Warrantech “No Lemon Guarantee” in Service Contract Class Action

Warrantech Consumer Product Services, Inc. and TAG Warranty Corp. (formerly known as AMT Warranty Corp.) sell warranty products and administration for automotive and consumer products. Certain of their service contracts come with a “no lemon guarantee,” but the complaint alleges the companies do not keep their promises to replace items that require repeated repairs.

The class for this action is all natural persons living in the US or its territories who bought a Warrantech extended service plan that had a “no lemon guarantee” who have had more than three service calls or repair attempts within any twelve-month period, between April 2016 and the present, and who have not received a replacement product.

Consumer purchasers of things like home appliances pay an extra fee for service contracts, or extended service plans (ESPs).

“The key distinction” between a manufacturer’s warranty and an ESP, the complaint alleges, “is that a warranty strictly covers defects in workmanship and materials, while an ESP cover[s] product failure in general with a list of exclusions.” ESPs may come with additional benefits, such as a “no-lemon guarantee,” which is a promise to replace an item that has failed a given number of times. The ESPs at issue in this case have such a no-lemon guarantee.

Warrantech and AMT sells their service contracts through retailers and distributors. The complaint alleges that the companies “have written ‘Service Contract Terms and Conditions’ that are sometimes (but not always) provided to consumers at the time of purchase.”

One of the two plaintiffs in this case, Kenneth Elliott, bought a number of appliances, including a new Kitchen Aid refrigerator, in May 2016. He bought an ESP for all the appliances for more than $1,300. The refrigerator was delivered in March 2017. In July 2020, the complaint alleges, the refrigerator began having problems keeping its temperature. The complaint alleges, “A total of at least eleven (11) service calls related to the Kitchen Aid refrigerator occurred between July[] 2020 and February[] 2022.”

The complaint alleges that the companies breached their contract with Elliott because they did not replace the refrigerator after it had failed more than three times in a twelve-month period.

The other plaintiff, Susan Young, bought a Jenn-Air microwave and wall oven combination which was delivered to her new home sometime before January 30, 2017, the complaint claims, and she also paid for an ESP on it. In December 2021, it began showing a flashing error message. The complaint alleges that the companies sent someone from a company called Vehtech to perform repairs, in December 2021, January 2022, February 2022, and April 2022, but according to the complaint, none of these attempts at repair were successful.

The complaint alleges that the Jenn-Air is still broken and that the companies have breached their contract with Young because they have not replaced the appliance after more than three repair calls within a twelve-month period.

Article Type: Lawsuit
Topic: Contract
Tags: Breach of Contract, Unjust Enrichment