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Court Issues Injunction Against C.A.R.S. Protection Plus

DETROIT, Dec. 9, 2005 -- This morning, in Wayne County Circuit Court, the Honorable William Giovan issued a final judgment and permanent injunction against C.A.R.S. Protection Plus, Inc. in a case filed by Matthew Van Eman against C.A.R.S., prohibiting C.A.R.S. from imposing unnecessary tear down and diagnostic testing costs on its warranty holders. C.A.R.S. does business in several states as an insurer for used cars. Yet, the jury found that C.A.R.S. had violated the Michigan Consumer Protection Act by requiring Mr. Van Eman to pay for expensive tear down and diagnosis to determine precisely why an insured part had failed. The court today issued an injunction applicable throughout the United States providing as follows:

With regard to the Powertrain Value Limited Warranty at issue in this action, C.A.R.S. Protection Plus, Inc. is prohibited from imposing tear down and diagnostic testing costs on its warranty holders for the mere purpose of determining the precise reason why the covered part was damaged or failed where it is evident that a covered part has been damaged or failed and there is no legitimate reason to suspect that the failure of the covered part was caused by negligent maintenance by the warranty holder.

The suit was filed by Gerard Mantese, of the Troy firm of Mantese and Associates, P.C.

Matthew Van Eman, of Rochester, Michigan, alleged that under the used-car warranty agreements entered into between Defendant and countless Michigan customers, when a customer has a mechanical problem with their vehicle covered under the warranty, the customer takes their car to a repair facility where a certified mechanic can diagnose the mechanical problem. He further alleged that on many occasions, these licensed, certified, experienced mechanics are able to assess the problem with the vehicle and repair it without the need for extensive diagnostic tests, which are only available for extra, costly fees. He alleged that it was Defendant's customary practice to force customers, who have purchased limited used-car warranties through Defendant, to perform these diagnostic tests on each and every vehicle, no matter how obvious the problem may be with the vehicle, and even if these certified, licensed mechanics assessing the problems with the vehicle state that diagnostic tests are not necessary in order to repair the vehicle.

The suit also alleged that assessing vehicle problems through performing unnecessary diagnostic tests may be extremely costly for customers, and many times, cost prohibitive. During the suit, Mr. Van Eman contended that C.A.R.S. had utilized this pattern of conduct as a mechanism to avoid honoring the insurance, as such fees are cost prohibitive, and that forcing customers to pay the fees will compel them to seek other means of repairing the cars. By requiring that these tests be performed, Defendant is essentially forcing its customers to pay for these diagnostic fees to confirm both what is wrong with the car (many mechanics may be capable of determining without a diagnostic test) and why the vehicle is broken.

In Mr. Van Eman's case, C.A.R.S. required him to pay for not one, but two, tear-downs, the second of which would have cost thousands of dollars, even though an insured part -- an oil pan -- had failed and a gaping hole in it was visible to anyone who cared to look. The suit contended that C.A.R.S. refused to pay for a new engine, even though the failed oil pan had destroyed the engine and C.A.R.S. never even bothered to examine the oil pan. Mr. Van Eman's suit contended that C.A.R.S. had routinely subjected countless Michigan consumers to this illegal, unreasonable pattern of conduct, causing consumers to walk away and receive no benefit from the insurance coverage. His attorney, Gerard Mantese, stated, "The court's injunction, which has nationwide effect, will help protect consumers from this type of unfair conduct."