counts II and III of Plaintiff's Complaint and limits Plaintiff's recoverable damages on Count I to $500 dollars.

INTRODUCTION

This action involves Plaintiff's claim that his residential alarm service provider, Defendant ADT Security Services, Inc. (“ADT”), failed to perform its obligations under a service contract by intentionally failing to respond to an alarm and break-in at his home, resulting in the theft of Plaintiff's “lifelong savings and property and jewelry and appliances and automotive equipment, amounting to actual damages in excess of $45,000 dollars.” (ECF No. 1, Notice of Removal, Ex. A, Compl. ¶ 16.) Plaintiff further alleges that ADT negligently employed personnel who were responsible for the theft at his home and that ADT has engaged in “fraud and racketeering.” Id. ¶¶ 11–22. ADT responds that Plaintiff is contractually limited to $500 in damages for any alleged failure to perform under the alarm service contract. ADT further argues that Plaintiff has failed as a matter of law to state a claim of either “negligent employment” or “fraud and racketeering.”

I. BACKGROUND

Plaintiff entered into a written services contract with ADT on or about March 15, 2011, in which ADT agreed to install and monitor electronic security equipment at Plaintiff's residence, 13070 Killbourne, in Detroit, Michigan. (Compl. ¶¶ 1–2.) The six-page Residential Services Contract (the “Services Contract”) contained the following provisions pertinent to this action:

YOU ACKNOWLEDGE AND ADMIT THAT BEFORE SIGNING YOU HAVE READ THE FRONT AND BACK OF THIS PAGE IN ADDITION TO THE ATTACHED PAGES WHICH CONTAIN IMPORTANT TERMS AND CONDITIONS FOR THIS CONTRACT. YOU STATE THAT YOU UNDERSTAND ALL THE TERMS AND CONDITIONS OF THE CONTRACT, INCLUDING, BUT NOT LIMITED TO, PARAGRAPHS 5, 6, 7, 8, 9, 10, AND 22.

Def.'s Mot. Ex. A, Residential Services Contract (the Services Contract) at p. 1.¹

The Services Contract further explains that ADT is not an insurer and that the amount paid for ADT services is limited to the liability ADT assumes under the Services Contract unrelated to the value of Plaintiff's property:

WE ARE NOT AN INSURER. WE ARE NOT AN INSURER AND YOU WILL OBTAIN FROM AN INSURER ANY INSURANCE YOU DESIRE. THE AMOUNT YOU PAY U.S. IS BASED UPON THE SERVICES WE PERFORM AND THE LIMITED LIABILITY WE ASSUME UNDER THIS CONTRACT AND IS UNRELATED TO THE VALUE OF YOUR PROPERTY OR THE PROPERTY OF OTHERS LOCATED IN YOUR PREMISES. IN THE EVENT OF ANY LOSS OR INJURY TO ANY PERSON OR PROPERTY, YOU AGREE TO LOOK EXCLUSIVELY TO YOUR INSURER TO RECOVER DAMAGES. YOU WAIVE ALL SUBROGATION AND OTHER RIGHTS OF RECOVERY AGAINST U.S. THAT ANY INSURER OR OTHER PERSON MAY HAVE AS A RESULT OF PAYING ANY CLAIM FOR LOSS OR INJURY TO ANY OTHER PERSON.

Services Contract 15.

The Services Contract also contains the following limitation of damages provision:

NO LIABILITY; LIMITED LIABILITY. IT WILL BE EXTREMELY DIFFICULT TO DETERMINE THE ACTUAL DAMAGES THAT MAY RESULT FROM OUR FAILURE TO PERFORM OUR DUTIES UNDER THIS CONTRACT. 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. IF IT IS DETERMINED THAT WE OR ANY OF OUR AGENTS, EMPLOYEES ... 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.

Services Contract 16. Finally, as relevant here, the Services Contract provides:

EXCLUSIVE DAMAGES REMEDY. YOUR EXCLUSIVE DAMAGE AND LIABILITY REMEDIES ARE SET FORTH IN PARAGRAPH 6 ABOVE. WE ARE NOT LIABLE TO YOU OR ANY OTHER PERSON FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES.

Services Contract ¶ 7.

Plaintiff claims that under the terms of the Services Contract, ADT agreed that in the event of a triggering of the electronic monitoring equipment installed at Plaintiff's home, ADT would physically send an employee to the residence to verify that a break-in had occurred and would immediately notify law enforcement of the occurrence. (Compl. ¶ 3.) Plaintiff claims that on October 27, 2011, the alarm at his residence was triggered and that he received a phone call from an ADT Dispatcher telling him that his alarm had been activated and that the police would be dispatched. (Compl. ¶ 6; Pl.'s Resp. 4.) Plaintiff asserts that following the representation made to him on the phone by the ADT Dispatcher that the police would be called, another ADT employee, who had been sent to the residence to verify the break-in, “falsely” informed the ADT Dispatcher that the break-in could not be verified and thus the police were never summoned to the residence and Plaintiff was robbed. (Compl. ¶ 9; Pl.'s Resp. 4–5.) Plaintiff asserts that “either the ADT investigator was mentally impaired, or, more likely, ADT was in bed with the burglars!” (Compl. ¶ 21; Pl.'s Resp. 5.) Plaintiff alleges that ADT was negligent in hiring an “alarm responder” who had been knowingly involved in burglaries and/or breaking and entering, or who “had [a] suspect background [ ].” (Compl. ¶ 14–15.)

ADT does not dispute these allegations for purposes of the motion, but claims that Plaintiff is limited by the terms of the Services Contract to recovering damages of $500 for the alleged breach. ADT also argues that Plaintiff's “negligent employment” and “fraud and racketeering” claims fail as a matter of law. For the reasons the follow, the Court GRANTS ADT's motion to dismiss the negligent employment and fraud/racketeering claims (Counts II and III) and limits Plaintiff's recoverable damages under his breach of contract claim (Count I) to $500, as specified in the Services Contract.

II. STANDARD OF REVIEWA. Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a case where the complaint fails to state a claim upon which relief can be granted. When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.2007). But the court “need not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.2000)). “[L]egal conclusions masquerading as factual allegations will not suffice.” Eidson v. State of Tenn. Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir.2007).

In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court explained that “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level....” Id. at 555, 127 S.Ct. 1955 (internal citations omitted). Dismissal is appropriate if the plaintiff has failed to offer sufficient factual allegations that make the asserted claim plausible on its face. Id. at 570, 127 S.Ct. 1955. The Supreme Court clarified the concept of “plausibility” in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009):

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” [Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ]. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556, 127 S.Ct. 1955. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Id., at 557, 127 S.Ct. 1955 (brackets omitted).

Id. at 1948–50. A plaintiff's factual allegations, while “assumed to be true, must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief.” LULAC v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007) (emphasis in original) (citing Twombly, 127 S.Ct. at 1965). Thus, “[t]o state a valid claim, a complaint must contain either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory.”...