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    Alarm companies are often asked [required] to sign contracts presented by a General Contractor or the Subscriber's form contract.  These contract forms almost never have the protective provisions properly drafted alarm contracts have, and in fact contain many provisions that either contradict provisions in the alarm contract or create new issues.  Some alarm companies simply won't sign any form other than their own, which is the best practice, and others seek counsel before signing a contract form other than their own, a prudent practice.  Still others just sign and hope for the best. 

    A case decided by the Second Appellate Division of the Court of Appeals of California illustrates two issues to watch for, one covered by the alarm contract and the other issue not addressed in the alarm contract.

A fire alarm company contracted with a General Contractor for installation of a fire alarm system.  The City of Los Angeles was the Subscriber and there was a contract between the City and Metro Builders and Engineers.  This contract had a delay in performance provision, with liquidated damage penalty provision, and a prevailing wage requirement.  

    Delay in performance is an issue addressed by the Standard Fire Alarm All in One.  There is no time of the essence in performance.  Prevailing wage requirements is not mentioned in the Standard form, other than a reference to compliance with AHJ requirements (and this reference is intended to refer to the fire marshal).

    The fire alarm company, National Security Systems Inc. completed the installation of the $93,800 commercial fire alarm.   There was a dispute whether the installation complied with the plans and AHJ requirements and before final approval by AHJ the General Contractor fired the Alarm Co.  Still owed $18,670 for the work, the Alarm Co. sued the General Contractor.  The General Contractor counterclaimed, demanding damages for delayed performance and failure to comply with prevailing wages.  

    For those of you not familiar with Prevailing Wages, typically municipal jobs and sometimes private contracts with institutional subscribers will include a provision in the contract that you agree to pay your employees a minimum wage based on a published standard of payment.  In this case the General Contractor, who has not raised an issue of prevailing wage until the fire alarm co. started the lawsuit.  Turns out the alarm co. underpaid several of its employees, and the City imposed penalties.  The General Contractor ended up paying the employees the amounts they were due and a small fine to the City for a total of $10,000.  

    The General Contractor also claimed damages as a result of delayed performance.  Your contract terms can have performance criteria, not only a completion date by a performance schedule that is designed to ensure that your work schedule does not delay performance by other contractors on the job.  In this case the Fire Alarm Co. was terminated, and it took time to find another fire alarm company.  The court determined that there was 21 days of delay; penalty was $1200 a day; $25,200.00.

    An important issue in the case was the termination of the Fire Alarm Company.  The Court's decision is interesting and below is an excerpt from the case.  [you can read the entire case at https://www.kirschenbaumesq.com/page/alarm-law-issues  [NATIONAL SECURITY SYSTEMS, INC  v. HOUALLA ENTERPRISES, LTD]

 

    " On September 17, 2010, Metro directed National to proceed with the final inspection on the fire alarm system for the project, based on National's confirmation the system had been tested and was "good to go" for the inspection.

     On September 30, 2010, National contended the "Fire alarm final failed because Metro Builders tampered with the fire alarm system therefore damaging the system and voiding the system warranty."

   Metro responded: "You state that inspection failed because of our actions, although no fire alarm inspection even took place (the fire alarm inspection last request on record was for May).  We inspected the panels to see if there was any damage to them, and could not see any. We are hiring another fire alarm company to come and verify this."

   The independent fire alarm company determined there was no wrongdoing by Metro "but instead outline[d] many items not in compliance with the plan and with the code."

   On October 13, 2010, Metro advised National, "Now that we understand what needs to be done to complete the job I will request you to complete this job and provide final inspection in the next 48 hrs. After this time I will hire all necessary recourses to complete the job and all cost incurred will be charged back to your company."    National did not correct its work and on October 18, 2010, Metro advised National it was being replaced by another subcontractor "capable of completing the fire alarm system."

   On December 17, 2010, the Department of Building and Safety approved the final inspection, and the fire marshal gave its approval on December 27, 2010."

     Departure from the Standard Fire All in One subjected this fire alarm company to prevailing wage [which could not be avoided because it was a City job - but the alarm co should have known about the wage issue and complied in the first instance] and penalties for delayed performance.  Furthermore, in hindsight, the fire alarm co should have better assessed its chances at trial.  It's legal fees could have been and may have been in excess of the damages awarded against it.  So now it faces loss of its $18,000, an award against it for $25,000 and legal fees of unknown amount.  

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