Solid Gold Jewelers v. Adt Security Systems, Inc., Case No. 5:07CV01555.

• Citation: 600 F.Supp.2d 956
• Decision Date: 19 December 2007
• Docket Number: Case No. 5:07CV01555.
• Parties: SOLID GOLD JEWELERS, Plaintiff, v. ADT SECURITY SYSTEMS, INC., Defendant.
• Court: U.S. District Court — Northern District of Ohio

600 F.Supp.2d 956

SOLID GOLD JEWELERS, Plaintiff, v. ADT SECURITY SYSTEMS, INC., Defendant.

Case No. 5:07CV01555.

United States District Court, N.D. Ohio, Eastern Division.

December 19, 2007.

Benjamin R. Schrope, Mansfield, OH, John F. Myers, Holland Myers & Myers, Akron, OH, for Plaintiff.

Anne M. Carlson, Charles C. Eblen, Shook, Hardy & Bacon, Kansas City, MO, John R. Mitchell, Joshua A. Klarfeld, Thompson Hine, Cleveland, OH, for Defendant.

MEMORANDUM OPINION AND ORDER

SARA LIOI, District Judge.

This matter is before the Court on the motion for judgment on the pleadings filed by Defendant ADT Security Systems, Inc. ("ADT"). (Doc. No. 12.)

I. Statement of Facts and Procedural History

Plaintiff Solid Gold Jewelers ("Plaintiff" or "Solid Gold") is a retail jewelry store located in Akron, Ohio. (Compl. ¶ 1.)¹ Defendant ADT is engaged in the business of selling, installing and servicing security alarm systems. In 1999, Solid Gold and ADT entered into a contract for the installation, and ongoing inspection, maintenance and service of an alarm system at Solid Gold's business premises. (Compl. ¶¶ 1, 6.)

On May 18, 2006, a break-in and theft occurred at Plaintiffs premises, resulting in damage to and loss of property. (Compl. ¶ 3.) Plaintiff suffered damages as a result of the theft in the amount of $46,265.87. (Compl. ¶ 9.)

Plaintiff filed this action in Summit County Court of Common Pleas on April 23, 2007. The original complaint set forth causes of action for breach of contract, negligence, and fraud. (Doc. No. 1, Ex. A.) Defendant removed the action to this Court on May 25, 2007, invoking the Court's diversity jurisdiction. (Doc. No. 1.) On July 16, 2007, ADT filed the instant motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). (Doc. No. 12.) Solid Gold filed opposition (Doc. No. 18), and ADT replied. (Doc. No. 20.) After briefing on the motion was completed, Solid Gold filed a motion to amend the complaint, which was granted, and thereafter it filed an amended complaint on September 26, 2007. (Doc. No. 23.) The amended complaint omits the fraud causes of action asserted in the original complaint, evincing Plaintiffs intent to pursue only the breach of contract and negligence claims. In those claims, Plaintiff complains of ADT's alleged failure properly to install, inspect, maintain and replace the security system, to notify police and Plaintiff when the alarm signal was received at the time of the burglary, and to conduct an investigation of the break-in and convey the results to Plaintiff. The Court now considers ADT's motion for judgment on the pleadings as it applies to the amended complaint.

II. Law and Analysis

A. Legal Standard

Federal Rule of Civil Procedure 12(c) governs motions for judgment on the pleadings and provides:

After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

Fed.R.Civ.P. 12(c).

Motions for judgment on the pleadings are reviewed under the same standard applicable to motions to dismiss under Rule 12(b)(6). Ziegler v. IBP Hog Market, Inc., 249 F.3d 509, 511-12 (6th Cir.2001). The motion may be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Tritent Int'l Corp. v. Kentucky, 467 F.3d 547, 553-54 (6th Cir.2006). The court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded material allegations in the complaint as true. Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 897 (6th Cir.2004). The court need not, however, accept conclusions of law or unwarranted inferences cast in the form of factual allegations. Id.

B. Analysis

1. Breach of Contract

In its motion, ADT asserts that Plaintiffs entire complaint is barred, or at least limited, by the express terms of the agreement. ADT does not, however, cite any authority to support the position that Plaintiffs claim is barred completely by the contract. Pursuant to the contract, ADT was obligated install the alarm system and repair and maintain it in good working order. If, as Plaintiff contends is the case, ADT failed to install the system in the proper manner, and/or failed to undertake necessary repairs or maintenance, Plaintiff clearly would be able to state a claim for breach of contract. Viewing the allegations as true, as the Court is required to do at this stage, the Court finds no grounds for granting judgment in favor of ADT on the contract claim.

ADT further contends that, even if it breached the contract, its liability is limited by the contract to a maximum of $1,000. ADT cites a litany of cases generally stating that alarm companies are not insurers, and that risk allocation provisions such as the one in the parties' contract purportedly limiting ADT's exposure to $1,000 universally are enforced. See, e.g., E.H. Ashley & Co. v. Wells Fargo Alarm Serv., 907 F.2d 1274, 1278 (1st Cir.1990). This provision very well may be enforceable in this case, but the Court finds that such enforcement is inappropriate on a motion for judgment on the pleadings. Whether the provision is enforceable requires a detailed examination of the contract itself, as well as a number of other factors, including whether the provision is a liquidated damages clause or a limitation on liability. See Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 465 N.E.2d 392 (1984) (regarding liquidated damages provisions); Collins v. Click Camera & Video, Inc., 86 Ohio App.3d 826, 621 N.E.2d 1294 (2d Dist.1993) (limitation of liability). Consideration of those questions, in turn, requires reference to materials outside the four corners of the complaint² and, therefore, is not proper in this procedural setting.

2. Negligence

In the Complaint, Plaintiff alleges that ADT "negligently, and/or recklessly, and/or wantonly, and/or intentionally failed to install, inspect, maintain and/or replace the security system, under such circumstances that Defendant knew, or should have known, of the high degree of risk of harm or damage to Plaintiff." (Compl. ¶ 11.) Plaintiff further contends that ADT negligently, recklessly, wantonly and/or intentionally failed to warn of known defects in the manufacture, design and/or installation of the security system, and similarly failed to notify the police, conduct an investigation of the premises, and notify Plaintiff upon receiving the alarm signal on the date of the burglary. (Compl. ¶¶ 12-13.)

ADT avers that Plaintiffs negligence claim is legally deficient because the duties upon which it is premised arise from the contract between the parties. ADT argues that where the only legal relationship between the parties is contractual, ADT owed Plaintiff no duty of care independent of the contract and, therefore, cannot be liable for claims sounding in tort as a matter of law. "Under Ohio law, the existence of a contract action generally excludes the opportunity to present the same case as a tort claim." Wolfe v. Cont'l Cas. Co., 647 F.2d 705, 710 (6th Cir.), cert. denied, 454 U.S. 1053, 102 S.Ct. 597, 70 L.Ed.2d 588 (1981). "[A] tort exists only if a party breaches a duty which he owes to another independently of the contract, that is, a duty which would exist even if no contract existed." Id.

Plaintiff must rely then on the existence of an independent cause of action under Ohio law sounding in tort where the relationship between the parties is one of contract. As a general rule, "[a] tort exists only if a party breaches a duty which he owes to another independently of the contract, that is, a duty which would exist even if no contract existed." Battista v. Lebanon Trotting Ass'n, 538 F.2d 111, 117 (6th Cir.1976) (citing Ketcham v. Miller, 104 Ohio St. 372, 136 N.E. 145 (1922)). Parties to a contract may face tort liability that "arises from the breach of some positive legal duty imposed by law because of the relationship of the parties, rather than from a mere omission to perform a contract obligation." Battista, 538 F.2d at 117 (citing Bowman v. Goldsmith Bros. Co., 109 N.E.2d 556, 557, 63 Ohio Law Abs. 428 (8th App.Dist.1953)). Under Ohio law, "it is no tort to breach a contract, regardless of motive." Canderm Pharmacal, Ltd. v. Elder Pharms., Inc., 862 F.2d 597, 602 (6th Cir.1988) (citing Battista, 538 F.2d at 117; Hoskins v. Aetna Life Ins. Co., 6 Ohio St.3d 272, 276, 452 N.E.2d 1315 (1983); Olbrich v. Shelby Mut. Ins. Co., 13 Ohio App.3d 423, 425, 469 N.E.2d 892 (2d Dist.1983)).

Plaintiff contends that, under Ohio law, it may maintain a negligence action against ADT because ADT owed Plaintiff an independent duty to perform its contractual obligations with care, skill and faithfulness. Ohio law does not, however, impose a separate duty of care upon every party to a contract. An "exception" to the general rule does exist, but only "in those contract situations where a special or fiduciary relationship exists between the parties and imposes a duty of good faith will the breach of [contract] result in a tortious cause of action." Schachner v. Blue Cross and Blue Shield of Ohio, 77 F.3d 889, 897 (6th Cir.1996) (citing Empire-Detroit Steel Div. Cyclops Corp. v. Penn. Elec. Coil, Inc., No. CA-2903, 1992 WL 173313, at *3 (Ohio Ct.App. 5th Dist. June 29, 1992)). The cases cited by Plaintiff illustrate this exception, but it does not apply on the facts presented.

Hunsicker v. Buckeye Union Cas. Co., 95 Ohio App. 241, 118 N.E.2d 922 (1st Dist.1953) involved...