ADT Security Services, Inc. v. Van Peterson Fine Jewelers
05-15-01224-CV
| Tex. App. | Oct 13, 2016Background
- Van Peterson operated a retail jewelry store and contracted with ADT in 1999 for a UL-certified commercial alarm system; the UL certificate was renewed in April 2006 and was in force at the time of the September 12, 2007 burglary.
- The alarm worked from installation until late May 2007 but failed to operate during the burglary in which >$1,000,000 of jewelry was stolen.
- Van Peterson alleged an ADT employee attempted to replace the system’s two-way radio back-up with a cellular back-up, left the job incomplete, and misrepresented the cellular device met UL standards; ADT denied those allegations.
- Expert testimony established the alarm was not UL-compliant on the night of the burglary, but neither side offered a definitive cause for the failure and no cellular device was found in the wreckage.
- On remand from an earlier interlocutory appeal (which resolved other contract- and negligence-based claims against Van Peterson because of a contractual limitation-of-liability clause), the jury found (1) ADT made a DTPA misrepresentation that the alarm functioned in compliance with UL standards, and (2) ADT breached a warranty that the alarm complied with UL standards, awarding $1,110,300.
- The trial court entered judgment for Van Peterson; ADT appealed asserting legal insufficiency and that the DTPA/warranty findings were precluded by the contract’s terms. The Court of Appeals reversed and rendered judgment that Van Peterson take nothing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ADT made an actionable DTPA misrepresentation that the alarm "functioned in compliance with all applicable UL standards" | Van Peterson: daily "chirps" and alleged employee statements conveyed the alarm was UL-compliant and induced reliance | ADT: the UL representation is contractual (from the written certificate/contract), not a separate actionable DTPA misrepresentation; jury rejected cellular-backup allegation | Held: No actionable DTPA misrepresentation — UL representation arose from contract, and no authority supports an inanimate "chirp" as a DTPA representation. |
| Whether breach of warranty (express or implied) under the DTPA supported recovery | Van Peterson: warranty that alarm complied with UL standards (express or implied) was breached and constitutes a DTPA predicate | ADT: any express warranty derives from the contract and is subject to the contract’s limitation-of-liability; implied warranty for installation/maintenance does not extend to alarm systems in this context | Held: The warranty found by jury was express (contract-based) and barred by prior ruling enforcing the contractual limitation; no legally sufficient evidence of an applicable implied warranty. |
| Whether Van Peterson’s DTPA claim is merely a disguised contract claim (nonactionable) | Van Peterson: conduct and representations went beyond mere nonperformance of contract | ADT: the claim is essentially breach of contract/nonperformance and thus not actionable under the DTPA | Held: The claim was rooted in contractual nonperformance (failure to provide a UL-compliant system) and is not actionable under the DTPA. |
| Whether evidence legally supported causation and damages for DTPA/warranty recovery | Van Peterson: jury verdict established causation and damages from ADT’s actions | ADT: evidence was legally insufficient to prove causation linked to an independently actionable DTPA/warranty violation | Held: Evidence legally insufficient to support judgment; appellate court reversed and rendered judgment that Van Peterson take nothing. |
Key Cases Cited
- Crawford v. Ace Sign, Inc., 917 S.W.2d 12 (Tex. 1996) (mere breach of contract does not create a DTPA claim)
- Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493 (Tex. 1991) (analyzing when duties are independent of contract for tort treatment)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency standard of review)
- Arthur’s Garage, Inc. v. Racal-Chubb Sec. Sys., Inc., 997 S.W.2d 803 (Tex. App.—Dallas 1999) (limits on disclaimers and when warranties form basis of DTPA claims)
- Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987) (implied warranty to repair or modify tangible goods cannot be waived)
- ADT Sec. Servs., Inc. v. Van Peterson Fine Jewelers, 390 S.W.3d 603 (Tex. App.—Dallas 2012) (prior interlocutory opinion enforcing contractual limitation on negligence/breach claims)