lawsuit against fire sprinkler co survives in Colorado August 25, 2025

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
**************
lawsuit against fire sprinkler co survives in Colorado
August 25, 2025

lawsuit against fire sprinkler co survives in Colorado

   Fire alarm companies are often engaged in the fire protection business too, or closely aligned with fire protection business. Fire protection businesses are those engaged in installation, inspection and service of sprinkler systems, fire suppression systems, fire extinguishers and I suppose other systems that put out or retard spread of fire. Fire alarm companies, on the other hand, provide systems that detect fire and alert those in the building and the fire department.
   These are two distinct businesses requiring different licenses. They also require different contracts to protect them. Though fire alarm companies generally recognize the importance and value of fire alarm contracts, the Fire All in One being the gold standard in the industry, fire protection companies are not as diligent. K&K does offer a Fire Protection All in One, which does offer the most contractual protection available to fire protection companies. Too bad Diamond Fire Protection, the defendant in the case reported below, didn't have the Fire Protection All in One; the outcome of its motion to dismiss the lawsuit would likely have been granted instead of denied.
   Diamond Fire Protection was sued by its subscriber's insurance company for damages following a "dry pipe fire suppression system in a hotel malfunctioned and caused millions of dollars in damages". Diamond's insurance company provided defense attorneys took the position that "the work contract pursuant to which it serviced the fire suppression system absolved it of any liability which might result". The Plaintiff, in defense of the motion to dismiss, claimed that Diamond also failed to properly inspect the dry sprinkler system by failing "to conduct inspections according to NFPA 25 guidelines", and that the exculpatory provision in the work order did not cover inspection services. The judge denied the motion to dismiss and permitted Plaintiff to amend its complaint to include failure to inspect and authorized continued discovery.
   Careful reading of the decision will reveal that Diamond may have performed work without benefit of a contract, and even it's "contract" seemed to consist of work orders, probably with some protective language added. This is absolutely not sufficient contractual protection, in my opinion.
   "Finally, I cannot say that amendment would be futile, as Defendant argues. While it is plausible that the “sprinkler testing” provision cited by Defendant, if applicable, might be dispositive of Plaintiff's amended claim, the evidence only shows this provision in relation to a contract that was signed on November 12, 2022, and Defendant does not explain how this would retroactively apply to alleged failures to inspect that occurred earlier in 2022 and in 2021. See Dkt. 34 at 16 (“Plaintiff also alleges that during its June 2022 work and its 2021 and 2022 Annual Inspections of the property's sprinkler system, Defendant failed to conduct... a 5-year internal inspection of the system's piping as required by NFPA 25...”). Further, given the parties’ competing contentions about whether the work order contracts governed their relationship outside the specific jobs contemplated by those orders, I cannot say at this time that amendment would be futile. Compare Dkt. 30 at 4 (“There has never been a standing contract for services between Diamond Fire and the Insured, instead separate work order contracts were prepared when Diamond Fire performed services at the Property.”) with Dkt. 66 at 2 (“The provision does not mean Defendant will have no liability for its failure to inspect or test the dry system at other times not governed by the Work Order.”)
   Those of you in the fire alarm business be sure to use the Fire All in One, and do no services without that contract in place before you do the work.
   Those of you in the fire protection business, be sure to use the Fire Protection All in One, also before you do any services.
   Here is the case in full.

United States District Court, D. Colorado.
AMGUARD INSURANCE COMPANY, Plaintiff,
v.
DIAMOND FIRE PROTECTION CO., INC., Defendant.
Civil Action No. 1:23-cv-01508-DDD-NRN
filed 03/05/2025
ORDER GRANTING MOTION FOR LEAVE TO AMEND AND DENYING WITOUT PREJUDICE MOTION FOR SUMMARY JUDGMENT
Daniel D. Domenico United States District Judge
1 Plaintiff in this case has moved to amend its complaint. Because it has shown good cause for such an amendment, and any prejudice to the Defendant could be cured by reopening discovery for the limited purpose of allowing Defendant to conduct a few additional depositions, the motion is granted, and Defendant's pending motion for summary judgment is denied without prejudice to refile after the close of supplemental discovery.
BACKGROUND
Plaintiff AmGuard Insurance Company sued Defendant Diamond Fire Protection Company after a dry pipe fire suppression system in a hotel malfunctioned and caused millions of dollars in damages. See generally Dkt. 1. At the time of the flooding, the hotel was insured by Plaintiff, which has already compensated it for the resulting water damage. Dkt. 1 at ¶ 14. Plaintiff now seeks to recover what it paid from Defendant, which was contracted to service the fire suppression system in November 2022, prior to its malfunction, and, Plaintiff alleges, failed to “fully and completely drain the dry system before it was placed back into service.” Id. at ¶ 11.
On July 2, 2024, Defendant filed a motion for summary judgment arguing that the claims against it failed as a matter of law because the work contract pursuant to which it serviced the fire suppression system absolved it of any liability which might result. Dkt. 30. In response, Plaintiff disputed that this exculpatory provision was enforceable, but also argued that even if it were, some of its claims would survive because it also alleged — unrelated to Defendant's work in November 2022 — that Defendant failed to properly inspect the system pursuant to National Fire Protection Association (“NFPA”) 25 guidelines. Dkt. 34 at 16; Dkt. 1 at ¶ 16(a)(v). Defendant replied that this argument sought to improperly expand the scope of Plaintiff's complaint and introduce new arguments in response to its motion for summary judgment. Dkt. 39 at 10–11.
Plaintiff has now filed a motion to formally amend its complaint to clarify its allegation that Defendant failed to conduct inspections according to NFPA 25 guidelines. Dkt. 58. Defendant opposes the motion to amend. Dkt. 64.
DISCUSSION
Plaintiff's complaint alleges that Defendant failed to “exercise reasonable care” by “failing to have the system properly maintained, serviced, inspected and/or tested to make sure that it functions and was installed properly as required by... the National Fire Protection Association 25 guidelines.” Dkt. 1 at ¶ 16(a)(v). This allegation is arguably broad enough to cover the argument that Defendant “failed to conduct and/or advice [sic] Plaintiff's insured to conduct a 5-year internal inspection of the system's piping as required by NFPA 25, which would have revealed the corrosion and obstruction.” Dkt. 34 at 16. But Defendant also has a point that Plaintiff's single, generic reference to the National Fire Protection Association 25 guidelines, which are several hundred pages long, was insufficient to put it on notice of the argument that Plaintiff raised in response to its motion for summary judgment. Because Plaintiff has shown, however, that it has good cause to amend its complaint and because its offer to reopen discovery for the limited purpose of allowing Defendant to depose prior contractors who inspected the sprinkler system would cure any prejudice to Defendant that might result from allowing Plaintiff to amend its complaint at this stage, the motion is granted.
After a scheduling order deadline has passed, as it has for Plaintiff's motion, a party seeking leave to amend their complaint “must demonstrate (1) good cause for seeking modification under Fed. R. Civ. P. 16(b)(4) and (2) satisfaction of the Rule 15(a) standard.” Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass'n, 771 F.3d 1230, 1240 (10th Cir. 2014). Rule 16(b)(4) provides that “[a] schedule may be modified only for good cause and with the judge's consent.” Fed. R. Civ. P. 16(b)(4). Of the two, Rule 16 provides the more stringent standard. It requires the movant to show it could not meet scheduling deadlines “despite the movant's diligent efforts.” Gorsuch, Ltd., 771 F.3d at 1240 (10th Cir. 2014) (alteration adopted). “In making this determination, the factor on which courts are most likely to focus is the relative diligence of the [party] who seeks the change.” Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 988 (10th Cir. 2019) (alterations adopted). “Good cause is likely to be found when the moving party has been generally diligent, the need for more time was neither foreseeable nor its fault, and refusing to grant the continuance would create a substantial risk of unfairness to that party.” Id. (alterations adopted). Failing to satisfy either Rule 16 or Rule 15 is sufficient to deny a motion for leave to amend.
There is no indication in the record that Plaintiff was not diligent in seeking to amend its complaint. Defendant contends that Plaintiff waited for “approximately five months after it raised the New Theory” to seek leave to amend, but Plaintiff actually raised the possibility of amendment within one week of being presented with Defendant's argument that it was improperly seeking to expand its complaint in response to the motion for summary judgment. Dkt. 64 at 4; Dkt. 40-1 at 6 (“Plaintiff should be granted leave to amend, as the statute of limitations on claims against Defendant has not yet run.”). Given Plaintiff's (arguably correct) position that it had already raised the allegedly new claim that Defendant had failed to conduct adequate inspections in its original complaint, coupled with the legitimate expectation that this issue might be resolved in relation to the pending motion for summary judgment, it was not unreasonable for it to wait until Defendant filed its motion to strike, Dkt. 57, to formally move to amend its complaint. There is thus good cause to amend in this case.
Given Plaintiff's willingness to reopen discovery to allow Defendant to depose the contractors who previously inspected its sprinkler system, Defendant would also not be prejudiced by amendment at this stage. See Dkt. 58 at 9 (“In a good faith effort to cure Defendant's claimed prejudice, Plaintiff offers to amend and will not oppose a brief extension of discovery to allow Defendant to depose the prior contractor.”). I note, however, that Discovery will not be reopened for Plaintiff to gather more evidence in support of its amended complaint. If, as Plaintiff insists, it meant to allege that Defendant failed to conduct necessary inspections pursuant to NFPA 25 guidelines since the inception of this case, it should have already collected the evidence it needs to support this claim. See Dkt. 58 at 8 (“[Plaintiff's] failure to inspect claim has never been a ‘new’ theory of liability.”). Because Defendant's depositions of the prior contractors may yield factual support for the proposition that they were actually responsible for any failure to inspect, Defendant will also be permitted to designate non-parties at fault as requested in response to the motion to amend, and to file another dispositive motion once supplemental discovery is complete. See Dkt. 64 at 8 (“Defendant requests that this Court allow Defendant leave to designate non-parties at fault, conduct additional discovery, and leave to file another dispositive motion pursuant to the Work Order Contract.”).
Finally, I cannot say that amendment would be futile, as Defendant argues. While it is plausible that the “sprinkler testing” provision cited by Defendant, if applicable, might be dispositive of Plaintiff's amended claim, the evidence only shows this provision in relation to a contract that was signed on November 12, 2022, and Defendant does not explain how this would retroactively apply to alleged failures to inspect that occurred earlier in 2022 and in 2021. See Dkt. 34 at 16 (“Plaintiff also alleges that during its June 2022 work and its 2021 and 2022 Annual Inspections of the property's sprinkler system, Defendant failed to conduct... a 5-year internal inspection of the system's piping as required by NFPA 25...”). Further, given the parties’ competing contentions about whether the work order contracts governed their relationship outside the specific jobs contemplated by those orders, I cannot say at this time that amendment would be futile. Compare Dkt. 30 at 4 (“There has never been a standing contract for services between Diamond Fire and the Insured, instead separate work order contracts were prepared when Diamond Fire performed services at the Property.”) with Dkt. 66 at 2 (“The provision does not mean Defendant will have no liability for its failure to inspect or test the dry system at other times not governed by the Work Order.”).
3 In light of my decision to grant Plaintiff's motion to amend, the pending motion for summary judgment, Dkt. 30, is denied without prejudice to refile after the close of supplemental discovery. I note, however, some of the questions raised by the motion pertaining to the enforceability of the “exculpatory” provision in the work order contracts present novel issues of state law that might warrant certification to the Colorado Supreme Court. See Curran et. al. v. Home Partners Holdings LLC et. al., No. 1:23-cv-01279-DDD-MDB, at Dkt. 44. For one, as Judge Dominguez Braswell noted in Cont'l Cas. Co. v. Cintas Corp. No. 2 d/b/a Cintas Fire Prot., there is some doubt whether the Jones factors governing exculpatory contract provisions govern cases such as this concerning “a sophisticated business entity consuming commercial services.” No. 1:20-cv-02128-MDB, 2022 WL 17251196, at 9 (D. Colo. Nov. 28, 2022); see also, e.g., Constable v. Northglenn, LLC, 248 P.3d 714, 718 (Colo. 2011) (“Strong policy considerations favoring freedom of contract generally permit business owners to allocate risk amongst themselves as they see fit.”); Jones v. Dressel, 923 P.2d 370, 376 (Colo. 1981) (outlining factors governing enforceability of exculpatory agreements). Additionally, if the Jones factors do apply to this case, it is unclear whether a finding that Defendant owed a duty to the public under factor one would be dispositive of the analysis or whether I would still have to address the other factors. Compare Cont'l Ins. Co. v. Cintas Corp. No. 2, No. 1:18-cv-00254-RBJ, 2019 WL 4643711, at 7–8 (D. Colo. July 12, 2019) (analyzing all four factors despite a finding that “[Defendant] is a business who owes a duty to the public”) with Cont'l Cas. Co. v. Cintas Corp. No. 2 d/b/a Cintas Fire Prot., 2022 WL 17251196 at *8 (“Here, the first factor—‘the existence of a duty to the public’—would likely be determinative.”). The parties are therefore ordered to confer on whether certification to the Colorado Supreme Court would be appropriate prior to filing any additional motions for summary judgment.
CONCLUSION
It is ORDERED that:
Plaintiff's Motion for Leave to Amend its Complaint, Dkt. 58, is GRANTED;
Defendant's Motion to Strike New Liability Theory, Dkt. 57, and Plaintiff's Motion to file a Sur-Reply thereto, Dkt. 62 are DENIED AS MOOT;
Plaintiff's Motion to file a Sur-Reply, Dkt.40, in opposition to Defendant's Motion for Summary Judgment is GRANTED;
Defendant's Motion for Summary Judgment, Dkt. 30, is DENIED WITHOUT PREJUDICE to refile after the close of supplemental discovery; and
The parties are ORDERED to confer on whether issues that may be presented by any forthcoming motion for summary judgment are appropriate for certification to the Colorado Supreme Court.
All Citations
Slip Copy, 2025 WL 2208707
End of Document   © 2025 Thomson Reuters. No claim to original U.S. Government Works.
*****
STANDARD FORM AGREEMENTS: To order up to date Standard Form 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.
*
WEBINARS: https://www.kirschenbaumesq.com/page/alarm-webinars
*
ALARM ARTICLES:  You can always read our Articles on our website at www.kirschenbaumesq.com/page/alarm-articles  updated daily

Wondering how much your alarm company is worth?
Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth
*
THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily
***
PODCASTS: https://podcasts.apple.com/us/podcast/ken-kirschenbaum-presents/id1794851477
_{*}
Getting on our email list / 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.
**************
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