Unpaid auto repair prompts lawsuit

Erica D. Johnson

Thursday, June 5, 2003 | 9:52 a.m.

A Las Vegas woman who claims a mechanic held her vehicle hostage when her insurance company refused to pay for repairs is behind a class-action lawsuit.

In the suit filed Tuesday, local attorney Robert Gerard claims National Warranty Insurance Co. refused to pay Bill Heard Chevrolet for repairs made to a policyholder's truck.

Phyllis Hoffman's 1999 Chevrolet pickup truck has been at the dealership for two weeks, since mechanics installed a new water pump. The repairs cost $1,100, Gerard said.

The lawsuit seeks an unspecified amount in damages.

"They just stopped all payment," Gerard said. "We want to get to the bottom of this and get the truck out of the shop."

As of Wednesday, the truck was still in the shop and the dealership was still waiting for payment, Bill Young, Bill Heard Chevrolet's service manager, said.

Young said the insurance company authorized the repairs weeks ago.

"The repairs were done," he said. "We're just waiting to get paid."

Young said he doesn't know of any other customers whose vehicles are being held for the same reason.

But Gerard said he suspects hundreds of other National Warranty Insurance Company policyholders in Las Vegas have cars being held by local mechanics.

According to its website, the company, which is based in Lincoln, Neb., sells policies through car dealerships nationwide and processes nearly 60,000 new contracts per month.

Gerard is investigating to find out whether the company stopped payment in other cities, he said.

"This appears to be a widespread problem," he said.

Hoffman paid $1,400 for the company's Smart Choice 2000 Encore Performance extended warranty when she purchased the truck from Courtesy Mitsubishi last year, Gerard said.

The warrantee promised to pay for all nonmaintenance repairs for 100,000 miles.

Because the cost was added into Hoffman's financing package, she is still making monthly payments to the insurance company, he said.

The company's backup policy, Signet Star Reinsurance Co., which promised to pay if the primary insurer stopped payment, also refused to pay, Gerard said. That company is also named in the suit.

Attempts to reach the two insurance companies today were not successful. A message was left with at National Warranty spokesperson in Lincoln, Neb. A person answering the phone at a Signet branch in Coral Gables, Fla., said the company headquarters was in New Jersey. A person answering a number listed for the company in New Jersey said Signet had moved to somewhere in Connecticut.

While the case is still under investigation, Gerard said he has his own suspicions about what could have happened to the insurance company's money.

"We believe someone may have misappropriated the funds," he said.