Tom Warner and the Washington, D.C.-based Warner companies have agreed to pay at least $1.625 million over the next 10 years to Montgomery County to settle a 1995 lawsuit, according to both parties.
Warner said he decided to settle with the county after steps were taken to involve his wife Barbara's company Utility Service Express (USE), which Tom manages, into the lawsuit.
"I did not want her to be subjected to what I had been through," Warner said. USE, started in May 1998, has become the Warners' only source of income. Legal fees mounted to $3 million during the ongoing lawsuits, and Tom filed for personal bankruptcy in July.
Though the county has not alleged that USE engaged in any deceptive and unfair trade practices, it will, for purpose of the settlement, be responsible for the payment of monies into the Consumer Restitution Fund for compensation to Warner consumers. The fund could be significantly higher than $1.625 million, since the county will receive a percentage of the gross revenues of USE.
Also in the settlement, the Warner companies have admitted to committing violations of the Montgomery County Consumer
Protection laws between 1993 and 1995, and must agree to operate under strict standards established by the county and provide consumers with more information about the prices it charges. Warner said as early as 1996, revisions to the companies' flat rate practices had been "adopted voluntarily."
In November 1995, the Warner companies were sued by the County Office of Consumer Affairs for alleged violations of Montgomery County's Consumer Protection laws. The investigation, headed by two private law firms on a contingency basis, was based on less than 50 complaints, according to Warner. At the time the lawsuit was filed, the Warner companies had 170 trucks on the road serving 50,000 customers.
A three-day investigative report on the Warner companies by CBS affiliate WUSA (Channel 9) aired in November 1995. An ex-employee of American Mechanical Systems of Baltimore Inc., which Warner owned separately from the Warner companies, submitted a manuscript full of undocumented and unproven allegations to WUSA. The employee never worked in the county, according to Warner.
Another television exposé of the Warner companies aired in February 1996 by CBS's "48 Hours," which filmed five different services firms fixing a disconnected terminal wire in a furnace. The Warner service technician attempted to replace a working motor that was statistically near the end of its useful life, and sold a service contract without fully explaining it. The bill resulted in a $6 overcharge, but it entitled the furnace owner to another check-up the following spring.
In December 1997, the Maryland Office of the Attorney General, Consumer Protection Division, also filed a suit against the Warner companies. It cited three unfair and deceptive trade practices, including the company's use of unlicensed journeymen. The WSSC code enforcement authority in the area did not require journeymen to be licensed, according to the Warner attorneys. That lawsuit has yet to be settled.