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Jacobsen Diamond Ctr., LLC v. ADT Sec. Servs., Inc.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
Jul 15, 2016
DOCKET NO. A-1578-14T1 (App. Div. Jul. 15, 2016)

Summary

finding that a $1,000 limitation of liability provision in a contract for the sale of a burglary alarm system was an enforceable exculpatory provision

Summary of this case from Fabricatore v. ADT LLC

Opinion

DOCKET NO. A-1578-14T1

07-15-2016

JACOBSEN DIAMOND CENTER, LLC, d/b/a ELITE DIAMOND CENTER, DIAMOND BY AMANDA JEWELRY, LLC, d/b/a ELITE DIAMOND CENTER, and GEORGE FAHMY, Plaintiffs-Appellants, v. ADT SECURITY SERVICES, INC., TYCO INTERNATIONAL LTD., a/k/a TYCO INTERNATIONAL (US) INC., d/b/a TYCO FIRE AND SAFETY, HONEYWELL INTERNATIONAL, INC., and LACKA SAFE CORP., a/k/a ORIGINAL SAFE & VAULT, Defendants-Respondents, and TELULAR CORP., UNITED WIRELESS HOLDINGS, INC., a/k/a MOBITEX TECHNOLOGY, INC., LENS CRAFTERS, INC., LUXOTTICA SPA, EDAX REALTY CORP., and JOSEPH WHITE CO., Defendants.

Elliott Malone argued the cause for appellants (Law Offices of Elliott Malone, Esq., LLC, attorneys; Mr. Malone, of counsel and on the briefs; Paul DePetris, on the briefs). Aaron K. Kirkland (Shook, Hardy & Bacon L.L.P) of the Missouri bar, admitted pro hac vice, argued the cause for respondent Tyco Integrated Security LLC f/k/a ADT Security Services, Inc. (Shook, Hardy & Bacon L.L.P. and Mr. Kirkland, attorneys; Mr. Kirkland, Charles C. Eblen, and Joanna T. Vassallo, of counsel and on the brief). Jeannine L. Lee (Stinson Leonard Street LLP) of the Minnesota bar, admitted pro hac vice, argued the cause for respondent Honeywell International, Inc. (Morrison Mahoney LLP and Ms. Lee, attorneys; Christopher E. Martin and Ms. Lee, on the brief). Everett E. Gale, III, argued the cause for respondent Lacka Safe Corp. (McElroy, Deutsch, Mulvaney & Carpenter, LLP, attorneys; Mr. Gale, of counsel and on the brief; Jennifer M. Bennett, on the brief).


NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino, Accurso and Suter. On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1177-12. Elliott Malone argued the cause for appellants (Law Offices of Elliott Malone, Esq., LLC, attorneys; Mr. Malone, of counsel and on the briefs; Paul DePetris, on the briefs). Aaron K. Kirkland (Shook, Hardy & Bacon L.L.P) of the Missouri bar, admitted pro hac vice, argued the cause for respondent Tyco Integrated Security LLC f/k/a ADT Security Services, Inc. (Shook, Hardy & Bacon L.L.P. and Mr. Kirkland, attorneys; Mr. Kirkland, Charles C. Eblen, and Joanna T. Vassallo, of counsel and on the brief). Jeannine L. Lee (Stinson Leonard Street LLP) of the Minnesota bar, admitted pro hac vice, argued the cause for respondent Honeywell International, Inc. (Morrison Mahoney LLP and Ms. Lee, attorneys; Christopher E. Martin and Ms. Lee, on the brief). Everett E. Gale, III, argued the cause for respondent Lacka Safe Corp. (McElroy, Deutsch, Mulvaney & Carpenter, LLP, attorneys; Mr. Gale, of counsel and on the brief; Jennifer M. Bennett, on the brief). PER CURIAM

This appeal arises out of an uninsured jeweler's effort in this litigation to obtain recovery for over $5 million in jewels stolen by burglars from his retail store on two successive Super Bowl weekends in 2010 and 2011. Plaintiff, the store owner, appeals from pre-trial orders curtailing discovery and granting summary judgment to two of the defendants. He also appeals certain rulings made during the trial and further argues that comments made by defense counsel during closing arguments deprived him of a fair trial. For the reasons that follow, we affirm.

I.

Plaintiff George Fahmy opened his own jewelry store in Paramus in November 2006, after working in the jewelry business for several years. Plaintiff purchased a security alarm system for his business from defendant ADT Security Services, Inc. ("ADT"). The alarm system contained a two-way radio system manufactured by defendant Honeywell International, Inc. ("Honeywell"). The radio system utilized what was known as the "Velocita" network.

Plaintiff's jewelry businesses were known as "Jacobsen Diamond Center, LLC, d/b/a Elite Diamond Center" and "Diamond by Amanda Jewelry, LLC d/b/a Elite Diamond Center." For ease of reference, we shall refer collectively to these parties as "plaintiff," unless the context otherwise indicates.

Plaintiff also purchased several safes from defendant Lacka Safe Corp., a/k/a Original Safe & Vault ("Lacka Safe"). He chose not to buy a separate alarm system for the safes of a kind that activates when a safe is opened by an intruder.

The security problems at plaintiff's store first surfaced in May 2009 when a customer at the counter stole three rings and ran out. Unfortunately, the thief's actions were not filmed because the ADT surveillance video was not operating at that time. ADT thereafter rectified the problem.

On February 6, 2010, Super Bowl Sunday, burglars broke into the jewelry store by cutting through the wall from an adjacent retail store. The thieves removed a safe that had been positioned alongside the wall. Because the burglars entered the jewelry store in this fashion, they did not set off plaintiff's door alarms. The stolen safe contained a substantial amount of jewelry. After this break-in, plaintiff moved the two remaining safes to a middle area of the store so that they were not adjacent to any walls.

In mid-2010 Honeywell notified ADT that it soon would no longer be supporting the Velocita network, and that ADT and its customers therefore needed to obtain replacement equipment. ADT, in turn, contacted plaintiff and recommended that he replace his system with an upgraded two-way radio system, also manufactured by Honeywell, for $1,600. Plaintiff balked and insisted that he should not be charged for any such upgrade. As a result, ADT installed instead what apparently was a less effective radio system manufactured by a company other than Honeywell.

The store was burglarized once again on Super Bowl Sunday on February 6, 2011. This time, the burglars were able to enter the store and disable the alarm system. They cut open the safes and removed the jewels contained inside them.

The perpetrators of both burglaries were never identified or apprehended. Unable to obtain restitution from those thieves, and having no insurance coverage for the stolen jewels, plaintiff instead attempted to recoup his losses through the present lawsuit.

In 2012, plaintiff filed his complaint in the Law Division seeking monetary damages. As amended, the complaint asserted claims against ADT, Honeywell, and Lacka Safe, all of which are respondents in this appeal. The complaint also named as defendants the owners of the adjacent store, plaintiff's landlord, the landlord's agent, a wireless company that had provided data and voice connectivity at the site, and Velocita. Plaintiff settled with several of those additional defendants. The claims against them were dismissed and consequently do not affect the present appeal, which solely involves ADT, Honeywell, and Lacka Safe.

With respect to ADT, plaintiff contended in the complaint that, in 2006, ADT improperly designed and installed the alarm system for his store. Plaintiff further alleged that ADT had (1) misrepresented the alarm system as being a "state of the art" system that would provide him with "the full range of protection, equipment and services" available, and (2) inappropriately replaced "the originally installed UL AA two-way High Security radio" (i.e., the original two-way radio) with "an inferior radio unit" that did not meet the same standards, concealing these facts from plaintiff. Based on these factual allegations, plaintiff asserted claims against ADT for violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 ("CFA"); common-law fraud; entering into a "void and unenforceable agreement"; willful and wanton misconduct; gross negligence; breach of contract; breach of express and implied warranty; negligent supervision; and negligent infliction of emotional distress.

With respect to Honeywell, the complaint factually alleged that Honeywell knew when its radio system was provided that the network required for operating it "would be shut down in the future," but "intentionally concealed this fact." Consequently, plaintiff asserted claims against Honeywell for violations of the CFA; common-law fraud; willful and wanton misconduct; gross negligence; breach of express and implied warranty; and negligent infliction of emotional distress.

Finally, as to Lacka Safe, the complaint alleged that defendant improperly advised plaintiff to purchase several small safes rather than a single vault, instructed plaintiff that "proper use of the safes was to leave them on wooden planks for easy maneuvering," and misrepresented the quality of the safes that were provided. Based on these allegations, plaintiff asserted claims against Lacka Safe for violations of the CFA; common-law fraud; willful and wanton misconduct; gross negligence; breach of express and implied warranty; and negligent infliction of emotional distress.

The parties engaged in extensive discovery in anticipation of a trial date the court had set for July 14, 2014. As will be discussed in more depth in Part II, infra, the court, after an extension, ultimately designated February 3, 2014 as the discovery end date. Plaintiff unsuccessfully moved on short notice in January 2014 to extend the discovery period and to compel certain requested discovery from defendants. Thereafter, ADT and Honeywell moved for summary judgment.

Following oral argument, the trial court granted summary judgment to both ADT and Honeywell. The claims against Lacka Safe proceeded to a jury trial, which took place in the fall of 2014 over four days.

At the close of plaintiff's case-in-chief, the court granted Lacka Safe's motion for involuntary dismissal as to plaintiff's common-law fraud claim. However, the court denied the motion as to plaintiff's claims for breach of contract and violation of the CFA, which were tried to conclusion. After the proofs were presented, the jury returned a verdict of no cause of action in favor of Lacka Safe.

Plaintiff now appeals. As to all defendants, he argues that the trial court erred in denying his motion to extend and compel discovery, and in declining to reconsider that denial. With specific reference to ADT, plaintiff argues that the court erred on summary judgment in enforcing the limitation-of-liability provision within ADT's form contract, and in dismissing his CFA claim against that defendant. As to Honeywell, plaintiff contends that the court likewise should not have granted summary judgment, and should have found triable issues supporting his theory that Honeywell breached legal duties owed to him respecting the cessation of the Velocita network. As to Lacka Safe, plaintiff contends that its counsel made several allegedly improper statements during summation that deprived him of a fair trial. Finally, plaintiff argues that the court improperly excluded certain sales receipts that he contends would have substantiated his claims of loss.

Having fully considered these points in light of the record and the applicable law, we affirm the final judgment in favor of all three defendants. Although we have some concern about the trial court's discovery rulings, we are unpersuaded that those concerns rise to the level of an abuse of discretion, or that plaintiff was deprived of a sufficient and reasonable opportunity to prepare for trial. Substantively, we agree that summary judgment was appropriately entered in favor of both ADT and Honeywell, even considering the record in a light most favorable to plaintiff. Finally, we conclude that the involuntary dismissal of plaintiff's common-law fraud claims against Lacka Safe was justified; that alleged misstatements by Lacka Safe's counsel during summations were inconsequential, and that the court did not misapply its authority in restricting plaintiff's evidential use of sales receipts.

II.

Plaintiff's first and primary argument challenges the trial court's rejection of his motion in January 2014 to compel discovery and extend the discovery period. The chronology pertinent to this issue follows. Not long after all defendants filed their answers, the case was assigned to Track IV as a complex matter. The litigation was closely case-managed during its entire span by the same Law Division judge, and that judge eventually presided over the jury trial.

In September 2012, the court issued a case management order specifying various discovery deadlines and setting an initial discovery end date of July 17, 2013. Subsequently, in November 2012, the court extended the deadlines for plaintiff's expert reports and fact-witness depositions, leaving the remaining deadlines and the discovery end date the same. A later order in September 2013 pushed back the deadline for expert depositions and changed the discovery end date to February 3, 2014.

On November 8, 2013, the court entered a "firm trial order" scheduling the trial for July 14, 2014. Pursuant to Rule 4:24-1(c), the court's setting of the trial date signified that the discovery period could not be further extended, even with the consent of counsel, unless "exceptional circumstances" were shown.

On January 2, 2014, plaintiff moved to compel additional discovery from both ADT and Lacka Safe. Plaintiff complained that those defendants had failed to respond to a demand for the discovery of insurance coverage, and did not "adequately respond" to various document requests and interrogatories, the responses to which were served on plaintiff between October 2012 and November 2013. Plaintiff also moved to compel the depositions of ADT and Lacka Safe witnesses who, according to plaintiff's counsel, were "scheduled to be deposed at the end of [January 2014]." Specifically, plaintiff sought to compel compliance with deposition notices directed to Lacka Safe, all sent on December 23, 2013, and noticed for January 13, 2014, regarding Lacka Safe's founder Frank Lacka, two other Lacka Safe employees, any person still employed by Lacka Safe who participated in the delivery of safes to plaintiff in November 2006, and Lacka Safe corporate representative(s) with knowledge relating to two specific topics. Plaintiff also sought to enforce deposition notices for representatives of ADT, all sent on December 24, 2013, regarding ADT's expert William Birks, Jr., noticed for January 9, 2014, four identified ADT employees, noticed for January 16 and 21, 2014, and ADT corporate representative(s) with knowledge relating to five specific topics, noticed for January 21 and 22, 2014.

After filing his motions to compel discovery, on January 13, 2014, plaintiff moved on short notice to extend the time for discovery until April 15, 2014. Plaintiff's counsel represented to the court that all parties had consented to the requested extension.

By orders dated January 31, 2014, the trial court denied plaintiff's discovery motions, noting that the parties had already been provided with "a total of 651 days of discovery." The court found that plaintiff had "failed to present any evidence of exceptional circumstances to warrant an extension of discovery," and had "not demonstrated a satisfactory showing of why discovery was not previously completed when the parties were previously afforded an extension." The discovery end date of February 3, 2014 was thus left in place.

Regarding plaintiff's specific motion to compel discovery from ADT, the court stated that the discovery requests were "belated and unduly burdensome seeking irrelevant material." As to plaintiff's motion relating to Lacka Safe, the court noted that "this belated request for additional discovery is vague, unduly burdensome and irrelevant and violates Rule 4:10-2." The discovery end date of February 3, 2014 was thus left in place.

Plaintiff moved for reconsideration, which the court denied in orders dated March 14, 2014.

On appeal, plaintiff argues that the trial court's refusal to extend discovery with the consent of all parties was arbitrary, and that it unfairly curtailed his ability to prepare for motion practice and trial. He emphasizes that the case management orders in this case had been structured to front-load much of the discovery sought by defendants before plaintiff's own discovery needs were to be filled. He argues that there was plenty of time in January 2014, when he moved for the extension to complete the outstanding discovery, to accommodate the request without affecting the scheduled trial date, which was then more than six months away.

The standards of the applicable court rules are clear. Rule 4:24-1(c) provides that, regardless of the consent of the parties, "[n]o extension of the discovery period may be permitted after an arbitration or trial date is fixed, unless exceptional circumstances are shown." As this court has explained, to obtain an order extending discovery based upon "exceptional circumstances," the moving party must satisfy four criteria:

(1) why discovery has not been completed within time and counsel's diligence in pursuing discovery during that time; (2) the additional discovery or disclosure sought is essential; (3) an explanation for counsel's failure to request an extension of the time for discovery within the original time period; and (4) the circumstances presented were clearly beyond the control of the attorney and litigant seeking the extension of time.

[Rivers v. LSC P'ship, 378 N.J. Super. 68, 79 (App. Div.), certif. denied, 185 N.J. 296 (2005).]

In reviewing on appeal the application of these factors, we accord considerable deference to the trial court. Generally speaking, we do not second-guess the trial court's rulings on discovery matters unless the court has manifestly abused its discretion. See, e.g., Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371 (2011); Payton v. N.J. Tpk. Auth., 148 N.J. 524, 559 (1997).

Plaintiff has failed to meet this heavy burden for second-guessing the trial court's case management decisions. Much of the additional discovery plaintiff wanted to complete was not even requested of defendants until late December 2013 — on the verge of a holiday period and little more than a month before the already-extended February 3, 2014 discovery end date. Plaintiff waited until then to notice more than a dozen depositions and until January 2014 to move on short notice to compel more expansive responses to various interrogatories and requests for documents, the responses to which had been served by defendants between two and fifteen months earlier. The trial court had a reasonable basis to conclude in these circumstances that plaintiff had not acted with sufficient diligence to justify a further extension of the deadline, and that the circumstances were not "clearly beyond the control" of plaintiff. Rivers, supra, 378 N.J. Super. at 79.

A discrete issue plaintiff raised relating to a "new expert report" served by Lacka Safe in December 2013 related to an examination of plaintiff by a doctor and plaintiff's desire for time to retain another countering medical expert to evaluate him. This effort was presumably tied to plaintiff's claims for negligent infliction of emotional distress, since his medical or emotional condition would have had no relevance to defendants' liability claims for breach of contract or consumer fraud. However, the emotional distress claims were dismissed and formed no part of the trial and are not part of this appeal. Hence, plaintiff's ability to try the case could not have suffered due to the lack of an additional medical expert.

Even putting the relevance issue aside, plaintiff's contention that he was prejudiced by the late defense report is meritless, as plaintiff put his own medical condition at issue, and knew at least by June 19, 2013, the date he was medically examined, that defendants had obtained an expert to address the issue. We discern no legitimate reason why plaintiff could not have retained a medical expert and obtained a report within the designated discovery period.

We have fully considered plaintiff's arguments that he was unduly prejudiced by the court's denial of the discovery extension he sought and the court's associated ruling that declined to compel the requested additional discovery. There is scant reason to assume that this discovery was truly vital to plaintiff's case. As we will discuss, infra, the claims against ADT and Honeywell were largely found wanting as a matter of law. Although the claims tried against Lacka Safe were, by comparison, more fact-dependent, we are unpersuaded that the additional discovery plaintiff wanted from Lacka Safe in January 2014 would have been likely to tip the balance at trial.

That said, we are mindful that all parties did consent to the sought-after discovery extension, which certainly is an important and relevant consideration. Even so, the trial court has an independent obligation to manage discovery in a fashion that curtails unnecessary delay and expense and which helps promote trial date certainty.

Although, in hindsight, the further discovery plaintiff desired probably could have been accomplished sufficiently before the trial — which did not begin until September 2014 — that eventuality was not certain at the time when plaintiff filed his extension motion. The court also had the prerogative to build into the post-discovery schedule sufficient time for dispositive motion practice and other trial preparation. See R. 4:46-1 (providing that summary judgment motions must be made returnable no later than thirty days before a scheduled trial date).

In sum, although the trial court could have reasonably ruled to the contrary, plaintiff has not met his heavy burden of demonstrating a prejudicial abuse of discretion. The trial court's discovery-related rulings are therefore affirmed.

III.

Plaintiff next challenges the trial court's decisions granting summary judgment respectively to ADT and Honeywell. We evaluate these arguments through the lens of well-settled principles.

A court should grant summary judgment "forthwith" when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). Under this well-known standard, "a court should deny a summary judgment motion only where the party opposing the motion has come forward with evidence that creates a 'genuine issue as to any material fact challenged.'" Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995). The non-moving party "cannot defeat a motion for summary judgment merely by pointing to any fact in dispute" if it is not material. Ibid. This court applies on appeal the same standards as the trial court when reviewing its decision. W.J.A. v. D.A., 210 N.J. 229, 237-38 (2012).

Guided by these criteria, we consider the entry of summary judgment in favor of, first, ADT, and then, Honeywell, in light of these standards.

A.

Plaintiff's arguments with respect to ADT largely focus on two separate points: (1) the trial court's enforcement of a $1,000 limitation of liability clause contained in ADT's form contract, and (2) the dismissal of plaintiff's consumer fraud claims against ADT. Neither challenge is persuasive.

The limitation of liability issue is governed by this court's precedential decision in Synnex Corp. v. ADT Security Services, Inc., 394 N.J. Super. 577, 580-81 (App. Div. 2007), upholding an ADT limitation clause identical to the one at issue here. We held in Synnex that the clause was enforceable and did not violate public policy. We reached that conclusion by applying not only case law from our own state enforcing such exculpatory clauses in contracts for the sale of fire and burglar alarm systems, but also similar case law from several other jurisdictions. Id. at 588-89.

Plaintiff attempts to distinguish Synnex based on certain aspects of that case not present here, such as the fact that the alarm in Synnex was installed in a warehouse rather than a storefront; the plaintiff in Synnex was a large information technology products distributor that might have had enough bargaining power to negotiate better contract terms with ADT; and Synnex was a subrogation case in which the insured property owner received millions in recovery from its own carrier. None of these asserted factual differences compels a different result in this case.

As we held in Synnex, the limitation of liability clause is a reasonable measure within this particular industry to contain an alarm system supplier's exposure from the losses caused by thefts or other criminal acts. Synnex noted that such a limitation clause "simply allocates responsibility to the buyer of an alarm system to maintain insurance coverage, and the buyer is in the best position to know the value of its property and to insure against any loss." Id. at 580-81.

The responsibility of maintaining insurance coverage was expressly allocated to plaintiff. Yet plaintiff opted not to procure any such insurance. There is no compelling policy reason to place the responsibility for customer losses due to theft or burglary upon ADT simply because its customer failed to take other measures within its control to manage a known risk.

Plaintiff also contends that the ADT contracts are "voidable" because he entered into them as a result of ADT's alleged "misrepresentations, concealment or failure to disclose." However, plaintiff is not seeking to void the ADT contracts, but instead to collect damages for ADT breaching them. He has shown no persuasive reason to leave the contract generally intact but then excise only the limitation of liability clause.

Plaintiff's claims of misrepresentation are wholly unrelated to the limitation clause. They cannot serve to relieve plaintiff of specific and unrelated contract provisions that plaintiff finds unduly onerous. See, e.g., Abel Holding Co. v. Am. Dist. Tel. Co., 138 N.J. Super. 137, 155 (Law Div. 1975) (noting that "[t]he mere fact that a contract is somewhat harsh or unfair in its operation does not excuse performance, and the . . . performance of promises agreed upon by parties may only be excused for reasons which the law deems just"), aff'd, 147 N.J. Super. 263, 267 (App. Div. 1977).

In addition, the trial court did not err in granting summary judgment to ADT and dismissing plaintiff's CFA claims against that defendant. Plaintiff contends that ADT misrepresented the quality of the alarm system it sold to him. He further contends that ADT violated the consumer laws in selling him an inferior system, after Honeywell had advised that the Velocita network was going to be discontinued.

The trial court ruled that plaintiff failed to establish a prima facie case for a CFA action against ADT because (1) ADT's statements that the system was "state of the art" amount to "opinion or sales talk," rather than an actionable "material representation," and (2) plaintiff's claims regarding the deficiencies in the alarm system showed "nothing more than an unmet contractual expectation." We agree with both of these determinations.

The CFA includes in its definition of a "person" protected by the statute "any natural person or his legal representative, partnership, corporation, company, trust, business entity or association[.]" N.J.S.A. 56:8-1(d). "[A] business entity can be, and frequently is, a consumer in the ordinary meaning of that term" and can enforce a consumer's rights under the CFA. Hundred E. Credit Corp. v. Eric Schuster Corp., 212 N.J. Super. 350, 355-56 (App. Div.), certif. denied, 107 N.J. 60 (1986). Hence, plaintiff potentially qualifies as a "person" under the statute, even though he himself is a businessman.

However, "notwithstanding a broad and liberal reading of the statute, the CFA does not cover every sale in the marketplace." Papergraphics Int'l, Inc. v. Correa, 389 N.J. Super. 8, 13 (App. Div. 2006). The applicability of the CFA "hinges on the nature of a transaction, requiring a case by case analysis." Ibid.

A breach of contract is not, alone, a violation of the CFA. Cox v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994). For instance, sloppy workmanship in the performance of a contract does not ordinarily amount to a consumer fraud. Roberts v. Cowgill, 316 N.J. Super. 33, 37 (App. Div. 1998).

In the analogous context of a common-law fraud claim, our Supreme Court has explained that "to be actionable, fraud must relate to a present or pre-existing fact and cannot ordinarily be predicated on representations which involve things to be done in the future." Anderson v. Modica, 4 N.J. 383, 391-92 (1950). Thus, if a party makes a promise, contracts to perform it, and then fails to do so, "[s]uch failure to perform is merely a breach of contract which may give rise to an action on the contract." Id. at 392; see also Barry by Ross v. N.J. State Highway Auth., 245 N.J. Super. 302, 310 (Ch. Div. 1990) (applying Anderson in a CFA context).

The Court likewise observed in this regard that any breach of contract is, in some sense, "unfair to the non-breaching party," but it is only where "substantial aggravating circumstances" are present that a CFA violation exists and a remedy trebling actual damages can be justified. Cox, supra, 138 N.J. at 18 (citing D'Ercole Sales v. Fruehauf Corp., 206 N.J. Super. 11, 31 (App. Div. 1985)).

Here, plaintiff failed to sufficiently identify "substantial aggravating circumstances" that, if proven, would make ADT's conduct a form of consumer fraud and not simply a breach of contract. Essentially, plaintiff argues that ADT made material representations as to the nature and quality of the system that it delivered in 2006, and improperly and deceptively replaced the original two-way radio with an inferior radio in 2010. In the second amended complaint, plaintiff recited a litany of allegations that, if proven, might establish a prima facie case under the CFA. However, a review of the actual evidence in this record concerning the statements and conduct of ADT reveals that most of the allegations are unsupported. Those that have some support are, fundamentally, allegations of failed contractual commitments rather than of consumer fraud.

Plaintiff contends that ADT is liable for consumer fraud for allegedly promising a "state of the art" security system. Plaintiff's other allegations of the misrepresentation essentially boil down to contentions regarding what was promised to plaintiff when he purchased the alarm system in 2006 and whether the system as delivered met those promises, and the replacement of the original two-way radio in 2010. Neither of these suffice to support plaintiff's CFA claims against ADT.

As to the "state of the art" issue, the trial judge held that "[c]haracterizing something as state of the art constitutes opinion or sales talk, which cannot support a fraud claim, citing Rodio v. Smith, 123 N.J. 345, 354 (1991) (holding the slogan, "You're in good hands with Allstate" to be mere puffery). Plaintiff argues that the judge's ruling was error and that other CFA cases support his position that ADT's "state of the art" claim was a material misrepresentation.

None of the cases that plaintiff cites on this point, however, address the use of the phrase "state of the art" or any other general phrase or sales slogan. To the contrary, the cases he cites all deal with much clearer and specific factual representations. Rather than supporting plaintiff's argument, these cited cases actually support the conclusion that a statement must be specific and susceptible of objective verification to be actionable under the CFA. That is not so here.

For example, in Union Ink Co. v. AT&T Corp., 352 N.J. Super. 617 (App. Div.), certif. denied, 174 N.J. 547 (2002), we found that the defendant had advertised that its cellular phone subscribers would receive the same quality of service as they had with land-line phones and that its cellular plan was "capable of providing service to subscribers almost anywhere in North America." Id. at 625-26. This was objectively false and, as this court found, "materially different from the slogan at issue in Rodio." Id. at 645; see also Leon v. Rite Aid Corp., 340 N.J. Super. 462, 466 (App. Div. 2001) (holding the plaintiff stated a CFA claim with allegations that defendant Rite Aid "advertised that its merchandise, including prescription drugs, was sold at the lowest and best prices when, in fact, different prices were charged to different customers for the same prescription drugs and Rite Aid's own list prices were increased for certain kinds of transactions"); Kugler v. Koscot Interplanetary, Inc., 120 N.J. Super. 216, 226-28 (Ch. Div. 1972) (finding that the defendants had engaged in a pyramid scheme and holding that specific dollar projections of expected sales and income provided in sales meetings, which were either unsupported or actually contrary to fact, should not be deemed "mere puffery"). --------

With respect to other statements or conduct at the time of the sale of the alarm system, plaintiff alleged that ADT violated the CFA by (1) knowingly concealing the future shutdown of the Velocita network, (2) misrepresenting that the alarm system constituted "the full range of protection, equipment and services" available, (3) "representing that the rear door was not set with a time delay when it in fact was," and (4) misrepresenting that the system "would meet UL AA Two-Way Security System Standards." The trial court did not err in deeming these contentions insufficient to get to a jury.

As to the question of whether knowingly concealing the future shutdown of the Velocita network could be a CFA violation, plaintiff relies on Hundred East Credit Corp., supra, 212 N.J. Super. at 357. He contends that Hundred East Credit is "a similar business CFA case" in which a CFA violation was found where a business was "led to believe that parts would remain available for the product purchased, when in fact they would be discontinued[.]" However, that case presented very different facts from the present matter. In Hundred East Credit, there was evidence to support the trial judge's findings that (1) the defendant knew but did not disclose, when it sold the plaintiff additional parts to expand the capacity of a "P-350 line" computer purchased two years before, that the P-350 line would be discontinued later that same year, (2) the discontinuance rendered the plaintiff "unable to accomplish the objectives which motivated its purchases in the first instance," and (3) the sale of the peripherals to the plaintiff was part of "an organized, systemic plan" by the defendant "to liquidate the inventory of P-350 line computers so as to avoid sustaining a loss of profits on these items." Id. at 353-54, 357.

Here, by contrast, plaintiff has no competent proofs from which a factfinder could reasonably conclude that ADT knew, when it sold plaintiff the alarm system in 2006, that four years later the Velocita network would cease to support the Honeywell radio it had included in that system. Moreover, even assuming that plaintiff's proofs had created such a triable fact question as to what ADT knew about the Velocita network in 2006, he failed to show either that ADT's behavior was in any way organized and systematic or, more significantly, that the alarm system he purchased from ADT was "unable to accomplish the objectives which motivated its purchase" because of the later Velocita network problems.

To the contrary, ADT promptly notified plaintiff of the forthcoming Velocita network discontinuation in 2010 and proposed to replace the original two-way radio with a functionally-equivalent radio that would have communicated with a central station every few minutes. There is no dispute that such radios existed and were readily available or that, had one been installed in 2010, plaintiff's alarm system would have continued to operate as it did before the original two-way radio was replaced. Thus, unlike the situation in Hundred East Credit Corp., ADT was not marketing — and plaintiff was not purchasing — a system that would shortly become totally useless and beyond repair.

Plaintiff further alleges that ADT misrepresented that the alarm system constituted "the full range of protection, equipment and services" available. Arguably, such a representation could be deemed more than puffery, as it could be understood to be more specific and ascertainable than the phrase "state of the art." However, neither plaintiff nor his experts specified what the "full range" would include, or exactly how the ADT alarm system was deficient. Plaintiff cannot appropriately rely on this allegation to establish a CFA claim against ADT, as there is no evidence that anyone from ADT actually made such a representation. Plaintiff's testimony does not attribute these words to any ADT representative, or attest that he was told, in substance, that he was purchasing every possible protection that was available from ADT. Thus, plaintiff cannot escape summary judgment on the CFA claim based on an alleged "full range of protection" statement.

Plaintiff additionally contends that "ADT set the rear door on a delay trigger, despite this door not being used and the customer requesting that it be set on an instant trigger." In his reply brief, plaintiff again contends that he informed ADT that the rear door was never used and "ADT represented" that rear door would be set on an instant trigger. However, in support of this proposition, plaintiff cites only to testimony from an ADT witness who essentially stated that a door that is not used for ingress or egress is typically not set on a time delay, without adding anything about the specific door at issue. Plaintiff's own testimony does not indicate that he advised ADT that the rear door was never used, or asked that it be set on an instant trigger. He testified that the rear door had a push bar lock, which was required by the fire department, and that on one occasion he was advised by the fire department that he had to clear snow away from the rear door. Thus, plaintiff's proofs do not establish actionable misrepresentation or concealment in communications by ADT related to the rear door.

As to the final issue concerning the system's pre-installation, plaintiff alleges that ADT misrepresented that the system "would meet UL AA Two-Way Security System Standards." There is no dispute that the contract for the alarm system stated that a UL certificate was to be issued upon completion. This, together with plaintiff's testimony that he insisted on including radio backup in the alarm system, is likely sufficient evidence to support a conclusion by a trier of fact that ADT did contractually promise plaintiff that the alarm system "would meet UL AA Two-Way Security System Standards." However, plaintiff fails to show that this UL-related promise was an actionable misrepresentation under the consumer fraud laws.

Plaintiff argues that "the fact that a UL certificated system was promised but not delivered is unquestionable." As plaintiff put it in his deposition, he felt that he "paid for a Lamborghini" but received "a broken bicycle" from ADT. If there were sufficient evidence to prove that ADT had actually engaged in this type of a bait and switch practice, plaintiff might have a viable CFA claim.

However, close examination of plaintiff's proofs reveals that, while there is certainly evidence to support the conclusion that the alarm system no longer met "UL AA Two-Way Security System Standards" after the original two-way radio was replaced in 2010, there is insufficient evidence to support a conclusion that the system did not meet those standards from 2006 before the time of that replacement.

In his statement of supplemental material facts, plaintiff included a number of references to UL standards, but he did not explain how the as-installed alarm system failed to meet those standards. When asked at his deposition about specifics regarding what ADT did wrong, plaintiff replied, "I have no idea. I think this question shouldn't be asked of me because I'm not a professional."

Jeffrey D. Zwirn, plaintiff's "alarm expert and certified fraud examiner," opined that a "state of the art" system would have been better in several respects. But Zwirn did not opine that the as-installed alarm system failed to meet any particular UL standards. To the contrary, in explaining that the installation of the replacement radio in 2010 "grossly violated UL standards" by using "less expensive and inferior technology" that did not meet "UL AA Two-Way Line Security Requirements," Zwirn suggested that the technology before the replacement was installed actually did meet those requirements.

Prior to the installation of the replacement radio, the alleged problems with the alarm system were that (1) the DVR recorder was not set to automatically reboot following a power outage, and (2) the motion sensors did not trigger when the safe was removed during the first burglary. However, while Zwirn opined that an alarm system could have been installed that lacked these problems, he did not state that a system meeting "UL AA Two-Way Security System Standards" would necessarily have avoided them.

Indeed, there is evidence in the record that ADT did not provide plaintiff with the actual UL certificate referenced in the ADT contracts. That certificate would have served as evidence that the alarm system met "UL requirements for installation, operation and maintenance." However, the burden was on plaintiff to establish that ADT failed to deliver what it had promised, not on ADT to prove otherwise.

Accordingly, as to ADT's alleged misrepresentations and alleged misconduct prior to the replacement of the original two-way radio, we conclude that plaintiff failed to establish a prima facie and triable case of any CFA violation.

Our analysis regarding the replacement radio presents a closer question, but we agree with the trial court that the record presents no viable CFA claim there either. Granting plaintiff all favorable inferences from the evidence, we acknowledge there is a fact question as to whether ADT was obliged to replace the original two-way radio with one that would have been its functional equivalent and whether ADT met that obligation. This again, however, is essentially a contract dispute rather than a CFA claim.

If ADT promised to maintain the alarm system to a specified standard and failed to do so, "[s]uch failure to perform is merely a breach of contract which may give rise to an action on the contract." Anderson, supra, 4 N.J. at 392. Plaintiff was free to pursue a claim for breach of contract, but he elected not to do so for self-evident practical reasons because of the limited damages of $1,000 available.

The evidence does not support plaintiff's suggestion of intentional deceit by ADT concerning the replacement radio. Plaintiff does not dispute that ADT proposed in August 2010 to replace the original two-way radio, with another, functionally-equivalent Honeywell radio or that the reason this replacement was not made at that time was that plaintiff refused to pay the cost of the replacement. Similarly, there is no dispute that ADT ultimately provided the replacement radio at no cost to plaintiff. Nor is it disputed that both the service ticket plaintiff signed and the boxes left in plaintiff's possession accurately identified that replacement radio. The evidence shows that ADT did not, as plaintiff contends, hide any details of the replacement equipment that was actually installed or provide him with fraudulent documents.

Plaintiff's allegation that ADT referred to the replacement radio using the term "upgrade" is also insufficient to establish a misrepresentation. The term "upgrade" appears only in an internal ADT memorandum. There is no evidence that the concept of an "upgrade" was ever communicated to plaintiff.

In sum, even granting all inferences in plaintiff's favor, he failed to present substantial aggravating circumstances that are needed to show a CFA violation as opposed to a simple breach of contract. The dispute between the parties concerning what equipment ADT was obliged to provide and which party was responsible to bear the cost of it concerns, fundamentally, the parties' performance of ongoing contractual obligations. The dispute most appropriately resolved in the context of a breach of contract action rather than a CFA claim. Since plaintiff did not pursue a contract theory against ADT once the $1,000 damages limitation was upheld, summary judgment was warranted.

B.

The propriety of the dismissal of plaintiff's claims against Honeywell requires little comment. Most importantly, plaintiff had no contractual relationship with Honeywell. Despite that lack of privity, plaintiff contends that Honeywell is liable to him under the CFA and also for "willful and wanton" conduct and gross negligence. We agree with the trial court that these claims against Honeywell are not supported by the factual record.

The court observed that there was no factual basis to support plaintiff's claim that "Honeywell misrepresented the longevity of the Velocita network." Honeywell made no representations directly to plaintiff, either false or otherwise, because it had no contact with him. There was simply no evidence to support a conclusion that Honeywell knew, when plaintiff contracted with ADT in 2006, that "in three to four years the wireless service provider would discontinue service." Likewise, the judge ruled, as a matter of law, that plaintiff's gross negligence claim failed because Honeywell did not owe any duty to the plaintiff. These conclusions as to Honeywell were sound and consistent with both the record and the applicable law.

Honeywell had no direct contact with plaintiff in connection with either the sale of the original two-way radio in 2006 or the replacement of that radio in 2010. Hence, no finding of affirmative misrepresentation by Honeywell is viable.

Plaintiff contends that Honeywell knowingly concealed a material fact by failing to disclose the future discontinuance of the Velocita network, but there is no proof that Honeywell was aware of that prospect in 2006. Moreover, even assuming that Honeywell had a duty to reveal facts it allegedly knew in 2006 about the future demise of the Velocita network, it would have owed that duty to ADT rather than to plaintiff.

Viewing the record in a light most favorable to plaintiff, we are satisfied that the trial court properly dismissed all of plaintiff's claims against Honeywell.

IV.

Plaintiff's appeal as to the remaining defendant, Lacka Safe, is limited to contentions that the trial court made inconsistent rulings at trial, and also that Lacka Safe's counsel made improper comments in summation that tainted the jury and thereby produced the no-cause verdict. We discern no reason to set aside the verdict on these asserted grounds.

First, plaintiff complains that, during closing arguments, Lacka Safe's defense counsel "blamed the burglars for the robbery" even though the trial court had previously granted plaintiff's motion in limine barring the defense from using such an "empty chair" defense. Plaintiff's counsel had moved to bar the empty chair defense because, he said, Lacka Safe was "seeking to have . . . burglars on the jury verdict sheet as [being] responsible in some part or not." Plaintiff's counsel asserted that it was "improper to have them on the jury verdict sheet, because it's only going to cause confusion[.]" The judge agreed and ruled that the burglars should not be on the verdict sheet.

Plaintiff's argument that the trial court later disregarded this earlier ruling is meritless. The burglars did not appear as potentially responsible parties on the verdict sheet, and the jury was not asked to apportion any fault to them. It was obvious at trial that plaintiff was claiming that Lacka Safe was responsible for the losses resulting from two separate burglaries. Defense counsel's references to the burglars in summation were made in the context of arguing that, because "[n]othing Lacka [Safe] did five years before caused these burglaries," plaintiff had failed to show the required element of causation. Plaintiff's counsel made no objection to these references to burglars by defense counsel. The allowance of the references to burglars was not error, much less plain error.

Second, plaintiff argues that Thomas Prevas, the defense expert for Lacka Safe, was permitted to testify at trial beyond the limited scope that had been established for his testimony. We are not convinced that Prevas materially exceeded that boundary. Even if he did, we are unpersuaded that this circumstance was likely to have affected the verdict.

The transcript shows that the trial judge was keenly aware of the limitations regarding Prevas' testimony about the alarm system. The judge either cut Prevas off or moved him on to another subject when he strayed into areas outside those limitations. Prevas' fundamental point was that, with the alarm system de-activated during the second burglary, "the burglars had unlimited time to work" to attack the safes, but the safes were only designed to withstand attack for a short time. Prevas did not expressly state that plaintiff himself was at fault for the absence of a "line security transmitter on the system," which would have alerted a central station within ninety seconds that the alarm had been disabled.

Given the actual context of this trial, there is no reason to suppose that the jury would have been unduly influenced by Prevas' comments. The key issues about the second burglary — which both parties focused on before the jury — were whether Lacka Safe should have (1) sold plaintiff a vault rather than the safes, and (2) installed the safes on the store's floor rather than on blocks. The existence of the alarm system and the manner in which it was overcome by the thieves was irrelevant to these central determinations regarding the safe company. In addition, plaintiff's counsel could have asked for a limiting instruction, but failed to do so. On the whole, we detect no harmful error.

Plaintiff also complains about eight particular statements defense counsel made during summation. Plaintiff objected to only one of these statements when it was made. None of them warrants a new trial.

Because it is "the duty of a trial attorney to advocate," counsel's remarks during summation are generally "expected to be passionate[.]" Risko v. Thompson Muller Auto. Grp., Inc., 206 N.J. 506, 522-23 (2011) (internal quotation marks and citations omitted). The absence of objection to summation comments by opposing counsel is significant. Id. at 523 (noting that the plain error standard applies in the absence of an objection). Silence from opposing counsel, here plaintiff's attorney, (1) indicates that counsel "did not believe the remarks were prejudicial at the time they were made," and (2) "also deprives the court of the opportunity to take curative action." Ibid.; see also Tartaglia v. UBS PaineWebber, Inc., 197 N.J. 81, 128 (2008) (noting that an appellate court may regard "counsel's failure to object to summation remarks as 'speaking volumes about the accuracy of what was said'") (quoting Fertile v. St. Michael's Med. Ctr., 169 N.J. 481, 493 (2001)).

Applying these principles, we are unpersuaded that any of the remarks of Lacka Safe's counsel during summation call for a new trial. The sole remark that drew an objection was defense counsel's statement that plaintiff's counsel had unwittingly "impeached" his client during cross-examination with tax return information. This remark simply highlighted that certain information on plaintiff's tax return was not consistent with his claims of damage. The term "impeached," viewed in that context, was neither unduly prejudicial or inflammatory. When the objection was raised, the judge noted that defense counsel was simply commenting on the evidence, and that jurors "should rely on their recollection[s]." We perceive no actual personal attack on plaintiff's counsel here by the use of the term "impeached." Nor did any reversible error stem from the situation.

The remainder of plaintiff's criticisms of opposing counsel's summation do not rise to a level that warrants appellate intervention, particularly in light of the absence of an objection below. We need not say more than that. R. 2:11-3(e)(1)(E).

V.

As a final matter, we reject plaintiff's argument that the trial court improperly and prejudicially excluded from evidence certain jewelry sales receipts that he wanted the jury to consider. The excluded receipts mainly relate to the quantification of damages, an issue the jury never reached. Although the receipts arguably had some limited relevance to credibility issues with respect to plaintiff's testimony about his overall operation of the jewelry store, we are not convinced that their exclusion comprised an abuse of discretion. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 383-84 (2010).

Affirmed.

I hereby certify that the foregoing is a true copy of the original on file in my office.

CLERK OF THE APPELLATE DIVISION


Summaries of

Jacobsen Diamond Ctr., LLC v. ADT Sec. Servs., Inc.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
Jul 15, 2016
DOCKET NO. A-1578-14T1 (App. Div. Jul. 15, 2016)

finding that a $1,000 limitation of liability provision in a contract for the sale of a burglary alarm system was an enforceable exculpatory provision

Summary of this case from Fabricatore v. ADT LLC

enforcing a $1,000 limitation of liability clause in a contract for the sale of a burglary alarm system

Summary of this case from Fabricatore v. ADT LLC
Case details for

Jacobsen Diamond Ctr., LLC v. ADT Sec. Servs., Inc.

Case Details

Full title:JACOBSEN DIAMOND CENTER, LLC, d/b/a ELITE DIAMOND CENTER, DIAMOND BY…

Court:SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Date published: Jul 15, 2016

Citations

DOCKET NO. A-1578-14T1 (App. Div. Jul. 15, 2016)

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