Q&A - Is there liability selecting the wrong central station?

Ken:

Here is my hypothetical situation and question:

There are several central stations in a particular area and some, but not
all of them, have generator back-ups. A dealer, being aware of the lack of
back-up, still chooses to use a central station that does not have a
generator back-up. There is a loss of power to the central station, and
the central station does not receive an alarm from a subscriber's residence
due to this loss of power. There is a loss that may have been reduced if
the authorities had been dispatched sooner, a fact that would have happened
had the central station received the alarm.

Is the dealer liable for this loss because he chose to go with the central
station that had no generator back-up when he could have chosen to use a
central station with generator back-up thus avoiding a situation, at least
partially due to the loss of power?

Thanks for your consideration.

Terry Ryan

+++++++++++++++++++++++++

Answer:

The real question is, what liability does the dealer have for selecting
a particular central station?
There are far more considerations when selecting a central station than
whether it has a generator to back up power. Some central stations are UL
certified; others have additional governmental license or recognition; some
may have a good reputation and others not so good.
I am tempted to give a quick answer, which would be that if you use
proper contracts with your subscriber you should have little or no exposure
for the central station's negligence. However, I can see an issue if we
stay with the above fact pattern, because another why to ask the liability
question is "what is your exposure if you select a central station which
you don't think is suitable?". I think you may have exposure if that can
be established.
Now keep in mind I am not suggesting that a central without a generator
is not suitable. We can discuss what a good central station should have in
another discussion. For this analysis, the question raised makes clear
that the dealer knew that the selected central didn't have a generator, and
[most importantly] that dealer believed that a generator was necessary for
a proper central station. Therefore, the dealer intentionally and
knowingly chose an unsuitable central station. That dealer will be hard
pressed to explain why he chose the central once it is established that he
believed it unsuitable.
The dealer's contract with the subscriber will provide that the dealer
has no liability for the negligence of the central station, and dealers are
not liable for the negligence of independent contractors. But negligence
in the selection of a central station may be a separate theory of
liability, and if the plaintiff can establish that the dealer didn't think
the central station was suitable, or using experts can establish that no
knowledgeable alarm company could possibly accept that central station,
liability may follow.