See You in Court

Feb. 23, 2022

When a warranty claim leads to legal action, know how to respond.

This month we will discuss an ugly truth about our industry and its customers.  It all starts with a mistake, or sometimes the notion that you touched the vehicle last, so it had to be you.

It’s the warranty claim and how we need to prepare ourselves for the reality of today’s generation of customer with a “you wronged me” mentality. At some point or another, you will find yourself in a situation where you are standing in a court feeling like you need to prove your shop’s innocence. Here are a few examples of things that happen and the results.

The most obvious thing that operators need to do, and sometimes do not want to do, is accept responsibility for an issue if you know how it happened. How many of you have balked at a warranty claim on an oil pan that was stripped because another shop looked at it to determine a leak?

It happens, and if you just recently did the oil change, then odds are you did something wrong. To save yourself the headache, just pay the claim. So many times, we find ourselves in court trying to fight a simple mistake because we try to use the defense of, “Well, we were not the last to touch it.” 

What we do not always understand is that when a customer has an issue that they can’t explain, odds are they are not taking it back to a quick lube for diagnosis.  In general, if I can see a situation in my own business that we may have caused, I pay it. It’s cheaper in the long run than to go to court and pay a lawyer for defense.

The next situation that you may find yourself in happens when a customer has a major issue, like an engine or a transmission problem.  Most times, this is why you are in court. You are responsible in a customer’s eyes because you did their service. It does not matter what happened, but it was you. How many times have you gone to look at a claim and the plug is tight, and the filter is tight, there is oil in the car, but it is locked up?

That is a tough conversation to attempt to have with an upset driver. This is an obvious, to us, internal motor failure. But there are enough ambulance-chaser law firms that will take you to court anyway to try and get a few grand. In all honesty, they are just hoping that you will cave and offer something to avoid court. I fight these claims. I also make sure that we have all our ducks in a row with pictures, videos and more. You will need evidence in court, so do not forget to collect all of this prior to explaining what has happened to the car, because you will not get that opportunity afterwards.  

The newest craze among some lawyers and some states is the consumer-breach-of-contract angle. This allows them to go for hundreds of thousands of dollars if they choose to, and you must be represented by a lawyer in these cases.

If you get hit with one of these shady lawsuits, call your insurance company and let them handle it. You will end up settling these claims because the risk of major financial burden if you were to potentially lose is crippling. Pay your deductible and let them fight it out with an insurance company. This is the preferred method for a quick settlement because we will not fight it very often.  I know of a few cases when someone has tried to go to court, and $30,000 later, the lesson has been learned.

As you can see in my examples of ways that you may find yourself on court and how to react, we are always at a disadvantage. Warranty claims are always the bain of our existence. They make us look bad in public opinion and it costs us bottom line profit. 

In the pandemic era that we are in now, with rising costs and lack of equipment and inventory options, our profit lines are already shrinking without having a judge decide that you need to lose more. Do your due diligence and make sure that if you decide to put your fight up in the court of law that you are ready to win. The other alternative is just not acceptable.

Lavana Howard, vanna d. photography
Photo 112175298 © Weerapat Wattanapichayakul | Dreamstime.com
Adrian Sanchez-Gonzalez