Corbett sues car warranty company

Nick Rees Dec. 18, 2009, 3:39pm


HARRISBURG, Pa. (Legal Newsline) - Pennsylvania Attorney General Tom Corbett has filed a lawsuit against a used car warranty company and its operators in Lackawanna County for allegedly defrauding thousands of motorists across the company.

The civil lawsuit names The Eagle Warranty Corporation of Eynon, Pa., as well as company president Charles Yaskulski and vice-president Edmund Yaskulski.

Eagle Warrant sold warranties for used cars to a network of dealerships in Pennsylvania, Delaware, Kentucky, Michigan, New Jersey, New York, Ohio, Rhode Island, South Carolina, Tennessee, Texas and West Virginia. On Dec. 11, the company abruptly ceased operation.

"Consumers paid anywhere from $400 to $2,500 for up to four years of coverage, believing that they were protecting their vehicles and guarding against future repair expenses," Corbett said. "Instead, consumers have been met with unanswered calls, unpaid claims, bounced checks, unrepaired vehicles and worthless warranties."

Eagle Warranty failed to honor auto repairs that it had authorized, the lawsuit says, causing consumers to receive bills or demands for payment from auto repair shops. Checks sent by Eagle Warranty to consumers or repair shops, in some instances, were returned by banks because of insufficient funds, adding additional fees or expenses for consumers and repair shops, Corbett says.

Corbett alleges that Eagle Warranty and its operators continued marketing and accepting payment for their used car payments up to the Dec. 11. Corbett said they either knew or should have known that they would be unable to continue providing coverage. Consumers in many instances still had several years left on their repair plan, which the company is now unable to fulfill, he says.

Restitution on behalf of all consumers who have not received the service of products they paid for is sought by Corbett's lawsuit. Civil penalties of up to $1,000 per violation of the Consumer Protection law are also requested by the lawsuit, with that number rising to $3,000 for each violation involving a senior citizen. The lawsuit also asks that the court prohibit the defendants from operating a used car warranty business until all restitution and penalties are paid.

Corbett's office has also obtained a preliminary injunction to freeze any bank accounts, business records and other assets of Eagle Warranty and its operators in conjunction with the consumer protection lawsuit. A hearing to determine if the asset freeze and special preliminary injunction should be continued will be held Tuesday in Lackawanna County Court of Common Pleas.

The asset freeze was requested for the purpose of identifying and preserving any funds that could potentially be used for consumer restitution in the future as well as to secure financial and business records that could aid the ongoing investigation into the company.

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