Cases

AMERICAN HOME SHIELD

Johnson Bottini is currently litigating a case against American Home Shield Corporation and American Home Shield of California, Inc. relating to home warranty plans sold by AHS. The case is pending in San Diego and is entitled Edleson v. American Home Shield of California, Inc. et al., Case No. 37-2007-00071725-CU-BT-CTL. Click here to view the complaint.

If you have any information relevant to American Home Shield, or would like to make a complaint against it, please contact us. We would especially like to hear from both consumers who have purchased AHS′s home warranty plans and independent contractors who used to work for AHS.

The judge in the case has ruled that Plaintiff has alleged valid claims against AHS. Click here to view the judge’s order. The facts alleged in Plaintiffs′ complaint are as follows:

A. AHS′ Sells Home Warranty Plans Through False and Misleading Advertising
AHS sells home warranty plans that supposedly offer "the assurance of being protected by the industry leader." In order to convince homeowners to purchase its plans, AHS advertises that "With American Home Shield, you won′t have to spend hours trying to fix covered appliances and systems yourself – or devote large amounts of money to have others repair your protected equipment" and "Relax once again knowing . . . If we can′t repair it we′ll replace it." AHS also claims that its warranty plans provide "Reliable repairs from carefully selected professionals." As explained below, however, AHS failed to disclose that these "professionals" are also "carefully selected" and trained to deny legitimate claims, refuse to authorize replacement of appliances, and increase the number of necessary service calls so as to increase costs to homeowners and decrease the costs to Defendants. ¶26. AHS also describes its service contracts as offering ″Protection From Large, Unforeseen Bills. Your home warranty helps protect many of the most expensive appliances and systems you own." ¶27. AHS also boasts "we stand behind every job we do with our unique money-back guarantee: If for any reason you are not satisfied with our service, American Home Shield will work with you until you are satisfied or we’ll refund the amount of the trade service call fee." ¶28. AHS also promises that "AHS will determine what repairs constitute an emergency" and that uniquely we’re uniquely committed to stand behind youuniquely and "we’re uniquely equipped to protect you from unwelcome repair bills. Whether a covered claim costs us $200, or in exceptional cases $20,000, you can rest assured that we’ll come through for you." ¶29. As discussed below, AHS advertisements are false and misleading because they do not disclose that AHS has failed to adopt and implement reasonable standards for the prompt investigation and processing of homeowners’ claims.

B. AHS′ Wrongful Claims Practices
An individual who purchases a home warranty plan from AHS is required under the terms of the plan to either call 1-888-247-4777 or visit the company’s website at www.ahsservice.com in order to make a claim. ¶31. Under the terms of AHS’ uniform plan, AHS will then contact “one of our authorized AHS contractors, who will then contact you to arrange a mutually convenient appointment time.“ Each home warranty plan uniformly states that “our reliable professionals are carefully selected and monitored to ensure that they uphold our standards for quality. Upon arrival at your home, your repair professional will require the $50 trade service call fee (or the actual cost of service, if less) by check or money order payable to the contractor/company. Additional charges apply to some repairs, but whether your covered repair or replacement costs hundreds or even thousands of dollars, American Home Shield will take care of the rest.“ ¶32. Thus, rather than investigating the homeowners’ claims itself, AHS hires outside service technicians to determine whether the homeowners’ claims are covered.
AHS tells these technicians that they should refuse to repair any problems that are marginal or which do not require immediate attention. ¶35. AHS also trains and encourages the technicians that an appliance or other covered item under the home warranty plan should not be authorized to be replaced if there is any way to repair the item, even if the technician knows the repair will only last for a very short period of time, after which additional repairs or replacement will be necessary. Id. AHS does this because, under the home warranty plans, the consumer is obligated to pay a set fee (originally $35 and now $50) for each time that the laborer visits the consumer’s home. ¶35.
AHS also sets guidelines and stipulations that penalize contractors for expending resources to resolve problems covered under the policies, thereby inducing contractors to falsely represent to policyholders that legitimate claims are not covered under the policy. ¶36. AHS even ranks and rewards contractors higher if they have a larger ratio of denials of claims than those contractors who in good faith repair the problems. ¶37. AHS’ business plan also includes a calculated, pre-determined, and uniform approach of maximizing “service calls“ that require homeowners to pay the $35 - $50 fee for each service call. Even when the appliance or other item covered under the home warranty plans should be replaced, AHS encourages the third-party technicians to attempt to fix the appliance, even if it is just a “band-aid“ fix. ¶38.

C. Without Conducting any Kind of Investigation, AHS Denied Plaintiffs′ Legitimate Claim
Plaintiffs purchased at least two nearly identical warranty plans from AHS (collectively the "Contract"). The second of the contracts expressly included Plaintiffs’ furnace as a system covered under the warranty plan. When Plaintiffs reported a problem with their furnace, AHS sent a third-party service technician who said the claim was not covered. Plaintiffs were thus forced to personally spend over $3,000 to have the furnace repaired. Eventually, AHS offered to pay $789 in response to Plaintiffs’ claim. Of course, by then the offer was too late. ¶46.
Plaintiffs have initiated this lawsuit on behalf of themselves and anyone else that made a claim under an AHS warranty plan from June 2001 to the present. Plaintiffs? complaint alleges causes of action for breach of contract, violations of the Consumer Legal Remedies Act (“CLRA“) (Civ. Code §1770, et seq.) and violations of the Unfair Competition Law (“UCL“) (Bus. & Prof. Code §17200, et seq.).