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Will ADT owe its dealers an accounting if it recovers against Vivint
October 13, 2021
Will ADT owe its dealers an accounting if it recovers against Vivint
          Thank you for all the time you spend with these posts.  Always very informative.  Let me ask you this. 
          A large numbers of ADT accounts are created by its dealers. If a dealer was penalized in any way for accounts taken over as a result of these allegations,if proven to be true or settled not only in this but any prior settlements for similar cases where ADT recovered, does ADT have an obligated to make its dealers whole or would dealers need to have brought their own action.  Keep in mind a dealer would only know an account was cancelled but not why. I would assume in discovery a list of customers can be procured to identify these accounts, but that is really for you to evaluate as I'm not a lawyer.  
          I guess this creates another question. When a dealer creates an account what obligations does ADT really have if any other than the contract terms with its dealers as a matter of law or obligation to act in good faith or otherwise to protect against such issues that it knows take place that can harm its dealers financially. 
          I suppose the scenario breaks out like this:
  *   ADT acquires lots of its accounts through its dealer program
  *   ADT pays its dealers for new accounts
  *   ADT expects dealers to guarantee an account for a particular time [I don’t know if this is the case; the accounts could be sold to ADT without recourse]
  *   ADT back-charges a dealer when an account goes bad, for any reason [I don’t know this to be the case either]
  *  ADT doesn’t have any agreement with the dealer that would permit ADT to pursue defaulting customers and without sharing any recovered revenue with the dealer who was back-charged  [could be that an agreement between ADT and dealer does deal with this situation and ADT is required to credit all or something back to the dealer]
          Let’s assume the ADT dealer agreement is silent about this situation.  Let’s also assume that a dealer is going to be back-charged.  If that’s the case then arguably ADT has been reimbursed for its loss [unless it claims its loss exceeds the amount to be collected on the contract].  If ADT is made whole by back-charging its dealers then a recovery against VIvint would constitute a windfall unless ADT reimbursed the dealers. 
          An ADT dealer who has been back-charged should be interested in knowing if ADT is seeking damages for that same back-charge.  We do know that ADT is not suing Vivint on behalf of its dealers.  I don’t know if ADT as made that representation in its papers in the case.  An ADT dealer may have to sit back and wait for the lawsuit to conclude and if ADT doesn’t offer some explanation or reimbursement the appropriate relief the dealer could pursue is an action for an accounting.
     Keep us posted.
More on ADT and Vivint
          Would there be any benefit for ADT to ask other companies in the industry if they too have had similar issues with Vivint and their respective account base?
          I would think that, having an additional hundred or so independent dealers added to the suit would potentially cause Vivint to change their ways – maybe not.
          Just a thought – we deal with it whenever they come to town as well.
          Well, ADT asking other dealers for help?  That might be a first.  ADT would not want to make the case a class action.  It’s not likely that would add much benefit to ADT and it would certainly complicate the case.  Whether other alarms companies might be called as witnesses to testify to what they have experienced is another matter.  ADT’s attorneys can decide if they need or want such support.

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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