Phenix Mutual Fire Insurance Company v. Stanley Convergent Security Solutions, Inc.

Filing 22

ORDER denying 14 Motion for Leave to File Third-Party Complaint. So Ordered by Judge Joseph A. DiClerico, Jr.(lt)

UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE

Phenix Mutual Fire
Insurance Company
v.

Civil No. 12-cv-273-JD

Stanley Convergent Security
Solutions, Inc.
O R D E R
Phenix Mutual Fire Insurance Company brought an action
against Stanley Convergent Security Solutions, Inc., seeking to
recover the amount Phenix paid to James and Jennifer Barall for
water damage to their vacation home in Peterborough, New
Hampshire.

Phenix alleges that the water damage occurred because

part of the security system installed in the Barall’s vacation
home by Stanley failed to work properly.

Stanley moves for leave

to file a third-party complaint against James Barall, to assert
claims for indemnification under the “Residential Agreement” for
installation of the system.

Phenix objects to the motion.

Stanley’s motion for leave to file a reply was granted, and
Phenix’s motion for leave to file a surreply was also granted.

Background
James and Jennifer Barall own a vacation house in
Peterborough, New Hampshire.

On December 18, 2007, James Barall

hired HSM Electronic Protection, Services, Inc., to install a
monitoring system for remote monitoring of motion, smoke, and
heat in the house.1

The installation was done pursuant to the

Residential Agreement, signed by James Barall and Pamela Toscano
for HSM Electronic Protection Services, Inc.

Phenix provided

insurance for the vacation house.
The Residential Agreement provides the amount to be paid for
installation and for the monitoring service.

The Agreement

includes a section for “Repair Service,” which is not checked.2
The Agreement also has several paragraphs pertaining to limits of
liability, including a section that states:
CUSTOMER AGREES TO INDEMNIFY AND HOLD HARMLESS HSM
[STANLEY], ITS EMPLOYEES, AGENTS, OR REPRESENTATIVES,
FROM AND AGAINST ALL CLAIMS, LAWSUITS AND LOSSES, BY
PERSONS NOT A PARTY TO THE AGREEMENT, ALLEGED TO BE
CAUSED BY THE IMPROPER OPERATION OF THE SYSTEM AND/OR
SERVICE, WHETHER DUE TO MALFUNCTIONING OR NONFUNCTIONING OF THE SYSTEM OR THE NEGLIGENT PERFORMANCE
OR NONPERFORMANCE BY HSM [STANLEY] OF THE INSTALLATION,
REPAIR, MONITORING, SIGNAL-HANDLING, OR DISPATCHING
ASPECTS OF THE SERVICES.

1

Stanley represents that HSM is its predecessor in interest.
The court will refer to Stanley rather than HSM. To the extent
Phenix challenges Stanley’s status, that issue is not addressed
here.
2

That option states: “Repair Service (if any) is provided as
set forth on the Schedule of Service and Protection.” The
Schedule of Service and Protection includes five possible service
plans, but none were chosen. The service fee included only
monitoring the system.
2

On July 17, 2009, Barall hired Stanley to relocate a
temperature sensor for the monitoring system.

The relocation

work was done under a service invoice that described the work to
be done at a cost of $475.00.

The temperature sensor was

supposed to send an alarm to the central monitoring station if a
low temperature were detected.

On February 8, 2011, a low

temperature condition occurred in the house, but the sensor did
not send an alarm to the station.
froze and then burst.

A water pipe in the house

Water from the broken pipe ran through the

house and damaged or destroyed the Baralls’ property.
The Baralls made an insurance claim to Phenix for their
damaged and destroyed property.
Baralls for the damage.

Phenix paid $114,822.92 to the

A subsequent investigation showed that

the relocated temperature sensor was not properly wired to the
alarm system which prevented the alarm from being transmitted to
the monitoring station when the low temperature condition
occurred.
Phenix, as the subrogee of the Baralls’ rights against those
responsible for the damage, brought suit against Stanley to
recover the amount paid to the Baralls.

Phenix brought claims of

negligence, breach of contract, and breach of implied warranty.

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Discussion
Stanley moves for leave to implead James Barall through a
third-party complaint pursuant to Federal Rule of Civil Procedure
14(a).

In the proposed third-party complaint, Stanley brings a

claim for a declaratory judgment of indemnification and a breach
of contract claim based on the Residential Agreement.
Rule 14(a)(1) provides that “[a] defending party may, as
third-party plaintiff, serve a summons and complaint on a
nonparty who is or may be liable to it for all or part of the
claim against it.”

Leave of court is required when, as here, the

defendant seeks to implead a third party more than fourteen days
after the answer was filed.

Id.

The court “should allow

impleader on any colorable claim of derivative liability that
will not unduly delay or otherwise prejudice the ongoing
proceedings.”

Lehman v. Revolution Portfolio L.L.C., 166 F.3d

389, 393 (1st Cir. 1999).
Stanley contends that James Barall has a contractual
obligation under the Residential Agreement to indemnify Stanley
and hold it harmless for the claims brought against it by Phenix.
Phenix contends that the Residential Agreement does not apply to
the repair that Stanley did to the system, relocating the
temperature sensor, because the repair was governed by a separate
agreement, the service invoice.

Phenix also contends that the
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indemnification provision does not apply because Phenix, as the
subrogating insurer, stands in the shoes of James Barall as a
party to the agreement.

In addition, Phenix contends that

Stanley must assert its indemnification claims against Phenix as
the subrogating insurer.

Stanley argues, in its reply, that

Phenix does not have subrogation rights against it because James
Barall expressly waived all insurers’ subrogation rights in the
Residential Agreement.

Phenix responds that the Residential

Agreement does not apply to the relocation of the sensor.
In this case, Stanley has not demonstrated that it has
colorable indemnification or breach of contract claims against
James Barall based on the Residential Agreement.

In the

Residential Agreement, James Barall authorized installation and
agreed to pay Stanley for installation and monitoring, and
Stanley agreed to install the monitoring system and to monitor
the system after installation.

Barall did not choose or pay for

the repair service that was offered in the Residential Agreement.
Therefore, in this case, the Residential Agreement pertains only
to installation and monitoring of the system.
A year and a half after the Residential Agreement was
signed, Barall hired Stanley to relocate a temperature sensor.
Phenix asserts that the service invoice governed that work.
Stanley has not provided a colorable argument that the
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Residential Agreement governed that work.

Therefore, Stanley has

not shown that it has a colorable claim for indemnification
against James Barall under the Residential Agreement.

In

addition, because of the subrogation relationship between Phenix
and Barall, Stanley has not shown that Barall, colorably, is a
“nonparty who is or may be liable to it for all or part of the
claim against it.”

Fed. R. Civ. P. 14(a); see Wausau

Underwriters Inc. v. Shisler, 1999 WL 529250, at *3-*4 (E.D. Pa.
July 21, 1999).

Conclusion
For the foregoing reasons, the defendant’s motion to file a
third-party complaint (document no. 14) is denied.

SO ORDERED.

____________________________
Joseph A. DiClerico, Jr.
United States District Judge
February 7, 2013
cc:

Gerard A. Butler, Jr., Esquire
Christopher A. Duggan, Esquire
Dustin M. Lee, Esquire
Joseph Gardner Mattson, Esquire
Lawrence F. Walker, Esquire

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