Protection One Stuck in Lawsuit Accused of Fraud and Deceit -

See new webinar announcement below

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A lawyer homeowner sued Protection One alleging fraud, deceit and deceptive business practices under several statutes in California. The lower court dismissed the case but the Appellate Court has reversed, in part, and sustained the action for the fraud, deceit and deceptive business practices. It's an interesting decision and you can read it here: https://www.kirschenbaumesq.com/article/sean-jaquez-plaintiff-and-appellant-v-protection-one-alarm-monitoring-inc-et-al-defendants-and-respondents-

The case is only in the pleading stage and so the allegations still have to be proved, but the decision addresses matters that most of you have thought about. Protection One's contract [which I did NOT write or approve] has an "early termination charge" which is what's left on its 3 year term contract or $750, whichever is less. It also includes a contract form that uses "lightly-shaded font" on the back page of the contract form. The plaintiff also claims that when first presented with the contract for signature he did not notice the second page and nothing on the first page alerted him to the second page. Also, plaintiff claims that the salesperson did not explain the important contract terms; "Morse explained what she considered the "important" terms of the agreement and filled in Jaquez's personal information on the front page of the agreement. Morse did not

mention that the agreement was for a predetermined length of time or that there would be an early termination fee if Jaquez cancelled prior to the expiration of the contract."

I have counseled consistently that

your sales people refrain from explaining the contract terms
that your contract NOT have light or small hard to read font, on front or back
that you avoid late payment fees and cancellation charges [as opposed to liquidated damages for breach of contract]

Here is the court's finding that kept Protection One in the lawsuit:

"Jaquez alleges in the fourth cause of action that Protection One deceived him

by representing that the agreement he initially signed was the full and complete

agreement. However, Protection One failed to give him the second page, which

specified that it was a three-year contract and outlined the early termination

fee. Although he read the agreement during the three-day cooling off period,

Jaquez was not made aware of the three-year term and the early termination fee

provision until after he entered into the contract. Jaquez asserts Protection

One intentionally concealed the terms of the contract to ensure customers

signed with Protection One rather than one of its competitors. As a result,

Jaquez contracted with Protection One and was harmed in that he was forced to

pay an early termination fee. We find these allegations sufficient to state a

cause of action for fraud and deceit."

And here is what got Protection One in trouble:

"Based on the record before us, Jaquez likewise had no reasonable opportunity

to learn the essential terms of the document he signed as a result of Protection

One's purported failure to provide him with the second page of the agreement.

Although the agreement warns a potential customer that he may be charged a

cancellation fee, that statement alone would not have informed a reasonable

person that he would be charged an early termination fee, much less one for $750

or the remaining amount due under the agreement. Jaquez was not negligent in

failing to take additional steps to ascertain what may be charged as an

early termination fee. While the law is clear that a consumer is generally not

excused from reading a contract, Protection One has provided no legal authority

for the proposition that a consumer is obligated to question and investigate any

provisions which merely allude to a potential fee.

Contrary to Protection One's characterization, the agreement on its face does

not indicate there is more than one page to the agreement. The document

specifies that it is "page 1 of " with the number 1 handwritten and any

indication that there were additional pages left blank. We are also not

convinced by Protection One's argument that the terms of the contract themselves

indicate to a reasonable reader that there is a second page. For example,

Protection One notes the first page states that "this contract contains

provisions significantly limiting [Protection One's] liability . . ." and "this

contract . . . provid[es] for arbitration of any disputes [bold and

capitalization excluded]," yet does not contain a full arbitration provision or

limited liability provision. Whether these statements are sufficient to alert a

reasonable reader to the existence of a second page is a question of

fact. They do not, at the pleading stage, overcome Jaquez's allegations that

Protection One actively hid the second page of the agreement from him. Finally,

we reject Protection One's argument that Jaquez was provided with a second page

at the time the system was activated. Jaquez was already bound by the agreement

by then. Protection One does not contend otherwise. Under the terms of the

agreement, Jaquez would have been responsible for the full $750 "early"

termination fee even if he cancelled immediately after activation."

If you have and use the Standard Form Contracts as drafted you shouldn't concern for the issues in this case. If you don't have a Standard Form Contract, today's a good day to get them. www.alarmcontracts.com

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TO SUBMIT QUESTIONS OR COMMENTS REPLY TO THIS EMAIL OR EMAIL Ken@Kirschenbaumesq.com. Most comments and questions get circulated.

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Webinars

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Topic: Trade Secrets and Restrictive Covenants. The webinar will focus on trade secrets and restrictive covenants as follows:

1. will courts enforce the covenants?

2. what standard must be met in order to obtain relief?

3. legal strategies for enforcing covenants

4. definition of trade secrets

5. required security efforts

6. non-compete agreements

When: Wednesday, April 2, 2014 12:00 PM - 1:00 PM EDT.

Presenter: Judge Ruth B. Kraft, Chair, Employment Law Group, Kirschenbaum & Kirschenbaum, P.C.

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Speaking Engagements

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SentryNet's 19th Annual Dealer Conference. April 22 - 24, 2014 at Harrah's in Tunica, MS. register at http://www.sentrycon.us or call Peggy at 800-932-3304 for more information. www.sentrynet.com

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Northeast Security & Systems Contractors Expo Thursday, May 22, 2014 10 am to 5 PM at Royal Plaza Trade Center, Marlborough, MA. registration https://www.expotracshows.com/neacc/2014/ Presentation on Alarm Law issues and Q&A will be at 2 PM. For more info contact Gary Spaulding, NEACC President

207-384-2420 gary@spauldingsecurity.com
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Alabama Alarm Association. AAA's Fall Meeting and Trade Show - October 21, 2014 from 3 to 5 PM at DoubleTree Hotel 808 South 20th Street Birmingham, AL 35205 for more info contact AAA Executive Director: director@alabamaalarm.org (205) 933-9000

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Electronic Security Summit for 2014. October 22-24, 2014 at the landmark Broadmoor Hotel. Colorado Springs, CO. For more information contact Alexander J. Quirin, CEO & Managing Partner, Advisory Summit Providers, LLC., (786) 999-9738 alex.quirin@aspsummits.com www.aspsummits.com

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Protection One Stuck in Lawsuit Accused of Fraud and Deceit - March 24, 2014