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Follow up on raising limitation of liability / webinar registration - Miami building collapse case
July 21, 2022
Announcing webinar on the Miami building collapse case presented by the fire alarm expert who installed and serviced the fire alarm and evac system.  If you do fire alarms you don’t want to miss this webinar.  Register today.
Webinar:  Champlain Towers South building collapse / alarm and security issues
When:  July 26, 2022  12PM  ET
Topic:  Hear from the fire alarm expert who serviced the fire alarm system and was intimately involved in the litigation involving Securitas Security.                 Some information that you should be aware of before the presentation:  Florida requires a voice evacuation system that provides speakers in every apartment so there can be floor by floor or building wide communication to evacuate.  This fire alarm system had that system and it was working.  Securitas provided security guards stationed at the building.  When the first fire alarm signal came into the security desk the guard did not determine the cause of the fire alarm or the zone, and did not utilize the evacuation system to alert residents.  Securitas has settled the Plaintiffs case paying over half of the almost one billion dollar settlement.  
Presented by:  Matt Haiman, Premier Alarm Systems – the fire alarm company for Champlain Towers South.  There will be ample opportunity for Q&A. 
Hosted by:  Ken Kirschenbaum,Esq
Who should attend:  Alarm owners installing and servicing fire alarm systems
Follow up on raising limitation of liability from June 30, 2022
          I enjoy reading the articles you publish, so thank you for doing so.  It’s very insightful.  I have a quick question related to your note below about the calculus for raising the limitation of liability.  You noted that it’s 6 X the monthly fee.  Can you give an example of this?  For example (and using only round numbers here), if a customer gets billed $100.00 per month for services on a recurring basis, and they want to raise their stated limitation of liability, there would be a 6 X multiplier applied for the increase.  That equates to $600.00, but I’m not sure how that would be applied.  Would that increase their monthly fee to $600.00 (as opposed to $100.00) or would the $600.00 be applied annually or over the term of the agreement?
          Let’s first discuss why we even have an option to increase the limitation of liability.  We know alarm companies are not licensed insurance companies; they don’t charge premiums and cover losses like insurance companies do. 
          Limiting liability by contract has a long history, but I will start with early 1900 lawsuits involving the transportation industry, railroads, in the United States.  Courts accepted limitation of liability as long as the provider offered the customer an opportunity to increase the limitation.  As far as I know there was no guideline on how that increase would be calculated and there was no real thought to whether it equated with insurance.
          Early on the alarm industry embraced the limitation of liability in the alarm contract.  A case in New York approved the limitation but only because the provision offered an opportunity to increase the limitation, citing the earlier transportation cases for legal authority.  So the limitation with the right to increase, without real guidelines, was the norm in alarm contracts when they began to make their appearance in the 1950s and beyond. 
          Sometime in the 1990s [if I recall correctly] New York’s highest court ruled that the limitation of liability would be enforced and no mention of the right to increase was mentioned.  I changed the terms of the limitation in the Standard Form Agreements, removing the right to increase.  A short time after that however I reconsidered and decided it was better to be safe than sorry.  While court decisions were coming down from many states the right to increase the limitation was only occasionally mentioned, but sometimes it was.  Since then the right to increase has been standard language for the limitation of liability.
          Some of you who don’t use Standard Form Agreements don’t have a limitation of liability; you have a liquidated damage clause.  Some courts refer to them as the same, but they are not, and if you get a smart enough attorney who is before a smart enough judge you may find out too late that a liquidated damage clause is not appropriate in an alarm contract.  [we are discussing liquidated damages to defend claims, not on collection cases where the liquidated damage clause is appropriate]
          The calculation for the optional increase is 6 times the monthly charge.  If a subscriber wants to increase the liability to $6000 then the monthly will be $1000.  Since this is likely more than an insurance policy would costs it makes more sense for the subscriber to get another policy or more coverage rather than try to increase the limitation.
          Can you increase the limitation without regard to a formula, such as one million or more, the amount paid on the contract or just no limit at all?  Sure, but you better realize that you’re not just betting your insurance company’s money.  You have agreed to indemnify your central station, for sure, and possibly others, and a loss claim may well exceed your insurance coverage. 
          What can you expect if you do delete the limitation or raise it significantly?  That depends if your insurance company finds out; if your central station finds out; if a potential buyer of your alarm accounts and contracts finds out or, maybe worse, you get a large loss followed by a lawsuit.  If you do, don’t expect me to be overly sympathetic when you call asking to be saved.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301