Abraham Shakeri v. ADT Security Services, I
816 F.3d 283
| 5th Cir. | 2016Background
- Neimax Jewelry (opened 1987) contracted with ADT for commercial alarm/monitoring (1988 and 1999 contracts); 1999 contract contained maintenance, a $1,000/10% liability cap, and a merger/disclaimer-of-reliance clause.
- In January 2012 ADT serviced the alarm; Plaintiffs reported continuing beeping and a follow-up technician allegedly failed to repair or enter the store; on January 12, 2012 Neimax was robbed, Shakeri was beaten and tasered, and the alarm/backup failed to activate.
- Plaintiffs (Shakeri and Taji; later joined by Neimax) sued in state court asserting negligence, breach of contract, common-law and DTPA fraud, DTPA unconscionable conduct, and breach of implied warranty of good and workmanlike performance; ADT removed on diversity grounds.
- The district court dismissed the negligence claim and several tort/DTPA claims (some under Rule 9(b)/12(b)(6)), and later limited contract damages to $1,000; plaintiffs appealed.
- The Fifth Circuit held that plaintiffs had not waived the negligence claim, reversed dismissal of negligence (physical injuries fall outside the economic-loss rule), affirmed dismissal of implied-warranty, DTPA unconscionability, and fraudulent-inducement claims, and remanded for further proceedings on negligence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligence — existence of independent tort duty | Shakeri/Taji: ADT owed a common-law duty to provide a working/top‑of‑line alarm; breach caused physical injury | ADT: No independent common‑law duty; any obligation arises from contract and is barred by economic‑loss rule | Reversed district court; negligence claim survives because alleged physical injury is independently tortious and not barred by economic‑loss rule; remanded |
| Breach of implied warranty (common law & DTPA) | Plaintiffs: ADT failed to perform repairs in a good and workmanlike manner | ADT: No basis for implied warranty; contract and other remedies control | Affirmed dismissal; Texas would not recognize an implied warranty here because public‑policy/compelling‑need prerequisites are lacking and other remedies exist |
| DTPA — unconscionable conduct | Plaintiffs: ADT unconscionably advertised a reliable, high‑quality alarm and exploited Plaintiffs’ lack of knowledge | ADT: Allegations amount to mere breach of contract, not actionable unconscionable conduct under DTPA | Affirmed dismissal; claim is essentially a contract breach and not actionable under the DTPA absent additional facts (e.g., intent never to perform) |
| Fraudulent inducement | Plaintiffs: ADT made actionable misrepresentations inducing the contract | ADT: Contract contains a clear disclaimer-of-reliance/merger clause barring fraud claim | Affirmed dismissal; the merger/disclaimer clause precludes the fraudulent‑inducement claim under Texas law |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard for plausibility)
- Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778 (Tex. 2001) (elements of negligence under Texas law)
- Chapman Custom Homes v. Dallas Plumbing Co., 445 S.W.3d 716 (Tex. 2014) (economic‑loss rule and when tort duties independent of contract exist)
- Equistar Chems., L.P. v. Dresser‑Rand Co., 240 S.W.3d 864 (Tex. 2007) (physical harm exception to economic‑loss rule)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (effect of disclaimer/merger clauses on fraud claims)
- Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171 (Tex. 1997) (when disclaimer of reliance can bar fraudulent‑inducement claims)
- Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987) (definition/recognition of implied warranty of good and workmanlike performance)