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OneBeacon America Insurance Co. v. Comsec Ventures International

January 7, 2010

ONEBEACON AMERICA INSURANCE COMPANY, AS SUBROGEE OF THE GARRETT HOTEL GROUP, INC., PLAINTIFF,
v.
COMSEC VENTURES INTERNATIONAL, INC. AND MAHONEY NOTIFY-PLUS, INC., DEFENDANTS.



The opinion of the court was delivered by: Gary L. Sharpe District Court Judge

MEMORANDUM-DECISION AND ORDER

I. Introduction

Plaintiff OneBeacon America Insurance Company (OneBeacon) brings this diversity action as the subrogee of the Garrett Hotel Group (Garrett), seeking compensation for fire damage incurred to Garrett's property. OneBeacon asserts claims for negligence, breach of contract, breach of warranty, consumer fraud, and misrepresentation. Pending are:

(1) defendant Mahoney Notify-Plus, Inc.'s motion for summary judgment (Dkt. No. 53); (2) defendant Comsec Ventures International, Inc.'s motion seeking dismissal of Mahoney's cross-claims against it pursuant to FED. R. CIV. P. 12(b)(6) or 56(b), and attorneys' fees; and (3) OneBeacon's motion for leave to file a surreply. For the reasons that follow, Mahoney's motion for summary judgment is denied; Comsec's motion is granted in part and denied in part; and OneBeacon's motion for leave to file a surreply is denied.

II. Facts and Procedural History*fn1

In or about 1983, defendant Comsec installed a fire alarm system at the Lake Placid Lodge (LPL), which is owned by Garrett. The system was composed of various fire and smoke detection devices and alarms installed in the five buildings of LPL, of which only the Main Lodge and the Cedar lodge are relevant here. The detection devices were wired into a control panel in each building. If a device was tripped, the alarm in that building would go off and the control panel would send a radio signal through a linear wireless transmitter to a wireless receiver in the centrally located Cedar Lodge. A signal would then be sent over the phone lines from a communicator panel in the Cedar Lodge to the monitoring company, which would contact the fire department. The wireless transmitters installed by Comsec were not approved for commercial use, could not be supervised,*fn2 and were subject to interference.

Defendant Mahoney is in the fire and security alarm systems business. In 2002 or 2003, their salesman, Thomas Corlew, reviewed LPL's fire alarm system. Corlew informed LPL's maintenance man that the system needed to be upgraded and hardwired so it could be supervised because it did not provide adequate protection in its current state. A quote was prepared for this work, which specifically advised that the fire alarm system was unsupervised as it existed at the time. This quote was rejected by LPL.

In September or October of 2005, Mr. Corlew returned to LPL at the request of Ernie Rice, LPL's current facility manager, and reiterated that the system needed to be hardwired, as it was unsupervised, unsafe, and unreliable. Mr. Rice has testified that he knew what it meant for the system to be unsupervised and the difference between a hardwired and wireless system based on discussions in September or November of 2005.*fn3

According to Mr. Corlew, Mr. Rice stated that LPL was "not going to do anything now, just get the main thing up and running; and then we can sort out the problems afterwards." The only change to the system authorized was the replacement of the communicator panel in the Cedar Lodge so it could report to Mahoney's central monitoring system. On November 23, 2005, LPL agreed to Mahoney's proposal for the installation of this communicator panel and fire monitoring.

On December 1, 2005, Mahoney employee Dave Mattoon installed the new communicator panel to the existing fire alarm system, and Mahoney took over system monitoring from Comsec. Rice asked Mattoon to check over the system to make sure everything was working, which Rice believes Mattoon did. However, Mattoon also informed Rice that he was not sure whether the wireless transmitters and receivers were up to code, that the transmitters were unreliable, and that the system needed to be hardwired or separate dialer's had to be installed in each building. Mattoon returned on December 2, 2005, at Rice's request, because there were communications problems with the fire alarm system and LPL was having false alarms. On December 2, 5, and 12, Mattoon worked on the alarm system, which included making adjustments to the Main Lodge control panel and rewiring the wireless transmitters and receivers. However, Mattoon did not hardwire the system or test the detection devices in the basement of the Main Lodge.

A Security Fire Monitoring Agreement (the Monitoring Agreement) was executed between the parties on December 8, 2005. It provided a limitation of liability and time limitation clause which stated, in relevant part:

The Subscriber understands and agrees that if the Alarm Company or Others should be found liable for personal injury or property loss or damage due from a failure of the Alarm Company or Others to perform any of the obligations herein, including but not limited to installation, repair service, monitoring or service or the failure of the System or equipment in any respect whatsoever, the Alarm Company and Others' liability shall be limited to a sum equal to the total of six (6) monthly payments or Two Hundred Fifty ($250.00) Dollars, whichever is the greater, and this liability shall be exclusive; and that the provision of this Section shall apply if loss or damage, irrespective of cause or origin, results directly or indirectly to persons or property, from performance or non-performance of the obligations imposed by this contract, or from negligence, active or otherwise, of the Alarm Company or Others. No suit or action shall be brought against the Alarm Company more than one (1) year after the accrual of the cause of action thereof.

The Agreement also contained a merger clause which stated, in relevant part:

All verbal or written communications between the parties which occurred prior to the date of this Agreement are merged into the terms of this Agreement and the entire Agreement of the parties is expressed herein above and no verbal understanding or agreement shall alter, change or modify the terms and provisions of this Agreement.... It is understood and agreed that if there is any conflict between this Agreement and the Subscriber's purchase order, or any other document, this Agreement will govern whether such purchase order or other document is executed prior or subsequent to this Agreement. LPL continues to use the services of Mahoney to this day.

At approximately 9:10 to 9:15 a.m on December 15, 2005, a fire was discovered in the basement ceiling of the Main Lodge by LPL employee Ray Nunez. When Nunez had previously been in the basement at approximately 9:00 a.m. he had not smelled any smoke. The fire alarm was manually pulled, and the alarm went off. However, a signal was not transmitted from the Main Lodge to the Cedar Lodge. Therefore, no signal was sent from the Cedar Lodge to Mahoney's central monitoring station. Two LPL employees called the fire department. However, the entire Main Lodge and parts of the Cedar Lodge were destroyed in the blaze.

On August 31, 2007, OneBeacon filed this action against Comsec and Mahoney. Mahoney's answer contained cross-claims for contribution and indemnification against Comsec. Eventually a settlement was reached between OneBeacon and Comsec in the amount of $500,000. However, Mahoney has refused to release its cross-claims against Comsec. The court now addresses Mahoney's motion for summary judgment on ...


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