ADT wins fire death case November 26, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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ADT wins fire death case
November 26, 2018
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ADT wins fire death case
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            ADT really knocked this case right out of the park.  Of course we don't celebrate the unfortunate circumstances that gave rise to the case, a residential fire resulting in death, but many legal issues were addressed in the case and the federal court judge, sitting in Kansas, got it all right.  Giving credit where credit is due, I have to assume that ADT defense counsel clearly laid out the defense.  
            The judge dealt with many familiar issues, starting with unconscionability of the ADT contract, the issue of gross negligence and how it affects the exculpatory clause and limitation of liability clause.  If you read the case it's fairly clear to me that the judge would have dismissed the case based on these protective provisions.  But the decision was easier because the judge relied on the "limitation of suit" provision.
            The facts are not flattering for ADT:
            "Sometime during the early morning hours of August 15, 2016, an accidental home fire from the kitchen stove began at decedent’s residence. Decedent’s home was equipped with a security system, which Defendant sold and monitored. At 1:30 a.m., Defendant received a “sensor tamper” alert for “glass break” in the dining room. Defendant did not call any individual or emergency service at that time. At 1:32 a.m., Defendant received an alert for “expansion module failure.” The expansion module is the key pad and system center located by the front door of the home. Defendant did not call any individual or emergency services at that time. At approximately 1:43 a.m., Defendant twice attempted to call decedent, but was unable to reach her. At 1:49 a.m., Defendant then attempted to call the next call-back number, that of decedent’s grandmother, but was also unable to reach her. The caller identification label associated with Defendant’s number is an unlisted number and does not identify Defendant as the caller. Between 2:01 a.m. and 2:04 a.m., Defendant again attempted to call decedent’s number and the next call-back number. Defendant was again unable to reach either party. Around 2:04 a.m., Defendant “fully cleared” the alarms.
            Around 2:52 a.m., City of Topeka Public Works Department employees noticed the house fire and dialed 911 from a cell phone. First responders arrived at the scene at approximately 2:58 a.m. A fire crew conducted a primary search and found decedent face down, unconscious, in a hallway. The fire crew took decedent from the house and began emergency medical treatment at approximately 3:07 a.m. Decedent was transported to Stormont Vail Health Care in Topeka, KS, where she succumbed to her injuries and was pronounced dead. Her cause of death was inhalation of smoke and soot from the fire. Decedent experienced significant conscious pain and suffering."
            The judge also included in his opinion allegations by the Plaintiff regarding representations by ADT [it was Protection One who installed the system before being purchased by ADT].
            "Plaintiffs allege that on Defendant’s website are the following statements:
• The ability to remotely learn of possible hazards and to dispatch responders is key to how security monitoring works.
• Protection 1 home alarm systems will provide you with total peace of mind.
• [Security systems] are monitored 24/7 at our central monitoring centers, so you can rest easy in the knowledge that we’ve got your back at all times.
• 24/7 professional monitoring centers will address alarms immediately to ensure that help is on the way.
• Protection 1’s home monitoring services ensure that you and your family always have a watchful eye and a lightning fast response unit on your side.
• [ADT] [t]ake[s] monitoring seriously and always employ[s] triple redundancy monitoring for home alarm systems.
• In the event of an emergency, local police or fire assistance will be notified.
• A trained employee immediately attempts to call you to notify you of the disturbance in case it is a false alarm. If you confirm a false alarm, the employee will see if there is anything else you need before letting you hang up. If the employee is unable to contact you, or if you confirm that the alarm is genuine, the authorities will be notified. A dispatch will then send police officers to your residence to evaluate the situation."
            On the motion to dismiss the case, the existence of issues of fact would be sufficient to defeat the motion, but one fact was uncontested, the lawsuit was started more than one year after the incident and the contract had a one year suit limitation provision.  The Plaintiffs argued that because the Plaintiff was a minor the limitation provision was tolled, but the judge rejected the argument.
            "3. Suit Limitation Provision
            Paragraph 9 of decedent’s contract with ADT reads, “no claim or legal action either of us may have arising out of this contract, your system, or our services (whether based on contract, negligence, or otherwise) may be brought more than one year after the date the cause of action for such claim accrued.”   Defendant asserts that this provision is enforceable and bars Plaintiffs’ suit.
            Absent statutory prohibition, Kansas law permits a contracting party to limit the time of its liability under a contract. Suit limitation provisions “encourage plaintiffs to use reasonable and proper diligence in enforcing their rights and protect courts from having to resolve claims years after the fact. In short, suit-limitation provisions serve a number of purposes even when the insurer is not directly prejudiced by a late filing.   “[U]nder Kansas law, when a contract does not violate an articulated public policy, parties may agree by contract to limit the time to file suit, even if the applicable statute of limitations allows for a greater time period.”
            Plaintiffs assert that the provision is unenforceable because wrongful death, survival, and consumer protection claims invoke public policy concerns “of a greater magnitude” than other causes of action protected from contractual limitation by Kansas courts. Plaintiffs cite no authority in support of their contention that public policy forbids a one-year suit limitation for survival actions or consumer protection claims, and the Court declines to make new law. Further, even if a one-year contractual suit limitation is against public policy, Plaintiffs’ survival and consumer protection claims are dismissed for failure to state a claim, as discussed below. The Court first considers the effect of the suit limitation provision on Minor’s wrongful death claim.
            B. Minor’s Wrongful Death Claim
            Minor asserts that a one-year suit limitation for wrongful death claims is against Kansas public policy, and further, that Minor’s minor status tolls any applicable suit limitation provision or statute of limitations. Under Kansas law, a wrongful death claim requires that the decedent “might have maintained the action had such person lived.”  Kansas courts have not decided whether a one-year contractual suit limitation is against public policy with regard to wrongful death claims, nor have Kansas courts considered whether minority tolls a contractual suit limitation agreed to by decedent. The Court considers these issues in turn.
            1. Contractual Limitation of Wrongful Death
            When considering whether public policy limits enforcement of an otherwise enforceable contract, the Court must balance competing interests. On one hand, Kansas courts have consistently recognized “the paramount importance of the freedom to contract.”  On the other hand, “[s]tatutes of limitation are creatures of the legislature and themselves an expression of public policy on the rights to litigate.” In Pfeifer, the Kansas Supreme Court rejected a six-month suit limitation provision for a retaliation claim arising under the Worker’s Compensation Act. Minor argues that a wrongful death claim “invoke[s] public policy concerns of a greater magnitude” than Pfeifer and accordingly, the court ought to find the one-year provision to be contrary to public policy.
            In Pfeifer, the plaintiff brought a retaliatory discharge claim, alleging that her employer fired her because she collected Worker’s Compensation.   The plaintiff’s employment contract included a provision which required her to file suit within six months of her termination.   The Kansas Supreme Court reasoned that “Kansas has a ‘thoroughly established’ public policy supporting injured workers’ rights to pursue remedies for their on-the-job injuries and opposing retaliation against them from exercising their rights.”   The court emphasized that the tort at issue “rested on a principle of deterrence against employer reprisal for an employee’s exercise of a legal right” and found that the contract “weakened [the plaintiff’s] right to pursue a cause of action and potentially subverts the public interest in deterring employer misconduct.  Further, the court found that “restricting an employee’s time to bring a retaliatory discharge claim for a job termination...necessarily impeded the enforcement of that right and the public policy underlying it.
            The Pfeifer court relied on Hunter v. American Rentals in holding that the contractual limitation would impede a legislative purpose.60 In Hunter, the Kansas Supreme Court found a contract provision eliminating liability for ineffective towing equipment was void because the contract provision directly undermined the legislative purpose of a Kansas statute that specifically required Defendant to provide safe towing equipment.61 The court found that public policy required the court to uphold the specific statutory duty—providing safe trailer hitches— the company owed to its customers and the general public, despite the contractual wavier.
            Minor asserts that wrongful death “invoke[s] public policy concerns of a greater magnitude than the retaliatory discharge claim protected by the Pfeifer court,” and asserts that Kansas law supports this finding.  Certainly the creation of the wrongful death cause of action is a matter of public policy and properly the jurisdiction of the legislature.   However, Minor points to no statute or policy that would be undermined by a one-year contractual limitation on the cause of action. The contractual provision at issue here provides one year from “the date the cause of action for such claim accrued” for the action to be brought.   Unlike in Pfeifer, a contractual limitation of one year does not “effectively weaken[ ]”   Minor’s rights nor does it “subvert the public interest in deterring” misconduct. Further, no specific statutory duty or legislative purpose is undermined. Indeed, Minor’s assertion that the claim invokes “public policy concerns of a greater magnitude than the retaliatory discharge claim” is unavailing. It is not the magnitude of the public policy that is dispositive, but rather the specific, articulable public policy that requires abrogation of parties’ freedom to contract. Accordingly, the Court finds that the one-year contractual limitation on Minor’s wrongful death claim is not contrary to Kansas public policy.
            2. Tolling of the Wrongful Death Claim
            Minor asserts that even if the one-year provision is enforceable, under K.S.A. § 60-515, the suit limitation is tolled based on his minor status. In Mason v. Gerin Corp., the Kansas Supreme Court found that expiration of decedent’s own statute of limitations prior to his death bars a wrongful death claim by his heirs.66 In Mason, the court explicitly considered and rejected a line of cases that found it was improper to “permit the action of the decedent prior to his death to defeat the cause of action in favor of his personal representative.”67 The court declined to follow this reasoning in light of the plain language of the Kansas statute and Kansas precedent.  The court found the personal representative’s action time-barred because “[t]he condition specified in the wrongful death statute requiring that the injured party have the capacity to maintain the action had he or she lived is not fulfilled.  ” In Mason, the Court also recognized that under Kansas law, a wrongful death action could not be maintained if the “decedent’s claim was satisfied by settlement during his lifetime.”
            In Frost v. Hardin, the Kansas Supreme Court, adopting the opinion of the Kansas Court of Appeals, found that a wrongful death action by minor children was not barred by the statute of limitations simply because the action would be barred if brought by the widow mother.  The court found that the children’s minority tolled the statute of limitations in a wrongful death action, just as it would any other claim brought by a minor, because the court was unable to “perceive any such public policy in the Kansas statutes which would override the specific tolling provisions of 60-515(a).”
            Unlike Frost, here, the question is whether a minor child is barred by a contractual limitation that would bar suit by the decedent herself, not a statute of limitations that would bar adult heirs. A condition precedent to a claim under the Kansas wrongful death statute is that the decedent “might have maintained the action” had they lived.   Here, decedent could not have maintained any action brought more than one year after her death, and prior to the expiration of that year, her recovery was contractually limited to $247.94. As in Mason, the actions and decisions of decedent prior to her death limits the ability of her heirs to recover for wrongful death. In Frost, the court found that no public policy overcame K.S.A. § 60-515. Kansas courts, however, have found that Kansas public policy supports reasonable risk-allocations provisions in contracts, including suit limitation provisions that shorten the legislative statute of limitations.  Defendant also correctly notes that to allow Minor to escape this contractual limitation, while upholding the contract’s applicability as to Administrator, would require decedent’s estate to indemnify and hold Defendant harmless against Minor’s wrongful death claim.
            Alternatively, Minor asserts that he is not barred by a contractual limitation because he is not in privity of contract. Privity of contract is “essential to the maintenance of any action on any contract...in respect of the matter sued on.”   Here, the matter sued on is the wrongful death of decedent, who was in privity of contract. The wrongful death claim is one the decedent “might have maintained” had the person lived.  Accordingly, it is decedent’s privity of contract that is required in a wrongful death suit, not Minor’s. Minor’s status as a minor does not change the Court’s analysis or the condition precedent. Accordingly, the Court finds that Minor’s wrongful death claim is subject to the contractual limitations, and is accordingly, time-barred."
            Be sure to update your contracts.  The Standard Form Agreements have had a suit limitation provision of one year for many years, so that won't need updating, but there have been enough changes over the last 2 years to warrant the updating of your contracts.  If you don't have the Standard Form Agreement, then you need to get them, today.  
            You can read the above case on our website under Alarm Law Issues, Leading cases sorted state by state, Kansas.  http://www.kirschenbaumesq.com/page/alarm-law-issues
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Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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