Wis. ADT dealers challenge terminations

Violation of Fair Dealership Law provisions cited
 - 
Sunday, June 1, 2003

MILWAUKEE - Citing a nearly 30-year-old Wisconsin law that requires dealers to receive 90 days notification of termination of their contracts as well as an opportunity to rectify performance deficiencies, five former dealers for ADT Security Services filed a lawsuit in April in Milwaukee County Circuit Court against the company’s registered agent in Madison, Wis.

The lawsuit marks another challenge following ADT’s announcement in August 2002 that it was cutting back on its nationwide dealer program, limiting the number of accounts it would purchase or terminating some contracts altogether because they didn’t meet specific criteria.

In late December 2002, a New Jersey dealer, Spectracom Inc., filed a class action lawsuit there citing breach of contract for lost income because ADT had limited the number of qualified accounts it would purchase.

The Wisconsin dealers, listed in the complaint as Home Protective Services Inc., Milwaukee; A-1 Security of S.E. Wisconsin LLC, Racine, Wis.; Howard Reddan, Verona, Wis.; David Hinks, Kenosha, Wis.; and Vicetec Security Group Inc., Milwaukee, had been affiliated with ADT for one to eight years, said Attorney Paul Jacquart with Jacquart & Lowe, Milwaukee.

The first four had all been terminated following the receipt of a letter in August 2002 giving them from 30 to 33 days’ notice. Vicetec had initially received notice in August 2002 that ADT was limiting the number of accounts it would purchase from the dealership, but six months later the company’s contract with ADT was terminated outright.

Jacquart said Wisconsin’s Fair Dealership Law, enacted in 1974, clearly predates the dealers’ contracts with ADT. In addition, he said, “you can’t contract outside the law,” meaning even contracts that specify shorter notification periods, such as the ADT contracts’ 30-days’ notice, are subject to the overriding state law. Jacquart noted dealerships have successfully challenged terminations shorter than 90 days under the state’s Fair Dealership Law provisions.

“Generally what we find is that these are national companies making national decisions,” Jacquart said, and they may not be aware of the local laws. “These decisions are made by businesspeople, not lawyers.”

However, Les Gold, attorney with Mitchell, Silberberg and Knupp, Los Angeles, which represents parties in the security industry, said of the differences between ADT’s contract termination criteria and the Fair Dealership Laws’ 90-day notice, “I would assume the ADT attorneys know what they’re doing in that regard. They’ve got a competent legal staff.”

Having spoken with an ADT dealer’s representative about the case, consultant Craig Leiser, president of The Kismet Group Ltd., Stillwater, Minn., said he was told ADT’s contract stipulates it is subject to the laws of the state in which the dealer program is based, which is Colorado. And Colorado doesn’t have the equivalent of Wisconsin’s Fair Dealership Law.

Although he wouldn’t speculate on how that would affect the outcome of the Wisconsin dealers’ lawsuit, Leiser said “in all probability, this will go to court” rather than being settled. He also noted because ADT is trying to cut both its dealer program and its overall costs, “they have no incentive to acquiesce.”

He said while ADT is trying to make decisions to enhance the livelihood of its business, the Wisconsin dealers and others affected by terminations nationwide are also concerned for their well-being.

The loss of access to the ADT name and the company’s support can be a big blow to a dealer, Leiser said. “In security, there’s no bigger name than ADT. To use that name provides a big advantage.”

Attorney Jacquart said while it was too early to talk about specific damages, he said the damages were likely to be “substantial because (the actions) led to the destruction of their (the dealers’) business, livelihood and those of the people who worked for them.”

He noted some of the companies - though he didn’t specify which ones - had been able to take on new security contracts since their termination from ADT’s program. In those cases, he said, damage amounts would be related to whether they were able to cover the losses of the ADT portion of their business.

Neither Jacquart, Gold nor Leiser were aware of any other lawsuits brought against ADT under a state’s fair dealership law. Jacquart said that could be because most dealers aren’t aware that such laws exist to protect them.

In the case of the Wisconsin dealers, he said his firm was initially approached about general legal advice, at which point he was able to make the parties aware of the Wisconsin statute.

Jacquart said ADT had 45 days to respond after being served with the complaint, which was in mid-April. He expected a trial date to be scheduled soon after the response.

He added there was the potential for two additional plaintiffs to join the lawsuit against ADT.

Comments

DISTRICT COURT, ARAPAHOE COUNTY, COLORADO
7325 S. Potomac St., Centennial, CO 80112 (303) 649-6355
CO Arapaho County District Court 18th JD
Filing Date: Feb 25, 2011 9:08 PM MST
Filing ID: 36163342

Plaintiff: Brandon W. Adams Investments, Inc., a Texas Corporation, f/d/b/a/ Central Security and Brandon W. Adams Individually,
Vs.
Defendant: ADT Security Services, INC., a Delaware corporation.

Attorneys for Plaintiff
Burkeley N. Riggs, Atty. Reg. No. 29822
MOYE WHITE LLP
1400 16th Street, 6th Floor
Denver, Colorado 80202

 https://www.getsecurityalarm.com/ADT_Lawsuit.html 

Plaintiffs, Brandon W. Adams Investments, Inc. (“Adams Investments”), d/b/a/ Central Security, Inc. and Brandon W. Adams (Adams Investment and Mr. Adams shall be collectively referred to as “Adams”), by and through their counsel, Moye White LLP, files this Complaint against Defendant ADT Security Services, Inc. (“ADT”).

PARTIES, JURISDICTION, AND VENUE

1. Adams Investments, Inc., is a Texas corporation in good standing with an address of 1109 Pigeon Forge Drive, Pflugerville, Texas 78660. Adams Investment formerly did business as Central Security, an authorized dealer of ADT.

2. Adams Investments is an initial consumer of the services of ADT. Adams Investments purchases services from ADT and re sells them to the public at large.

3. Mr. Brandon Adams, who is the owner/operator of Adams Investments is a Texas resident whose address is 1109 Pigeon Forge Drive, Pflugerville, Texas 78660.

4. ADT is a Delaware corporation, with corporate headquarters located in Boca Raton, Florida. ADT’s principal place of business is located at 14200 East Exposition Avenue, Aurora, Colorado 80012. ADT is a division of Tyco International, Ltd. and a worldwide supplier of electronic security systems, fire alarm systems, communication systems, and integrated building management systems.

5. Jurisdiction and venue are demanded by the terms of parties’ agreement and because ADT’s principal place of business is located in Arapahoe County, Colorado. Also, to the extent it is valid and enforceable, section 17.8 of the Authorized Dealer Agreement between Adams and ADT (the “Agreement”) vests jurisdiction and venue with this Court. Section 17.8 provides in pertinent part:

17.8 Applicable Law, Jurisdiction and Venue. This Agreement shall be construed and enforced in accordance with the laws of the state of Colorado applicable to agreements wholly executed and wholly performed therein. Any action or proceeding brought by either party against the other arising out of or related to this Agreement shall only be brought in a court of competent jurisdiction in Arapahoe County, Colorado.

See Exhibit A, § 17.8. Finally, this Court has jurisdiction over the parties and the subject matter pursuant to § 13-21-124, C.R.S.

FACTUAL ALLEGATIONS

A. ADT Deceives Independent Dealers Into Joining its Large Dealer Network.

6. ADT uses its large independent national dealer network, in addition to its corporate-owned stores, to sell its security monitoring service to residential and commercial subscribers nationwide, including end-users in Colorado.

7. Under its Authorized Dealer Program, ADT’s independent dealers (“Dealer(s)”) sell and install ADT alarm systems with monthly monitoring service contracts, to residential and commercial subscribers. See Form Monitoring Contract attached as Exhibit B.

8. Dealers work to obtain a portfolio of subscriber accounts under contract for ADT. For approximately $35.00 a month, ADT provides security monitoring services to subscribers. The Dealer installs an alarm system that is connected by telephony to ADT’s monitoring center, and ADT then monitors the alarm system signals and alerts. ADT’s service notifies subscribers and requests dispatch of appropriate authorities when ADT receives an alarm signal.

9. In the event ADT does not purchase a subscriber from a Dealer, or the subscriber does not qualify to purchase, ADT charges Dealers for subscriber monitoring services directly; approximately $4.00 per month to monitor each subscriber account. The Dealer then charges these subscribers directly.

10. ADT engages in an active marketing campaign to prospective Dealers through the internet and other media. In doing so, ADT advertises and represents that it, through the services it sells to prospective Dealers, helps these prospective dealers grow, acquire subscriber accounts and reap the long-term residual benefits from doing so.

11. ADT claims its dealership program (through a series of initiatives, incentives, and programs) that ADT dealers have better industry knowledge, established business relationship discounts and benefits, and the name brand recognition of ADT. Among other things, ADT represents that: it helps facilitates business relationships that generate leads for ADT Authorized Dealers; it offers a wide variety of industry-leading training to help you generate more leads and help increase sales growth; ADT offers to Dealers the benefits and resources of the industry leader.

12. ADT however fails to disclose to prospective dealers its pattern and practice of improperly terminating dealers. Over the course of the last ten years ADT has instituted hundreds of lawsuits against its dealers. A large number of these lawsuits concern ADT wrongfully terminating its dealers. After entering into an Authorized Dealer Agreement, ADT changes the parties’ agreed-to-bargain in order for ADT to deprive its dealers of certain fees that are entitled to dealers under the Authorized Dealer Agreement. Upon information and belief, ADT has been involved in over 180 dealer termination cases since 1999 in Arapahoe County District Court alone.

13. This pattern and practice of terminating dealers in order to avoid paying fees allows ADT to continue to charge its $35.00 monitoring fee without paying the dealer certain monthly revenue sharing fees otherwise due under the Dealer’s Authorized Dealer Agreement. This coupled with the fact that ADT consistently seeks to enforce the non-compete clauses in its Authorized Dealer Agreements deprives the terminated Dealer the opportunity of moving on to an ADT competitor thereby, in turn, depriving the subscriber of the ability to follow the dealer and obtain the same service for many times a lesser price.

14. On February 11, 2004, several ADT authorized dealers filed a lawsuit in Arapahoe County District Court against ADT, captioned Advantek Pro, Inc. v. ADT Securities, Services, Inc., 2004 CV 587 (the “Lawsuit”), alleging improper termination of their dealership agreements arising out of nearly identical facts alleged in this Complaint. Specifically, the Lawsuit alleges among other things that ADT changed it method of calculating customer attrition rates to improperly terminate ADT Dealers. The Lawsuit was later bifurcated and a portion of the case was certified for a class action. The remaining portion is currently in abeyance awaiting determination of the class action. See Complaint attached as Exhibit C. No notice was ever served on Mr. Adams regarding this class action.

15. On March 3, 2004, ADT’s attorneys entered an appearance in the Lawsuit. ADT, however, never disclosed the existence of that Lawsuit to Adams, and specifically failed to do so before Adams entered into the Agreement just six weeks later.

B. Adams Becomes an ADT Dealer, Relying on ADT’s Misrepresentations.

16. Based on the foregoing misrepresentations and believing that ADT was disclosing all material information, on April 16, 2004, ADT and Adams entered into the Agreement. On that day, Adams became one of nearly 500 ADT Authorized Dealers in the United States. ADT issued dealer number 5509530 to Adams. Since April 2004, Adams resold over 2000 subscribers to ADT pursuant the Agreement.

17. The Agreement provided for an initial term of three years. Upon the end of the initial term, the Agreement automatically renews for a successive periods of one year with a right to terminate by either party upon written notice 30 days before the end of the initial term, or a renewal period. Id. at § 15.1.

18. In addition, the Agreement refers and incorporates a standardized set of written procedures entitled “ADT Dealer Program Guidelines” (“Guidelines”). The Guidelines were not given to Adams prior to Agreement. ADT never gave Adams a current or complete copy of Guidelines after Adams signed the Agreement. Only later did Adams receive some Guidelines in piecemeal form that ADT delivered to him via email, mail, memorandum, or website.

19. As an ADT Dealer, Adams sold subscriber monitoring contracts for ADT pursuant to the Agreement. The monitoring contracts are preprinted by ADT and typically have a 36-month term (except in California, where the term is 24 months). The monitoring contracts are signed by the subscriber and by Adams and then remitted to ADT.

20. The Agreement further required Adams to sell a minimum number of monitoring contracts per month in order for Adams to maintain an “Authorized Dealer Status.” Id. at § 12.1 The Agreement, however, does not require ADT to purchase a minimum number of contracts, but instead allows ADT to purchase only those monitoring contracts that ADT determines are credit-worthy pursuant to the Guidelines. Id. at § 9.2. ADT allows Adams the right to sell service to subscribers independently and directly. Adams must offer to ADT, for purchase under Agreement, all monitoring contracts of subscribers that qualify under Guidelines or at specific request of ADT.

21. In return, ADT promised to pay Adams a series of fees in the event ADT purchased a subscriber monitoring contract. First, ADT promised to pay Adams an up-front Base Alarm Account Fee (“Base Fee”) for each qualified account ADT purchased from Adams. Exh. A at § 9.4. This amount is determined by the Agreement.

22. Second, ADT promised to pay Adams a Revenue Sharing Fee (“Revenue Fee”) for each subscriber account that ADT purchased from Adams. The Revenue Fee is a percentage of the subscriber’s payment during subscribers’ initial contract term. Pursuant to the Agreement, the amount of the Revenue Fee is determined by the Agreement set forth in Guidelines. Specifically, the Agreement provides in pertinent part:

9.5 Revenue Sharing Fee

9.5.1 Except as set forth in Section 9.5.2, for a period of up to thirty-six (36) months from the Closing Date with respect to a Purchased Alarm Account, Authorized Dealer shall be entitled to receive, on a monthly basis, a Revenue Sharing Fee determined by and subject to change in accordance with the procedures, including the average Alarm Account production goals, set forth in the Guidelines. Id. at § 9.5.

23. Third, ADT promised to pay Adams a Continuing Equity Payment (“Continuing Payment”) in the event the subscriber continued as an ADT customer after the initial term of the monitoring contract had expired. According to the Agreement, the payment was to be made monthly, and the amount of payment to Adams is determined in accordance with the Guidelines. The reason for this provision is that many times Subscribers will use ADT’s service long beyond the usual three-year term of Subscriber’s contract. Section 9.6 of the Agreement provides:

9.6 Continuing Equity Payment

9.6.1 During the term of this Agreement, and provided that Authorized Dealer is in good standing and is not in default under the terms of this Agreement, the Dealer Monitoring Agreement and the Guidelines, commencing thirty-six (36) months after the Closing Date of each Purchased Alarm Account, and continuing as long as the Purchased Alarm Account does not become a Canceled Alarm Account or a Non-Producing Alarm Account and (ii) the Purchased Alarm Account is not transferred, or sold to a third party, Authorized Dealer shall be entitled to a Continuing Equity Payment in accordance with the procedures set forth in the Guidelines.

24. In the event the subscriber later cancels a monitoring contract within the prescribed term, ADT requires the Dealer to refund the Base Fee and the Revenue Fee. This is known as an Attrition Chargeback. The Agreement further provides that in order to maintain an Authorized Dealer Status, Adams must not exceed a Net Maximum Attrition Rate:

12.1 Retention Goals. During the term of this Agreement, Authorized Dealer is required to assist ADT in the retention of the Purchase Alarm Accounts and not to exceed its Maximum Net Attrition Rate, which is defined as the amount of Purchased Alarm Accounts net of chargebacks, on an annual basis, that shall become Canceled or Non-Producing Alarm Accounts (the “Maximum Net Attrition Rate”) and which Maximum Net Attrition Rate shall be set forth in the Guidelines.

Thus, the Agreement provides an "annual basis" for calculating Attrition Chargeback liability, i.e. 12 months.

25. Further, Section 14 of Agreement defines term “attrition” in the context of a 12 month period:

14. Attrition Chargeback. During the term of this Agreement and for as many as twelve (12) months thereafter (depending upon the class of Purchased Alarm Accounts involved and the Closing Date with respect to those Purchased Alarm Accounts), Authorized Dealer shall be charged the Attrition Chargeback with respect to Purchased Alarm Accounts that become Canceled Alarm Accounts or Non Producing Alarm Accounts. The guidelines and procedures to be used with respect to Authorized Dealer's Chargeback are more specifically set forth in the Guidelines

Id. at 12.1 [emphasis added]. Thus, pursuant to the Agreement, the Net Maximum Attrition Rate is the amount of purchased alarm accounts net of chargeback, on an annual basis that have become canceled or non-producing subscriber accounts. Id.

C. In June 2008, ADT Attempts to Unilaterally Change the Maximum Net Attrition Rate Timeframe by Requiring Adams to Sign Another Dealer Agreement.

26. On April 16, 2007, the initial three-year term of the Agreement expired. Accordingly, the Agreement renewed each subsequent year for another one-year term on April 16. On June 19, 2008 and again on June 24, 2008, outside any renewal period, ADT forwarded a new and different Dealer Agreement to Adams. See Exhibit D, June 19, 2008 letter, June 24, 2008 letter and Agreement.

27. The new 2008 agreement offered by ADT to Adams contained a much different Retention Goals clause than the one set forth in the original Agreement of 2004. Importantly, this offered agreement removed the “annual basis” language contained in section 12.1 of the Agreement, and gave ADT complete discretion in its calculation of the Net Attrition Rate:

12.1 Retention Goals. During the term of this Agreement, Authorized Dealer is required to assist Dealer in the retention of the Purchase Alarm Accounts. At no time, shall Authorized Dealer exceed its Maximum Net Attrition Rate. The Maximum Net Attrition Rate and the formula for the computation for the Maximum Net Attrition Rate are set forth in the Guidelines.

28. Because the Agreement had neither expired nor terminated, Adams refused to execute the new Agreement. ADT’s correspondence enclosed with the offered contract indicated that once ADT received Adams’ signature page, ADT would then approve the Agreement. ADT never countersigned the offered agreement.

D. ADT Improperly Withholds Fees From Adams and Terminates Adams Based on ADT’s Bad Faith Improper Calculation of the Maximum Net Attrition Rate.

29. On February 26, 2009, ADT issued to its Dealers a Notice of Changes to ADT Authorized Dealer Program Guidelines (the “Memorandum”). See Memorandum attached as Exhibit E. Among other things, ADT purported to chance the Guidelines to reflect that Revenue Fees would be forfeited for any month in which the Dealer’s Maximum Net Attrition Rate exceeds 15%. Id. As such, ADT allegedly changed the Guidelines via the Memorandum, to stop all Revenue Fees and Continuing Payments earned by Adams. ADT did this by using a much different attrition calculation formula than that the annual basis calculation as agreed upon under the Agreement.

30. ADT’s unauthorized changes violated the original Agreement and interfered with Adams’s rights to earned fees under the Agreement. ADT then sought to use the Memorandum to unilaterally change the written Agreement. ADT further relied on the changes to its Guidelines as a way to avoid paying monies due under Agreement and to later terminate Adams’ dealer status.

31. On March 2, 2010 ADT terminated Adams by letter. ADT claimed the right to terminate the Agreement with Adams relying on section 12.1 concerning Adams’ retention goals and attrition. Specifically, ADT claimed that Adams had an attrition rate of 21.9 % which exceeded ADT’s Maximum Net Attrition Rate.

32. Under the original Agreement, the Net Attrition Rate is a simple math equation. When ADT changed the terms of the Agreement pursuant to the Memorandum, it changed the manner and term in which the Net Attrition Rate was calculated. This new equation accounts for a liability greater than bargained for by Adams and ADT in the Agreement. The new equation considers subscriber accounts that are older than 12 months.

33. On multiple occasions throughout 2009 Adams requested that ADT provide him the basis for its calculation of the Maximum Net Attrition both before and after ADT wrongfully terminated Adams. To date, ADT has failed to sufficiently explain is method of calculating the Maximum Net Attrition Rate. See email attached as Exhibit F.

34. In addition, throughout 2009, Adams requested that ADT provide an accounting for missing payments regarding Revenue Fees. Upon review of information provided to him by ADT, Mr. Adams informed ADT that ADT’s method for calculating the Maximum Net Attrition Rate was wrong, and also that ADT also had not correctly counted the right amount of cancelled subscriber accounts, and listed subscriber accounts incorrectly.

35. Specifically, Adams informed ADT that the data it sent to Adams reflected only 189 cancelled accounts, yet ADT used the number of 195 cancelled accounts to justify its wrongful converting Adams’ Revenue Fees. Adams further informed ADT that had it used the correct numbers for calculating the Net Attrition Rate, the Net Attrition rate would be below 15%. ADT never sent Adams any data supporting its 195 cancelled subscriber accounts number.

36. Finally, Adams informed ADT that it should not be including in its calculation for the Net Attrition Rate, current and good paying subscribers or for subscriber accounts that ADT had converted to corporate accounts. Specifically, active subscribers that were signed by Adams were reclassified by ADT as corporate accounts. ADT would then classify the corporate accounts as cancelled or non producing subscribers in order to artificially inflate Adams’s Net Attrition Rate. ADT continued to claim that these subscribers were non-producing even though ADT was and is receiving the monthly monitoring fees from the subscribers.

37. After ADT failed to furnish Adams with sufficient reporting abilities or give an accounting to Adams for verification of accuracy of fees it has paid to Adams, Mr. Adams questioned Jack Teel, ADT’s South Central Regional Director, about missing monies due on subscriber accounts several times. Jacks final response was “Brandon we are not going to have this conversation.”

FIRST CLAIM FOR RELIEF

(Breach of the Agreement)

38. Adams incorporates its previous allegations as if fully set forth herein.

39. On April 16, 2004, Adams and ADT executed the Agreement.

40. ADT has breached the Agreement in several ways including but not limited to:

a. ADT failed to give a valid or reasonable cause for and nonpayment of subscriber accounts;

b. ADT failed to give accurate accounting reports on subscriber accounts.

c. ADT improperly terminated Adams;

d. ADT intentionally failed to pay Adams on subscriber accounts under Agreement;

e. ADT charged Adams back on subscriber accounts incorrectly and improperly; and

f. The equation ADT used for Net Attrition Rate violates terms of the Agreement.

41. Adams substantially performed under the Agreement.

42. As a result of ADT’s breaches, Adams has incurred damages in an amount to be proven at trial.

SECOND CLAIM FOR RELIEF

(Breach of Implied Covenant of Good Faith and Fair Dealing)

43. Adams incorporates its previous allegations as if fully set forth herein.

44. Under Colorado law, the Agreement contains an implied covenant of good faith and fair dealing.

45. The Agreement allows ADT discretion concerning the terms identified in the Complaint.

46. ADT exercised this discretion in bad faith and therefore breached the implied covenant of good faith and fair dealing.

47. ADT’s breach of its covenant of good faith and fair dealing damaged Adams in an amount to be proven at trail.

THIRD CLAIM FOR RELIEF

(Declaratory Judgment)

48. Adams incorporates its previous allegations as if fully set forth herein.

49. Adams and ADT have a valid and enforceable Agreement, which ADT may not terminate.

50. ADT has illegally terminated the Agreement.

51. An actual and justiciable controversy exists between Adams and ADT regarding the parties’ respective rights and obligations under the Exclusive Agreement.

52. All necessary parties under C.R.C.P. 57(j) are before the Court.

53. Pursuant to C.R.S. §§ 13-51-101, et seq., and C.R.C.P. 57, this Court may declare the respective rights, status and other legal relations of Adams and ADT.

54. Adams is entitled to a declaratory judgment that ADT illegally terminated the Agreement.

FOURTH CLAIM FOR RELIEF

(Intentional Interference with Existing and Prospective Contractual Relations)

55. Adams incorporates its previous allegations as if fully set forth herein.

56. Existing and prospective contractual relations existed between Adams and subscribers.

57. At all times ADT knew of the existence of the contractual relations.

58. ADT acted in a manner that improperly induced a breach of the existing and prospective contractual relations, including but not limited to soliciting and converting subscribers away from dealer portfolio. Specifically ADT interfered with both: subscribers not purchased by ADT and subscribers billed belonging to Adams. ADT wrongly listed subscribers with the purpose and intent to not pay residual monies due to Adams.

59. ADT acted in a manner that improperly interfered with prospective contractual relations, including but not limited to soliciting future business from Adams’s existing subscriber portfolio.

60. Adams has incurred damages in an amount to be proven at trial as a result of ADT’s conduct.

FIFTH CLAIM FOR RELIEF

(Fraudulent Inducement)

61. Adams incorporates its previous allegations as if fully set forth herein.

62. Upon information and belief, ADT engages in a pattern and practice of inducing individuals to sign up as Dealers under the pretense of the bargain set forth in Authorized Dealer Agreements. ADT used undisclosed Guidelines and offered agreements to change the bargain after agreement and enable ADT to terminate the dealers. ADT then sell its services thru a new unsuspecting dealer. In fact, over the past 10 years ADT has been either a plaintiff or defendant in 180 lawsuits in Arapahoe County District Court, most of which concern termination of one or more of its 500 dealers.

63. ADT failed to disclose to Adams before the execution of the Agreement that ADT’s intent was to change the Agreement’s bargain at times in order to terminate or materially alter Adams’ dealer status.

64. ADT further failed to disclose the existence of the Lawsuit.

65. These facts were material to Adams.

66. ADT concealed and failed to disclose these material facts with the intent of creating a false impression of the actual facts in the mind of Adams.

67. ADT concealed and failed to disclose these material facts with the intent that Adams would rely on this concealment and failure to disclose by taking a course of action that Adams may not have taken knowing these actual facts. In particular, entering into the Agreement with ADT.

68. Adams justifiably relied, to its detriment, on ADT’s concealment and failure to disclose such facts. Specifically, Adams justifiably relied upon this concealment and failure to disclose facts by entering into the Agreement with ADT.

69. As a result of ADT’s concealment and failure to disclose such material facts, Adams has been damaged in an amount to be proven at trial.

SIXTH CLAIM FOR RELIEF

(Violation of the Colorado Consumer Protection Act)

70. Adams incorporates its previous allegations as if fully set forth herein.

71. ADT has engaged in unfair or deceptive trade practices as defined in Section 6-1-105(1), C.R.S. Specifically, ADT failed to disclose material information concerning its dealer policy of improperly terminating dealers in order to induce dealers to enter into Authorized Dealer Agreements such as Adams did here.

72. The deceptive practices described in this Complaint occurred in the course of ADT’s business and vocation.

73. The deceptive trade practices as described herein significantly impact the public as actual or potential consumers of goods, services, or property being sold by ADT. ADT relies upon its improper of pattern and practice of improperly terminating dealers coupled with its post termination non-compete clauses set forth in its Authorized Dealer Agreement to prohibit terminated Dealers from continuing to engage in selling same monitoring services. As such, customers nationwide are precluded from selecting Dealers of their choice, or to continue with Dealers they originally signed up with for their security services. ADT is thus able to maintain a much higher price nationwide for its monitoring services.

74. ADT engaged in these deceptive trade practices in bad faith as defined in C.R.S. § 6-1-113(2.3) in that ADT’s conduct was fraudulent, willful, knowing and/or intention conduct that caused injury.

75. As a proximate result of the willful and malicious conduct of ADT, Adams has suffered and continues to suffer damages and losses for which Adams is entitled to recover the maximum amount.

Seventh CLAIM FOR RELIEF

(Unjust Enrichment)

76. Adams incorporates its previous allegations as if fully set forth herein.

77. Adams conferred a benefit upon ADT for what Adams expected to be compensated.

78. Under the circumstances, it would be unjust for ADT to retain the benefit without paying Adams.

DEMAND FOR JUDGMENT AND PRAYER FOR RELIEF

WHEREFORE, Adams respectfully demands judgment and prays for the following relief:

a. An award of damages including lost profits as a result of ADT’s breach of the Agreement;

b. A declaratory judgment that ADT illegally terminated the Agreement, as set forth above.

c. An award of the costs and expenses, including reasonable attorney’s fees, incurred by Adams in connection with this action;

d. An award of pre-judgment and post judgment interest; and

e. Such other and further relief as the Court deems just and proper.

DATED: February 14, 2011.

Respectfully submitted,

Original pleading bearing original signature maintained in the offices of Moye White LLP, as required by C.R.C.P. 121, § 1‑26(9)

/s/Burkeley N. Riggs - Burkeley N. Riggs (#29822)