It bothers me when you buy insurance to protect against future repairs and replacement of defective parts and/or products and when a claim is filed the insurance company or warranty provider denies or refuses payment or coverage for bogus or deceptive reasons. I read this recent case in New Jersey where the consumer filed a consumer fraud case against a warranty protection company and won. Let’s review the case. It’s long but very informative.
Background
Plaintiff purchased warranty coverage for various appliances and repair services from defendant. The total cost for three years of coverage was $1,350. Plaintiff thereafter filed a claim for the repair of a covered appliance. She made service appointments with defendant’s contractor. Defendant’s contractor failed to appear for any scheduled appointments even when the plaintiff took off from work to attend the appointment. The insurance company also failed to answer plaintiff’s phone calls and texts. Defendant texted plaintiff at 2:00 p.m. and advised that it had to cancel the appointment. Finding the situation “ridiculous,” plaintiff arranged to have the repair completed by a contractor of her choice, and the warranty provider agreed to provide reimbursement but insisted it was to be contacted before any work began. On July 13, plaintiff and her contractor called defendant and the contractor provided the make of the appliance, the part number, and the total cost. Defendant requested the contractor refrain from repairing the appliance until it supplied its approval number. After waiting ninety minutes, the call was disconnected. Plaintiff called defendant again and, after waiting another thirty-five to forty minutes, the call was disconnected.
Ultimately, plaintiff proceeded with the repair and emailed defendant the reimbursement form. Not hearing from defendant, plaintiff followed up with a telephone call. Defendant emailed plaintiff and advised that it never received the reimbursement form. Plaintiff called defendant again and, within a few minutes, received an email that defendant received the form. Defendant advised that the matter was under review. Defendant then contacted plaintiff to confirm the correct mailing address for the check. Plaintiff did not receive the check. Plaintiff emailed defendant and was advised to wait thirty days. After not receiving the check in thirty days, plaintiff emailed defendant again. Defendant claimed there was a problem with the mailing address.
Ultimately, plaintiff filed this complaint in the Small Claims Division the Special Civil Part. On the second day of trial, plaintiff received two checks in the mail totaling $518. Amazing, isn’t it?!!!
How did the N.J. Consumer Fraud Act (CFA) impact the outcome of the case?
The court summarized that the CFA was adopted to greatly expand protections for New Jersey consumers. The CFA requires an injured consumer to prove three elements: ‘(1) unlawful conduct by defendant; (2) an ascertainable loss by plaintiff; and (3) a casual relationship between the unlawful conduct and the ascertainable loss.’”
N.J.S.A. 56:8-2 describes the conduct that gives rise to an unlawful practice under the CFA:
The act, use or employment by any person of any commercial practice that is unconscionable or abusive, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice.
The judge determined that defendant was guilty of an “unconscionable commercial practice.” “While there is no precise formulation for an ‘unconscionable act that satisfies the statutory standard for an unlawful practice. The statute establishes ‘a broad business ethic’ applied ‘to balance the interests of the consumer public and those of the sellers.” “An unconscionable practice under the CFA ‘necessarily entails a lack of good faith, fair dealing, and honesty.” The judge determined that defendant did not act with “good faith” or “fair dealing.”
“[A] breach of warranty, or any breach of contract, is not per se unfair or unconscionable…and a breach of warranty alone does not violate a consumer protection statute.” “The Legislature intended that substantial aggravating circumstances be present in addition to the breach.”
Here, the judge determined that defendant’s conduct was not in “good faith” or in “fair dealing.” This conclusion was reached, not merely because of the breach of the agreement, but because the judge specifically found substantial aggravating factors including the conduct and purposeful breach and refusal to perform its warranty services.
The judge awarded treble damages and costs. “The treble damages remedy ‘is mandatory under N.J.S.A. 56:8-19 if a consumer-fraud plaintiff proves both an unlawful practice under the [CFA] and an ascertainable loss.”
Great outcome for the consumer. The warranty company got slammed as it should have. In case you’re interested, the name of the warranty company “Amazing Home Warranty Service.”
To discuss your NJ consumer fraud matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Consumer Fraud Attorney