QUESTION:
Dear Mr. Kirschenbaum,
I receive your newsletter and appreciate the information that it provides. I am hoping that you can assist me by answering my question in your newsletter.
I am the owner of a security company and I have recently run into a problem. Several years ago, I began referring my monitored customers to a local patrol company with the understanding that they would provide the patrol service and I would provide the security monitoring. Recently, the patrol company has come under new ownership. The new owners have expanded their services to include installation and monitoring of security systems. I feel that they should not be able to begin monitoring service with any of these customers or use any of the information that I gave them to solicit any of our mutual customers.
I would like to see if I have any basis for a suit or recourse due to the fact that they are using the list of customers that I had provided with the understanding that it would be used for patrol purposes. There was no written agreement with the current patrol company or with the previous owners, but the information that I provided is not being used for its intended purpose. Please keep my contact information confidential.
Thank you for your assistance.
Screwed
*************
ANSWER:
You should have had an agreement with the patrol company. It would have included all of the terms you now think of as "implicit". One of the things you don't mention is whether you have contracts with your subscribers. If you don't then for sure you are SCREWED. You should have Monitoring Contracts with your subscribers. That contract would permit subcontracting services to others.
The agreement with the patrol company would have included provisions that
the subscribers were your customer
all customer information was confidential
patrol company agrees not to solicit or service the customers on its behalf or on behalf of others
patrol service agrees not to solicit or employ your employees
patrol service agrees to return all customer information on demand
patrol service agrees that in event of its breach it agrees to pay 80 times the recurring monthly revenue from any subscriber it solicits or services.
It would now be difficult to litigate against the patrol company. First of all you're not going to find a decent attorney to handle the case on contingency, so you'll have to fund the risky litigation. The patrol company's pockets may be deeper than yours so they may run the clock just to exhaust your financial resources.
Ownership of the customers may also be a question of fact, especially if you don't have monitoring or service contracts.
Obviously I have assumed facts you didn't provide in your question, and if your situation has other facts then you may want to engage in the litigation just to teach the patrol service a lesson. Also, check to see if it's licensed to provide alarm service in your state and jurisdiction, and promptly report them if not. You can also pursue your subscribers if any have breached their contracts with you.
You should not be doing business without proper contracts. That goes for every alarm, security, integrator company. Get them at www.alarmcontracts.com.