February 2, 2011
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Question
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Hi Ken;
I paid an alarm installer to install new alarms in 15 convenience-store locations. I only had the customer sign a 1 year agreement, and in the meantime this installer ran out and passed the state licensing test, started his own company (while still licensed with our company), and has convinced the owner of the stores to switch over to the installer’s new monitoring center for a discount on the 1 year anniversary (all 15 locations). For some reason, I have no contractor agreement/non-compete on file with this installer although he is legally licensed with the state of Texas as an installer with our company still! Am I just S.O.L., or can I sue him for tortuous interference of a contract? I feel slimed and wronged by this guy. Obviously I should cover myself with non-competes a little better going forward.
One of the 15 locations is the owner’s personal home and he’s in a 3 year (I guess this installer didn’t realize that – maybe I can use it as leverage..?).
On the checks I paid him, I wrote “2 Year Warranty” in the memo field – I wonder if this could help me..?
Can you recommend some initial steps? I had a call with him and his lawyer and they say they don’t owe me a thing. Bummer.
Rusty
Texas
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Answer;
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The quick answer is you're screwed.
The " I told you so" answer is, you should have had the subcontractor who you engaged as the installer sign my Standard Subcontractor's Contract.
Can you nevertheless sue the subcontractor? Yes you can. But look how much more complicated your case is now because you don't have a signed Subcontract agreement. Your claim is not likely tortious interference of contract because, not only did you not use the Subcontract Agreement, you had a one year monitoring agreement. The Standard Form Monitoring Agreement for commercial subscribers is 5 years [10 years if it's a lease]. From what you stated, your competitor told the subscriber to switch only once its contract with you expired.
You can hold the owner to the 3 year contract, assuming you had that contract executed properly, using the 3 day notice of cancelation. If not, you can kiss that contract good bye also.
From what I gather, you indicate that this subcontractor is actually still an employee on your books, though I suppose not getting paid. As an employee you may be able to hold him to some level of loyalty and non competition. But that case is going to be a mess and I doubt cost effective.
The costly lesson here is that you need to use the Standard Form Contracts, as is. You would have had:
an employment agreement with restrictive covenant
a subcontractor agreement with restrictive covenant
a 5 year monitoring agreement with real teeth to hold the subscriber