KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** Commercial Frustration as defense to alarm contract December 3, 2024 ************************* K&K Holiday Party 2024 – Napco will be providing grab bag gifts to dealers attending ************************** The K&K Holiday Party will be on December 12, 2024 in Old Westbury, NY from 6:30 to 9:30 PM. If you are coming you should have RSVP'ed to Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com or Amy Laveglia at 516 747 6700 x 313 or ALaveglia@Kirschenbaumesq.com or on the sperate invite. Special thanks to Napco who is promising to have give away grab bag gifts. It's a surprise and you won't want to miss out. Thanks to Dick and Donna Soloway and the Napco crew for their support and generosity. ************************* Commercial Frustration as defense to alarm contract ************************* If you bring enough collection proceedings against your subscribers to enforce the contract terms, including what’s already owed and the balance of the contract RMR payments, you hear just above every defense, frustration of purpose as one of them. The doctrine operates when a not reasonably foreseeable supervening event totally or nearly totally destroys the value of counterperformance in a contract or lease. In other words, the subscriber no longer needs the alarm system or your services and wants to be relieved of further payment obligations. We see the “defense” raised by subscribers who have moved; had chance of operation so that perhaps they are open 24/7 and don’t need an intrusion system, a fire alarm [or any alarm, camera or access control system] customer who intends on renovating or tearing down a building; etc. A just decided case in California had a landlord pursuing rent from a tenant who claimed it didn’t owe the rent because it was prohibited from operating because of mandatory shutdown when the COVID-19 pandemic barred the operation of public gyms and fitness centers for most of the following year. The court rejected the defense and held for the landlord. Fitness & Sports Clubs, Llc, v Aisbd, LLC. That’s not the case that interests me; it’s one of the cases cited by the court to reach its decision, Federal Leasing Consultants v Mitchell Lipsett Company, a case decided in 1978. The facts of the Federal Leasing case are as follows: “Action was instituted to recover payments remaining due under a lease. The Municipal Court for the Los Angeles Judicial District of Los Angeles County, Xenophen L. Lang, J., entered judgment in favor of defendant, and plaintiff appealed. The Superior Court, Appellate Department, Cole, P. J., held that risk or burden arising from governmental action preventing use of leased burglar alarm system when system, which operated on certain radio frequencies, was made subject of an injunction requiring that it be rendered inoperable because it interfered with secret government radio frequencies, was properly placed on plaintiff as lessor-financer under doctrine of commercial frustration, rather than on defendant as lessee, where lease clearly provided that title to system was in plaintiff, not in defendant, and that defendant must return it to plaintiff in good condition at end of lease, and, though defendant was solicited to purchase system, manufacturer recommended that defendant utilize plaintiff's services to finance transaction.” Like too many cases the decision turns to mumbo jumbo to reach what should be a fairly easy decision: “The question in cases involving frustration is whether the equities of the case, considered in the light of sound public policy, require placing the risk of a disruption or complete destruction of the contract equilibrium on defendant or plaintiff under the circumstances of a given case (citations omitted) and the depends on whether an unanticipated circumstance, the risk of which should not be fairly thrown on the promisor, has made performance vitally different from what was reasonably to be expected” Here is what the court relied on for its decision, which by the way was, in my opinion the right one in this case: “We believe that the equities of this case do justify placing the burden on appellant. In the first place, the equipment belongs to appellant. The lease expressly makes it clear that title to the burglar alarm system is in the leasing company not in respondent and respondent must return it to appellant in good condition at the end of the lease. In the second place, although respondent was solicited to purchase the alarm system by American Radar, American Radar recommended that respondent utilize appellant's services to finance the transaction.” This was a unique set of facts: a secret government radio frequency being affected by the alarm radio; government gets injunction and shuts off the alarm communication. [there was no discussion about changing the communication to POTS, which in 1978 would have been on option]. What are a few other reasons that have been proffered to avoid further obligation under the alarm RMR obligation: Death of subscriber [which is sufficient in PERS and medical alert contracts] Building burns down Loss of lease Building sold Moved or renovating home Cheaper system Got a dog Broke and can’t afford payments None of the above are sufficient excuses to establish frustration of purpose. The K&K Standard Form Agreements should be enforced in the face of these defenses. Keep in mind that the contract to be enforced will be enforced if the possibility of the defense was foreseeable when the contract was made. All of the above should have been considered when the contract was made and no provision permitting cancellation included in the contract. Keep in mind that bad facts make for bad law, so pick your battles carefully. Even if you might be technically right judges can find ways to reach the conclusion their gut tells them is the right decision for that case. Sometimes those cases can go on to influence other cases that perhaps do not have similar egregious facts. Using experienced litigation counsel, experienced in the alarm/security industry, makes the most sense. K&K’s collection department with its experienced paralegals and attorneys are available as your attorneys. The best won’t cost more, will be more efficient and more successful; they are a phone call away. Contact Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com. Concierge Clients can always contact Concierge Program Coordinator Stacy Spector,Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.com. Come meet them at the K&K Holiday Party December 12 [if you RSVP’ed]. ************************** STANDARD FORMS Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles updated daily ******************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our Email List / Email Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com ************************** Ken Kirschenbaum,Esq Kirschenbaum & Kirschenbaum PC Attorneys at Law 200 Garden City Plaza Garden City, NY 11530 516 747 6700 x 301 ken@kirschenbaumesq.com www.KirschenbaumEsq.com
