Being Sued Out of State Internet Business

[nightforce1]

Hello, I am a Sole Proprietor in which I own my own business and work for myself in PA. I am an authorized dealer for many different optics companies. Once an order is received by me I then send it to the supplier and/or manufacturer and they ship the item directly to the customer....I have a question..

I have a customer who is suing me because he claims I had sold him a 3 extended year warranty for an item that he bought from me back on 1/25/2011. First of all I never sold him the warranty, as it was included in the deal for free. So upon the normal 1 year warranty that is included with the item, he would have a total of 4 years. Below is a description of what has happen….

Upon calling (the manufacturer/supplier) based out of CA as that’s where the item was built and shipped from, I asked them if they offered a 3 year extended warranty on the item and was told yes. So I told them to go ahead and put it on the customers account. A little over a year later he had a problem with his item and contacted the vendor to send it back under warranty. They said it was out of warranty but they would honor the return anyway. Now here we are almost 3 years later he wants to sue me for selling him a 3 year extended warranty that never existed. Like I said, I didn’t sell him a 3 year extended warranty as it was included at no extra charge.

The vendor has in fact honored numerous returns (3 to be exact) from the customer including upgrading him to a better item twice. We are almost 3 years in with this situation now and this is the first I heard from the customer regarding this issue as he had never contacting me about it or even contacted me about setting up any returns. He went directly to the vendor to setup his returns. So now I look bad because I offered him the free 3 year extended warranty and it does not exist, even though the vendor has been honoring it up until recently as he is suing them also.

So I get an email from the customer about 30 days ago threatening to sue me because I sold him a 3 year extended warranty that did not exist. In the meantime, the vendor was supposed to be in contact with him to try and work things out, and I haven’t heard from the customer or the vendor in about 30 days regarding this issue until recently he emailed me again and said the below in quotes...


"My attorney is going to be sending a demand letter this week to you and the vendor.

You will have 60 days to respond.

I am assuming that you will decline to meet the demand, so this will go forth in Federal court.

Separate from the demand letter, I am going to seek criminal fraud charges against you, both in Texas and in your home state PA.

You really shouldn't sell warranties that never existed.

Don't bother answering this - I am not interested. Deal with my attorney."



So as you can see this is why I am writing you. I don’t feel this is fair for me to be sued for something ridiculous as this, especially criminal fraud charges. I really need some advise here!!

Thanks for your time and I look forward to hearing back from you.

 

[Proserpina]

Hello, I am a Sole Proprietor in which I own my own business and work for myself in PA. I am an authorized dealer for many different optics companies. Once an order is received by me I then send it to the supplier and/or manufacturer and they ship the item directly to the customer....I have a question..

I have a customer who is suing me because he claims I had sold him a 3 extended year warranty for an item that he bought from me back on 1/25/2011. First of all I never sold him the warranty, as it was included in the deal for free. So upon the normal 1 year warranty that is included with the item, he would have a total of 4 years. Below is a description of what has happen….

Upon calling (the manufacturer/supplier) based out of CA as that’s where the item was built and shipped from, I asked them if they offered a 3 year extended warranty on the item and was told yes. So I told them to go ahead and put it on the customers account. A little over a year later he had a problem with his item and contacted the vendor to send it back under warranty. They said it was out of warranty but they would honor the return anyway. Now here we are almost 3 years later he wants to sue me for selling him a 3 year extended warranty that never existed. Like I said, I didn’t sell him a 3 year extended warranty as it was included at no extra charge.

The vendor has in fact honored numerous returns (3 to be exact) from the customer including upgrading him to a better item twice. We are almost 3 years in with this situation now and this is the first I heard from the customer regarding this issue as he had never contacting me about it or even contacted me about setting up any returns. He went directly to the vendor to setup his returns. So now I look bad because I offered him the free 3 year extended warranty and it does not exist, even though the vendor has been honoring it up until recently as he is suing them also.

So I get an email from the customer about 30 days ago threatening to sue me because I sold him a 3 year extended warranty that did not exist. In the meantime, the vendor was supposed to be in contact with him to try and work things out, and I haven’t heard from the customer or the vendor in about 30 days regarding this issue until recently he emailed me again and said the below in quotes...


"My attorney is going to be sending a demand letter this week to you and the vendor.

You will have 60 days to respond.

I am assuming that you will decline to meet the demand, so this will go forth in Federal court.

Separate from the demand letter, I am going to seek criminal fraud charges against you, both in Texas and in your home state PA.

You really shouldn't sell warranties that never existed.

Don't bother answering this - I am not interested. Deal with my attorney."



So as you can see this is why I am writing you. I don’t feel this is fair for me to be sued for something ridiculous as this, especially criminal fraud charges. I really need some advise here!!

Thanks for your time and I look forward to hearing back from you.

I'd love to see the responses to this. Does the "free with purchase" item constitute part of the sale?

 

[justalayman]

I'd love to see the responses to this. Does the "free with purchase" item constitute part of the sale?

it wasn't actually free with purchase. It was simply the stated warranty for the product. a

as it was included in the deal for free.

as they say; nothing is free but it is simply considered part of the costs of the product.

I asked them if they offered a 3 year extended warranty on the item and was told yes.

make up your mind:

either the warranty was included (for free) or a 3 year extended warranty was offered. If it was offered, that suggests it is an additional purchase yet you say it was included.

So now I look bad because I offered him the free 3 year extended warranty and it does not exist, even though the vendor has been honoring it up until recently as he is suing them also.

Oh, there's the problem. It doesn't matter what the manufacture offered if you sold the product with a 4 year (total) warranty. He bought it from you so you get to cover the warranty for those 4 years, even if the manufacture does not offer any warranty.


as long as you cover the warranty claims for the product, he has no claim and no valid cause of action to sue you. If you refuse to cover the warranty, then he has a valid cause of action against you since you are refusing to fulfill the terms of the warranty of the product you sold to him.



what I seem to have missed is:

even you state the manufacturer offered this 3 year extended warranty but now it would appear the manufacturer is claiming there is no 3 year extended warranty. What's up with that?

 

[tranquility]

I don't think the other side has seen an attorney yet. Well, unless these are very high end optics. How much are we talking about here?

 

[nightforce1]

it wasn't actually free with purchase. It was simply the stated warranty for the product. a


as they say; nothing is free but it is simply considered part of the costs of the product.



make up your mind:

either the warranty was included (for free) or a 3 year extended warranty was offered. If it was offered, that suggests it is an additional purchase yet you say it was included.

Oh, there's the problem. It doesn't matter what the manufacture offered if you sold the product with a 4 year (total) warranty. He bought it from you so you get to cover the warranty for those 4 years, even if the manufacture does not offer any warranty.


as long as you cover the warranty claims for the product, he has no claim and no valid cause of action to sue you. If you refuse to cover the warranty, then he has a valid cause of action against you since you are refusing to fulfill the terms of the warranty of the product you sold to him.



what I seem to have missed is:

even you state the manufacturer offered this 3 year extended warranty but now it would appear the manufacturer is claiming there is no 3 year extended warranty. What's up with that?

Hello, to better explain the situation, I am a dealer not the manufacturer or supplier. I simply just sell the manufacturers products on my website. The customer was bargaining me and I wanted to get the deal. I gave him a 3 year extended warranty at no additional cost. So I called the manufacture and asked if they offer a 3 year extended warranty on the item. They said yes. I said go ahead and put it on his (customers) account. Well a year and a few weeks go past and he has a warranty issue, he asked the vendor (who manufacturers, builds, and ships the items), about his extended warranty. They said he does not have one because they do not offer it. Well I was told they did and was only going by what the manufacturer was telling me. So they did honor the return and hooked him up with a newer version item, and over the past 2+ years honored 3 more returns and upgraded him to one of the top of the line items that was double the specs as to what he originally bought. Now he wants to sue me for fraud for offering him a 3 year extended warranty that never existed. Again this is an out of state sale as an internet only business and jurisdiction comes into play here too....Plus here is PA where I live, fraud has a 2 year statue of limitation and where the customer resides has a 4 year statue of limitation on fraud...My point here...whos fault is this and does he really have a case here...I have not spoke to a lawyer yet as I have not got any papers in the mail from the customer yet.

Thanks again for the help.

 

[OHRoadwarrior]

As a dealer, you are supposed to be aware of the policies on the products you sell. You should arbitrate this with your supplier and work out a solution.

 

[nightforce1]

Yes I agree as a dealer I need to be aware of the details and policies of the products. Things change all the time as far as product specs and warranties. So when I am not sure on something I ask the vendor, as they are responsible for providing me with the correct info. In which this case they did not.

 

[justalayman]

nightforce1;3230031]Hello, to better explain the situation, I am a dealer not the manufacturer or supplier.

You mean like a car dealer is for their line of product? They sell the manufacturers products but have no responsibility for the warranties the manufacturer puts on their product. Up to this point, you would have no obligation under the warranty.

now, if that car dealer told me:

this car has a 27 year warranty on it that simply extends the initial 1 year bumper to bumper warranty so you would have a total of 28 years of bumper to bumper warranty. Ready to buy? Damn straight I am.

so, 2 years down the road I need to make a warranty claim. I bring it in and you go; but the manufacturer actually only offered a 1 year warranty. Sorry about that but they aren't going to cover anything.

I say: but I have it stated right here I have a total of 28 years of warranty and YOU are the one that told me I had a 28 year total warranty.

do you really need more to show why you, as the dealer, would be liable to cover the remaining 27 years? You offered a warranty on the product the manufacturer did not offer. That means YOU are the warrantor and not the manufacturer.

I simply just sell the manufacturers products on my website. The customer was bargaining me and I wanted to get the deal. I gave him a 3 year extended warranty at no additional cost.

YOU gave him a 3 year extended warranty.


then you have to back up that warranty.

especially since it was part of the negotiations, it was an incentive to him to purchase the item. You don't get to make wild claims and then simply say:

oh, I was just kidding.

Again this is an out of state sale as an internet only business and jurisdiction comes into play here too....Plus here is PA where I live, fraud has a 2 year statue of limitation and where the customer resides has a 4 year statue of limitation on fraud...My point here...whos fault is this and does he really have a case here...I have not spoke to a lawyer yet as I have not got any papers in the mail from the customer yet.

fraud in PA:

I have not looked into it but you might want to concern yourself with PA's discovery rule. If applicable, the 2 years doesn't mean a whole lot due to his recent discovery he was lied to when he purchased the item.

You'all can fight out venue and possible jurisdiction later but I think you are on the losing end here.

.My point here...whos fault is this

it sounds like it is yours. If you had contacted the manufacturer first and they told you there was an extended warranty, then while the buyer may still have an action against you, you would have one against the manufacturer. From your statement, you offered the 3 year extended warranty and then contacted the manufacturer to see if they actually offered one.

I gave him a 3 year extended warranty at no additional cost. So I called the manufacture and asked if they offer a 3 year extended warranty on the item. They said yes.

Now, realistically you have a very simple out in this issue but that is not what you have asked so far.

I have a question though:

if the manufacturer did not offer a 3 year extension of warranty, what did they say when you told them this:

I asked them if they offered a 3 year extended warranty on the item and was told yes. So I told them to go ahead and put it on the customers account.

If they didn't offer such a warranty, their

the response should have been:
whatchoo talking about Willis?

does the buyer have something that states there is a 3 year additional warranty?

 

[You Are Guilty]

Problem number one, as tranq pointed out, is that unless this is some Hubble telescope-grade stuff here, there's little chance of meeting the Federal court damage minimums.

And on the off chance this is a $75,000 set of sunglasses, is this "extended" 3 year warranty in writing anywhere?

 

[nightforce1]

You mean like a car dealer is for their line of product? They sell the manufacturers products but have no responsibility for the warranties the manufacturer puts on their product. Up to this point, you would have no obligation under the warranty.

now, if that car dealer told me:

this car has a 27 year warranty on it that simply extends the initial 1 year bumper to bumper warranty so you would have a total of 28 years of bumper to bumper warranty. Ready to buy? Damn straight I am.

so, 2 years down the road I need to make a warranty claim. I bring it in and you go; but the manufacturer actually only offered a 1 year warranty. Sorry about that but they aren't going to cover anything.

I say: but I have it stated right here I have a total of 28 years of warranty and YOU are the one that told me I had a 28 year total warranty.

do you really need more to show why you, as the dealer, would be liable to cover the remaining 27 years? You offered a warranty on the product the manufacturer did not offer. That means YOU are the warrantor and not the manufacturer.

YOU gave him a 3 year extended warranty.


then you have to back up that warranty.

especially since it was part of the negotiations, it was an incentive to him to purchase the item. You don't get to make wild claims and then simply say:

oh, I was just kidding.






fraud in PA:

I have not looked into it but you might want to concern yourself with PA's discovery rule. If applicable, the 2 years doesn't mean a whole lot due to his recent discovery he was lied to when he purchased the item.

You'all can fight out venue and possible jurisdiction later but I think you are on the losing end here.



it sounds like it is yours. If you had contacted the manufacturer first and they told you there was an extended warranty, then while the buyer may still have an action against you, you would have one against the manufacturer. From your statement, you offered the 3 year extended warranty and then contacted the manufacturer to see if they actually offered one.




Now, realistically you have a very simple out in this issue but that is not what you have asked so far.

I have a question though:

if the manufacturer did not offer a 3 year extension of warranty, what did they say when you told them this:



If they didn't offer such a warranty, their

the response should have been:
whatchoo talking about Willis?

does the buyer have something that states there is a 3 year additional warranty?

justalayman, I appreciate your advice and info. this item was bought for about $12,000. I understand you analogy about the car dealer salesman and wanted to elaborate on that..I dont think we are quite understanding each other. I only offered him the free 3 year extended warranty because (the manufacturer who honors all warranties) told me they offered it. I wouldn't have offered it to him if they didn't offer it. I would have told the customer I couldn't do it....

Now the manufacturer knows how this customer is as they have been dealing with him for almost 3 years now due to him constantly returning his item saying its defective meanwhile upon testing they found nothing wrong with it. In reality they have so far honored a 2+ year warranty on the item so far. They never turned him down and always was trying to make him happy. It all seems like a bunch of BS to me. But Its not like the manufacturer hasn't worked with him regarding the warranty and returns. The customer has decided to end everything and sue the manufacturer because he claims they keep sending him a defective item and me because of the warranty. This is a very large company that deal with expensive optics for Military and all kinds of other agencies. They wouldn't keep sending him a defective item on purpose just to piss him off. To me it sounds like user error or just plan user ignorance. When the company has all the test data from trained techs and top officials in the company that there is nothing wrong with the item. To me the customer is just an angry old man that has nothing else better to do.

Back to the warranty, my vender is responsible for knowing their product, they told me they offered the 3 year extended warranty and thats the only reason I offered it to him. Now come to find out thats not true....The customer does have the offer of a 3 year extended warranty in an email as thats how 95% of our communication was done.

Again, I dont feel responsible for something I only did given the info I was told by my vendor who honors all warranty claims, I do not work on the items nor accept returns to my place of business, all warranties are handled by the manufacturer.

 

[Mass_Shyster]

this item was bought for about $12,000.

As others have mentioned, it seems this person did not speak with an attorney.

Since the sender instructed you not to reply, and that you would have to deal with his attorney, I suggest you do exactly that: Wait for correspondence from an attorney. Please do not hold your breath waiting.

 

[nightforce1]

As others have mentioned, it seems this person did not speak with an attorney.

Since the sender instructed you not to reply, and that you would have to deal with his attorney, I suggest you do exactly that: Wait for correspondence from an attorney. Please do not hold your breath waiting.

Thank you, I have never been sued in my life nor have I ever sued anyone. I have been a good person all my life so as you can imagine this puts a gut wrenching feeling in my stomach and losing sleep at night and constantly worrying about it. I know its not the end of the world but I can't help but think about it all day!!

So my main reason for post in this is for some advise on how to deal with this and maybe some tips on how to stop worrying so much about it.

Thanks again for all the info and advice everyone has given me so far

 

[tranquility]

You cannot be sued in federal court under these facts. Diversity jurisdiction (guys from different states) needs to have $75,000 in damages. That does not mean you can't be sued in state court. Which state might require more facts but he may have to come to you to sue you. Also, as YAG implied; if it is a three year warranty it cannot be completed in a year. That means it should be in writing to survive a challenge under the statute of frauds. All those things are as a matter of law. I didn't go into the facts to see if there is a valid cause of action or valid defense or not. There, it seems there will need to be a lot of development of the facts in discovery.

 

[Mass_Shyster]

maybe some tips on how to stop worrying so much about it.

The primary reason you should stop worrying about it is because he most likely cannot sue you in Federal Court.

Under Diversity Jurisdiction, there is a requirement (as alluded to by "you are guilty") of an amount in controversy of $75,000.

According to wikipedia

Under the Magnuson–Moss Warranty Act, consumer who has been injured by the noncompliance of a supplier may bring an action in federal court if the amount in controversy is over $25,000 or a class action if the number of class plaintiffs is greater than 100. If the jurisdictional amount, or number of plaintiffs, do not meet these thresholds, an action under the act may be brought only in state court

Either way, a $12,000 dispute won't get you into Federal Court.

If you receive any correspondence from an attorney, check with the bar association of the state where the attorney practices to make sure he/she is really an attorney in that state, and that the contact information matches. People have been known to craft fake letters to scare the other person into settling.

 

[justalayman]

I asked awhile back whether he had any documentation of the 3 year warranty. Is there a reason you refuse to answer that?

justalayman, I appreciate your advice and info. this item was bought for about $12,000. I understand you analogy about the car dealer salesman and wanted to elaborate on that..I dont think we are quite understanding each other. I only offered him the free 3 year extended warranty because (the manufacturer who honors all warranties) told me they offered it. I wouldn't have offered it to him if they didn't offer it. I would have told the customer I couldn't do it....

again, that is irrelevant. You said you offered it as an incentive.

You are ignoring my point of why you would be seen as the warrantor. You said you offered the warranty prior to even knowing if the manufacturer offered it. You can provide any warranty you wish to add on the product. It is not impossible for a dealer to provide a warranty of some sort outside of what a manufacturer offers.

so, you have one of two situations that I can see:


fraud in the inducement.

you are liable for a 3 year warranty. If that means you have to pay for repairs for that period, then so be it. Learn to not offer something until you have proof the entity you think might have warranty you want to use as an incentive.



jurisdiction; as I said, PA does have a discovery of injury enhancement for the SOL. Don't know if it applies; didn't check. If it applies, the 2 year SOL you are hoping to hide behind may be irrelevant.

as well, he is going to argue his state has jurisdiction for a variety of reasons

the answer to who can claim jurisdiction will have to be resolved in court, should he sue you.



and this is one for the true scholars:

does using the internet (a federally controlled entity) allow a claim in federal courts? I know the feds use such issues in criminal actions all the time (ability to apply federal law to guns and MJ; not necessarily the internet but various issues and including using a telephone) but I don't know if it affects the issue for private civil actions. Is there a federal civil fraud statute that may be invoked due to the claimed fraud taking place either via telephone or internet, both federally regulated media?

but beyond all that and maybe I'm putting more weight on something that everybody else appears to either not see or believe it alters nothing:

. So they did honor the return and hooked him up with a newer version item, and over the past 2+ years honored 3 more returns and upgraded him to one of the top of the line items that was double the specs as to what he originally bought.

he doesn't even have the originally purchased item. Is there some reason this warranty would transfer automatically to a different product?