ADT, WEST, INC., Respondent
Supreme Court of Nevada; 108 Nev. 889; 839 P.2d 1308; 1992 Nev. LEXIS
162-October 22, 1992

PRIOR HISTORY:Appeal from summary judgment. Eighth Judicial District Court,
Clark County; Jeffrey D. Sobel, Judge.
DISPOSITION: Reversed and remanded.

PROCEDURAL POSTURE: In a negligence action, appellant employee sought review
of the decision from the Eighth Judicial District Court (Nevada) that
granted summary judgment to respondent alarm company.
OVERVIEW: Appellant employee was the victim of a sexual assault during the
process of closing and exiting her place of employment late at night. She
filed a complaint against respondent alarm company that serviced her
employer, alleging negligence theories as a basis for her right of recovery.
Respondent filed a motion for summary judgment which was granted by the
district court without a specification of reasons other than "the
pleadings." On appeal, the court reversed and remanded. Reviewing the record
the court found that there were factual issues to be resolved as to whether
respondent had provided the alarm system to employer with a panic or holdup
feature. There were questions as to whether respondent's representative had
negligently misrepresented the existence of a panic feature that was not
purchased or programmed into the alarm system, and which was a basis for
liability in tort. The court noted that the duty owed to appellant by
respondent was attributable to the contract between respondent and employer.
OUTCOME: The court reversed the summary judgment and remanded for a trial on
the merits.

COUNSEL: Elwin C. Leavitt, Las Vegas, for Appellant.
Pico & Mitchell, Las Vegas, for Respondent.
JUDGES: Mowbray, C.J., Springer, J., Rose, J., Steffen, J., Young, J.
OPINION: [*890] [**1309] Appellant Elizabeth E., an employee of Taco
Bell, was the victim of a sexual assault during the process of closing and
exiting her place of employment late at night. Elizabeth filed a complaint
against the alarm company that serviced the restaurant, basically alleging
negligence theories as a basis for her right of recovery. Respondent ADT,
Security Systems, West, Inc. (ADT) filed a motion for summary judgment which
was granted by the district court without a specification of reasons other
than "the pleadings." Despite the lack of cogency presented on behalf of
Elizabeth's cause of action either at the district court level or on appeal,
we conclude that summary judgment was inappropriate.


At the date and time pertinent to this case, Elizabeth was employed at a
Taco Bell restaurant in Las [***2] Vegas. She served as a night shift
assistant manager and her duties included closing the restaurant and
activating the burglar alarm system prior to leaving.

The alarm system installed at Taco Bell by a predecessor to ADT n1 provided
"burglary service" that entailed monitoring of the premises after business
hours. Prior to closing and exiting the building, Taco Bell employees were
instructed to call the alarm service company (ADT at the time of the
incident) to advise the company that the alarm was being engaged. Once
activated, the system provided employees thirty seconds within which to exit
the building. If the system was thereafter disengaged, an "unscheduled
entry" was registered with ADT, prompting an [*891] immediate call to the
premises by an ADT operator. In the absence of an answer, ADT would then
telephone designated employees of Taco Bell.

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n1 The original parties to the contract for the alarm system were Crime
Control, Inc. and Taco Bell. Crime Control, Inc. sold its business to
Electro Protective Corp., which later changed its name to ADT Security
Systems, Inc. The latter entity transferred its Nevada operations to its
regional subsidiary, ADT, Security Systems, West, Inc.

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[***3] Elizabeth stated in her deposition that she was trained by Taco
Bell manager Karen Burke, who told her that the alarm system was equipped
with a "panic" or "holdup" feature which would transmit a silent alarm to an
ADT operator who would then immediately notify the police. Elizabeth
indicated that Burke informed her that the silent alarm was activated by
simultaneously pressing the number one and three buttons on the key pad.
Unfortunately, the silent alarm instruction was in vain, as Taco Bell
elected not to purchase that feature of the system until the month after
Elizabeth's ordeal.

On October 22, 1989, Elizabeth and her daughter, who also worked for Taco
Bell, were working the late shift. As they concluded their shift at
approximately 1:20 a.m., Elizabeth called ADT to announce that they were
leaving the building and engaging the alarm. Elizabeth's daughter started to
leave through the rear door, with her mother close behind, when the daughter
was accosted by a man with a gun and forced back inside the building. The
intruder then instructed Elizabeth to disengage the alarm. In the process of
deactivating the alarm, Elizabeth pressed the two buttons on the key pad
that she [***4] obviously believed would transmit a silent alarm to ADT.
The intruder then ordered the women to get down on the floor and told them
he would kill them if the police arrived. The man next removed money from
the safe and thereafter sent the daughter to the break room. Elizabeth was
told to remove her pants and lie down by the back door. Apparently satisfied
that the police would not be arriving at the scene, the intruder ripped the
cord from the telephone and proceeded to sexually assault Elizabeth. After
the assailant left, Elizabeth and her daughter ran to a market across the
street and called the police.

The deposition of Melinda Chaffee, a lead operator for ADT at the time of
the incident, revealed that ADT received the "unscheduled entry" signal
resulting from the [**1310] assailant forcing the two women back into the
building. Chaffee stated that after receiving the signal, she called Taco
Bell but there was no answer (Elizabeth stated by deposition that phone did
not ring). She thereafter telephoned the store manager, Karen Burke, who
requested that an ADT representative meet her at the restaurant. When the
store manager arrived at the crime scene, the police had already [***5]
been contacted by Elizabeth.

Elizabeth's action against ADT was essentially based upon allegations of
negligence and deceptive trade practices. The district court granted summary
judgment against Elizabeth and [*892] declined to specify grounds for the
decision other than "the pleadings."


Summary judgment is properly entered only when there are no genuine issues
of material fact, it is virtually clear what the truth is, and the moving
party is entitled to judgment as a matter of law. NRCP 56(c); Short v. Hotel
Riviera, Inc., 79 Nev. 94, 103, 378 P.2d 979, 984 (1963). Although summary
judgment may not be used to deprive litigants of trials on the merits where
material factual doubt exists, the availability of summary proceedings
promotes judicial economy and reduces litigation expense associated with
actions clearly lacking in merit. Therefore, it is readily understood why
the party opposing summary judgment may not simply rest on the allegations
of the pleadings. To the contrary, the non-moving party must, by competent
evidence, produce specific facts that demonstrate the presence of a genuine
issue for trial. Michaels v. Sudeck, 107 Nev. 332, 334, 810 P.2d 1212,
1213-1214 (1991).

[***6] With the above legal principles in mind, the record in the instant
case leaves us with an element of doubt concerning the truth. In so stating,
we do not fault the district court judge who was given precious little
justification for declining to enter summary judgment. Indeed, it is far
from clear on the record whether the district court's attention was even
directed in any meaningful way to key aspects of depositions taken in the
action. Appellant's counsel complains on appeal that he intended to again
amend Elizabeth's complaint "as soon as the depositions were signed."
Fortunately for Elizabeth, excerpts of depositions were included in the
appendix to appellant's brief, and ADT voiced no objection to this court
considering these materials on appeal. Nor did ADT object to appellant's
appendix on grounds that its contents were not before the district court on
summary judgment. In any event, we have elected to review the depositional
testimony included in the appendices primarily because Elizabeth's counsel
filed a document in the district court specifying the same depositions as
attachments to Elizabeth's points and authorities in opposition to summary
judgment. The designation [***7] of the record on appeal included all
papers and documents filed in the district court.

It is uncontroverted that the alarm system purchased and installed at the
location where Elizabeth worked at the time of the incident did not include
a panic or holdup feature. The system was acquired to protect the premises
from acts of burglary occurring after the store was closed. It was not until
the month [*893] following Elizabeth's ordeal that the panic or holdup
feature was added to the system. It is thus clear on the record that ADT had
been paid only to provide property protection rather than people protection
at the time of the incident. However, that fact does not end the matter.

The depositional testimony of store manager Karen Burke indicated that she
was informed by a representative of ADT, a mechanic or person who worked on
the systems, that the alarm system installed at Elizabeth's place of
employment included a panic or holdup feature. Burke further stated that the
mechanic told her how to operate that aspect of the system, and that she in
turn instructed Taco Bell assistant manager trainees, including Elizabeth,
how to operate the panic buttons. Clearly, this testimony raises a [***8]
material issue of fact unsuited to a summary resolution.

[**1311] Despite the absence of record evidence upon which liability could
be based for negligence connected with the alarm system as it related to the
features actually purchased by Taco Bell, it is apparent that if a
representative of ADT negligently misrepresented the existence of a panic
feature that was not purchased or programmed into the Taco Bell alarm
system, a basis for liability in tort has been asserted. Moreover, the basis
for liability is strengthened where the ADT representative also instructed
the store manager how to operate the panic function in anticipation of
further instruction and reliance among Taco Bell employees.

Although the theory upon which we reverse the summary judgment is based upon
a tort cause of action for negligent misrepresentation, the duty owed to
Elizabeth by ADT is attributable to the contract between ADT and Taco Bell.
As a result of the contract and the serious nature of the services provided
by ADT under the contract, we have no difficulty recognizing ADT's duty of
care to Taco Bell and its employees not to misrepresent the capabilities of
the alarm system installed at the location where [***9] Elizabeth worked
on the occasion of her injuries. See generally, 65 C.J.S. Negligence § 20
(1966) (special relationship arising from contract can serve as basis for
liability for economic or physical injury resulting from reliance upon
negligent misrepresentation).

ADT seeks to avoid a finding of duty running to Elizabeth by contending that
Elizabeth was nothing more than an incidental beneficiary under the contract
between ADT and Taco Bell and that as such, she had no right of action
against ADT. We disagree. In Lipshie v. Tracy Inv. Co., 93 Nev. 370, 566
P.2d 819 [*894] (1977), we stated that in order to enjoy the status of a
third-party beneficiary, "there must clearly appear a promissory intent to
benefit the third party ( Olson v. Iacometti, 91 Nev. 241, 533 P.2d 1360
(1975)), and ultimately it must be shown that the third party's reliance
thereon is foreseeable ( Lear v. Bishop, 86 Nev. 709, 476 P.2d 18 (1970))."
Id. at 379, 566 P.2d at 824-825. In the instant case, drawing all
inferences, as we must, in favor of Elizabeth, it reasonably may be [***10]
inferred that when ADT represented that the panic feature was part of the
Taco Bell alarm system, ADT had to know that the emergency feature would be
used, if at all, by employees of Taco Bell. Moreover, the ADT representative
must have known, and it was therefore foreseeable to ADT, that Taco Bell
employees would rely on the availability and effectiveness of the panic
function during times of emergency such as the one that faced Elizabeth.
Clearly, the existence of such a feature would be intended to benefit the
promisee's employees who would be using the system. n2

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n2 Despite our analysis rejecting ADT's contention that Elizabeth would have
been at most an incidental beneficiary under the contract between ADT and
Taco Bell, we need not decide whether Taco Bell employees were third-party
beneficiaries under the contract. Because corporations function through
their officers, directors, and employees, it may be argued that Taco Bell
employees such as Elizabeth were, in legal contemplation, promisees under
the contract, at least to the extent necessary for recognizing a special
relationship between the injured employee and the responsible contracting
party. In any event, where, as here, the misrepresented service (the panic
or holdup feature) would have necessarily been used by, and of greatest
potential benefit to, the Taco Bell employees, it would be unreasonable to
conclude that no special relationship existed between ADT and Elizabeth.

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[***11] But for the above depositional testimony of Burke and Elizabeth,
who confirmed that Burke informed her of the panic feature of the system and
how to operate it, we would have agreed with the determination of the
district court. There is little doubt, however, that ADT had a duty not to
misinform Taco Bell concerning the capabilities of the alarm system that
existed on the premises. The duty not to misinform is especially clear where
it is foreseeable that those to whom the misinformation is given may rely
upon it to their extreme detriment. n3

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n3 Of course, this is an appeal from summary judgment, and at trial
Elizabeth will have to prove that a misrepresentation by an employee or
agent of ADT occurred, and that the negligent misrepresentation was the
proximate cause of her injuries. It should be apparent from our opinion that
absent the misrepresentation, there would be no duty running from ADT to

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[**1312] We perceive no validity to the other allegations of Elizabeth's
complaint, and conclude that her specifications [***12] of fraud,
deceptive trade practices and strict products liability are without merit.
Moreover, we note with some degree of dismay that it has been [*895]
necessary to view Elizabeth's amended complaint with substantial latitude in
order to devine a cause of action based upon negligent misrepresentation. We
nevertheless conclude that Elizabeth should have the opportunity to seek
redress for her injuries based upon a composite of allegations in the
amended complaint that are barely adequate to state a cause of action.

For the reasons discussed above, we reverse the summary judgment entered
below and remand for a trial on the merits.