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T. SCHNEIDERMAN, Attorney General of the State of New York, AFFIRMATION Petitioner, -againstAMERICAN TREE COMPANY, a/k/a AMERICAN TREE COMPANY, INC., JOHN STRANAHAN, individually, as an officer of, and doing business as AMERICAN TREE COMPANY, INC., DANIEL T. STRANAHAN, individually, as an officer of, and doing business as AMERICAN TREE COMPANY, INC., and MERWIN "SKIP" STRANAHAN individually and doing business as "AMERICAN TREE COMPANY, INC.," Respondents. ---------------------------------------------------------------------------------X CHRISTOPHER STASZAK, an attorney duly admitted to practice in the courts of the State of New York, affirms the following statements to be true under the penalties of perjury. 1. I am an Assistant Attorney General in the office of Eric T. Schneiderman, Index No. RJI No. Hon.
Attorney General of the State of New York, assigned to the Bureau of Consumer Frauds and Protection. 2. I am familiar with the facts and circumstances of this proceeding and submit this
affirmation in support of Petitioner's application for an Order and Judgment, inter alia, permanently enjoining Respondents from engaging in deceptive, fraudulent and illegal business practices, and awarding restitution to injured consumers, disgorgement of ill-gotten gains, and penalties and costs to the State of New York.
The facts set forth in this affirmation are based upon information contained in the
files of the Bureau of Consumer Frauds and Protection and are believed to be true and correct. RESPONDENTS 4. Respondent American Tree Company, Inc., ("American Tree") is a family owned
and operated tree service and home improvement contracting business, headquartered at 663 State Route 149, Lake George, New York, 12845, which offers a variety of services, including tree removal, logging, lot clearing and excavation. According to its website, which identifies the business name as "American Tree Company, Inc.," American Tree services the Lake George, Glens Falls, Queensbury, Saratoga and Adirondack Regions of New York State. Although American Tree was established as a domestic business corporation on March 21, 2003, the corporation was dissolved by proclamation of the New York Secretary of State on April 25, 2012. Since that time, the named individual Respondents have continued to conduct business under the name American Tree Company, Inc. 5. Respondent Daniel Stranahan is an owner and President of American Tree.
Respondent John Stranahan is an owner and Vice-President of American Tree. Respondent Merwin "Skip" Stranahan is, upon information and belief, an owner of American Tree. Each of the Stranahans is actively involved in the day to day operations of the business and actively participated in and has knowledge of the fraudulent and illegal practices alleged herein. 6. Respondents American Tree, Daniel Stranahan, John Stranahan and Merwin
"Skip" Stranahan are hereinafter collectively referred to as "Respondents."
INTRODUCTION 7. In late August 2011, Tropical Storm Irene hit the northeast United States, causing
severe damage, including in Essex and Warren counties. The storm's high winds and heavy rains caused significant tree damage, leaving many consumers with uprooted trees on their homes or strewn across their property, and in many cases, creating an urgent need for tree removal services. American Tree seized on the leverage it enjoyed as a result of the storm to take advantage of consumers by actively soliciting consumers for its services and charging consumers unconscionably excessive fees. Respondents also used unconscionable and deceptive practices to induce consumers to accept their services. They repeatedly failed to disclose, or gave consumers lowball estimates of, the fees they would charge for their services, or assured consumers that their insurance policies would cover their fees, even though that was not always the case. Respondents also failed to provide consumers with written contracts specifying the amounts they would charge for their work, as required by law. Respondents then charged consumers exponentially more for their services than they charged immediately before the storm for similar work and padded consumers' bills with undisclosed $1,500 "emergency" call fees and $1,000 "after hours" fees even though consumers had not called Respondents or asked for the work to be performed at a particular time. 8. As a result of these practices, Respondents repeatedly charged consumers
amounts for storm-related services that exceeded by thousands of dollars the amounts charged for similar work before the storm. In addition, Respondents padded their bills with undisclosed and exorbitant "emergency tree service call" and "after hours" fees, which, in some cases, exceeded the amount charged for the actual work performed. In many cases, these fees were charged even though consumers had not called Respondents to request their services or request 3
that the work be performed after hours. As a result of Respondents' misrepresentations and omissions, many consumers were shocked to receive bills that were tens of thousands of dollars. 9. In February 2012, the Office of the New York State Attorney General ("OAG")
received a consumer complaint alleging that American Tree engaged in deceptive and illegal acts during and following Tropical Storm Irene. The OAG's investigation ultimately identified at least 27 victims of American Tree's price gouging and other illegal activities. 10. On March 22, 2012, the OAG personally served a subpoena duces tecum on
American Tree pursuant to Executive Law § 63(12) and § 2302(a) of the New York Civil Practice Law and Rules, and on July 11, 2012, a subpoena ad testificandum on Daniel Stranahan, John Stranahan and Merwin "Skip" Stranahan. Although American Tree produced invoices and other information related to its pre and post-storm services pursuant to the subpoena duces tecum, none of the named Respondents appeared before the OAG to provide testimony as required by the subpoenas ad testificandum. 11. Information obtained during the OAG's eight-month investigation, including 4
consumer complaints, 15 consumer affidavits and a comparison of American Tree's pre and poststorm invoices, provided overwhelming evidence of price gouging, fraudulent and deceptive business practices and violations of the Home Improvement Contracts Law and the Door-toDoor Sales Protection Act. FACTS 12. On August 25, 2011, Governor Cuomo issued Executive Order No. 17, declaring
a "State Disaster Emergency" for several New York counties in anticipation of the arrival of Hurricane Irene.1 This declaration of emergency was amended by Executive Order No. 21 to
By the time Hurricane Irene reached the Adirondack area, it had been downgraded to a tropical storm.
include Warren and Essex Counties, which include Lake George, Glens Falls and Queensbury. (See Governor Cuomo's Executive Orders No. 17 and 21, attached as Exhibits A and B). On August 26, 2011, President Obama also declared the existence of an emergency in the State of New York, in anticipation of the impact of Hurricane Irene. See "President Obama Signs New York Emergency Declaration," The White House, Office of the Press Secretary, attached as Exhibit C. 13. The damage caused by Tropical Storm Irene was extensive. The storm left
thousands without power, caused widespread flooding and damage to infrastructure, and left countless consumers with downed trees on their homes and property. See "Irene's Rain and Wind Wreak Havoc, Cause Outages," Glens Falls Post Star, August 28, 2011, attached as Exhibit D. In many cases, consumers had multiple trees toppled or leaning on their homes. 14. On August 28, 2011, before the storm had fully subsided, Respondents began
actively soliciting consumers whose property had sustained tree damage. In certain cases, Respondents simply knocked on consumers' doors or showed up at their property unsolicited and offered consumers their services: While the storm was still underway and the rain was coming down, John Stranahan from American Tree Company arrived at my house and knocked on my door. I did not call him or American Tree. Mr. Stranahan told me he could remove the trees from my property and since he was already in my neighborhood with a crew I gave him permission to do so. Affidavit of Philip Nadig attached to Exhibit E.2 During the storm, my roof was damaged when a large tree was uprooted and landed on it. That same day, a "Mr. Stranahan" from American Tree Company ("American Tree") knocked on my door and asked me if I wanted him to remove the tree… I did not call American Tree or ask them to come to my house. Apparently, a crew from American Tree was already in the neighborhood. Affidavit of Robert Casagrande, Exhibit E.
All of the consumer affidavits submitted in support of the Petition are attached to Exhibit E, arranged alphabetically, with each separated by a tab with the consumer's name.
While we were outside surveying the damage [from Tropical Storm Irene], we were speaking with our neighbors and discussing the damage that took place on their property. As we were talking, Mr. Skip Stranahan ("Skip Stranahan") from American Tree Company ("American Tree") approached us on foot. I never contacted him or asked him to come to my home and neither did my husband. Indeed, I could not have called him as we had no electricity or phone service. Affidavit of Patricia E. Klinck, Exhibit E. I did not call American Tree…to inquire about having the company remove the downed trees. Mr. Skip Stranahan…appeared on my property the day of the storm when I was home and offered to remove them. Affidavit of William Baldwin, Exhibit E. See also Exhibit E: Affidavit of Sean Cox; Affidavit of Kenneth R. Curley; Affidavit of Mark Regan. 15. In other cases, American Tree representatives responded to calls from consumers
seeking tree removal services. See, e.g., Exhibit E: Affidavit of Peter Brothers, Affidavit of Patricia Killeen; Affidavit of Kristine Suits. A. Respondents Used Unconscionable and Deceptive Means to Obtain Consumers' Authorization to Perform Tree Removal Services As described more fully below, Respondents used unconscionable and deceptive
means to obtain consumers' authorization to perform tree removal services, including (a) failing to disclose the actual cost for their services, including "after hours" and "emergency service call" fees; (b) misrepresenting that there would be no cost to the consumer because the consumers' insurance would cover the entire cost; (c) misrepresenting the costs by providing vague and lowball estimates; (d) failing to provide a written contract specifying the scope of work to be performed and the cost associated therewith; and (e) obtaining consumers' signatures on blank invoices and filling in the prices afterward. 17. After surveying consumers' tree damage, Respondents offered to perform tree
removal services. Most consumers, many of whom had trees leaning on their homes or 6
otherwise creating a dangerous situation, did not ask Respondents how much they would charge for the work and Respondents did not disclose the charges. In other cases, Respondents assured consumers that the charges for the work would be covered by the consumer's insurance policy: We did not discuss how much Mr. Stranahan would charge for the work, nor did Mr. Stranahan advise me that he would charge an additional $1,500.00 ""emergency tree service call"" fee. Mr. Stranahan did not give me a written contract to sign. Instead, I orally gave him permission to remove the trees and I simply trusted that I would be charged a fair price for the work. Baldwin affidavit, Exhibit E. I walked over to the crew from American Tree and told them about the tree on my pool. I asked them if they would be able to remove the tree, and if I needed to schedule an appointment. In response, one of the crew members (I don't recall his name) told me that American Tree would be able to do the work… He further advised that because a pool is considered a "structure" by insurance companies, my insurance company would pay for the tree removal and that American Tree at the time was only removing trees that were on "structures." Affidavit of William Vanderminden, Exhibit E. See also Exhibit E: Casagrande Affidavit; Affidavit of Philip Nadig; Regan Affidavit. 18. In those instances where consumers did ask about price, Respondents gave vague,
lowball estimates such as "a few thousand dollars," that were a fraction of the fees Respondents ultimately charged consumers for the work, or assured consumers that the fees would be covered by their insurance policy, when that was not always the case: On or about August 28, 2011, my son Peter called American Tree Company ("American Tree") and asked them to come to our house so we could determine how much it would cost to remove all the trees that fell on our property. Later that day, Mr. Skip Stranahan ("Mr. Stranahan") from American Tree came to our home to inspect the damage. When my husband and I asked him how much it would cost, Mr. Stranahan said "no more than several thousand" dollars. Affidavit of Noel Brothers¶ 4, Exhibit E. (American Tree ultimately charged Noel Brothers and her husband $49,835.00, including $10,000 per tree for three "huge" trees) Skip Stranahan started to talk to us about the trees that were down on the property and I asked him casually how much he would charge to remove them. In 7
response, he said "a few thousand dollars." Klinck affidavit, ¶ 4, Exhibit E. (American Tree ultimately charged Patricia Klinck and her husband $31,522.62, including $24,500 for the removal of seven trees). I asked [John Stranahan] how much it would cost and he said it wouldn't cost me "anything" because "insurance would pay for it." Cox Affidavit, ¶ 3, Exhibit E. (American Tree ultimately charged Mr. Cox $6,955, including $4,000 for the removal of two trees. Mr. Cox's insurance company agreed to pay only $2,000 of the total bill). 19. Respondents also repeatedly failed to disclose that, in addition to the charges for
the actual work performed, American Tree would charge a $1,500 "emergency tree service call," and in some cases, a $1,000 "after hours" fee, as well, even though in many cases consumers did not contact American Tree to request its services or ask that the work be performed at any particular time: I did not call American Tree… to inquire about having the company remove the downed trees. Mr. Skip Stranahan . . . appeared on my property the day of the storm… and offered to remove them. We did not discuss how much Mr. Stranahan would charge for the work, nor did Mr. Stranahan advise me that he would charge an additional $1,500.00 "emergency tree service call" fee. Baldwin Affidavit, Exhibit E. During a lull in the storm, Mr. John Stranahan…knocked on my door, unsolicited, and asked me if I wanted him to remove the trees…Mr. Stranahan did not provide me with a written contract or even an oral estimate of the fee for the work. Nor did he inform me that he would charge me an "emergency" fee or an "after hours" fee. Regan Affidavit, Exhibit E. During a break in the storm, I went outside to look at the trees that fell… While I was outside, I saw a truck and crew from American Tree Company… on my street. John Stranahan approached me and I told him I had trees down on my property. He told me he could remove the trees…Mr. Stranahan did not give me an oral or written cost estimate or mention that American Tree would charge a $1,500.00 emergency service fee or a $1,000.00 "after hours" fee in addition to the charges for the work. Cox affidavit, Exhibit E. See also Exhibit E: Noel Brothers Affidavit; Casagrande Affidavit; Killen affidavit; Klinck Affidavit; Nadig Affidavit; Vanderminden Affidavit.
Based on American Tree's false and misleading representations and omissions,
consumers authorized American Tree to perform tree removal services. 21. Before commencing the work, Respondents repeatedly failed to provide
consumers with written contracts containing the statutory notices required by the Home Improvement Contracts Law and the Door-to-Door Sales Protection Act. For example, consumers did not receive contracts specifying the work to be done, the amount that American Tree would charge for it, notice that the consumer could cancel a contract within three business days and other mandatory disclosures. See generally, consumer Affidavits attached to Exhibit E. 22. Instead, in many cases, Respondents asked consumers to sign a
"proposal/invoice" form or other document that did not describe the work that American Tree would perform or the fees it would charge. Respondents repeatedly obtained consumers' signatures by advising them that their signatures were required in order to authorize American Tree personnel to enter their property, contact their insurance company or provide a cost estimate: Mr. Stranahan asked me to sign a document that had the words "Proposal/Invoice" on it...When I signed this document, it did not contain any pricing or estimates for the work. Mr. Stranahan did not provided me with a copy of the document, but told me I would receive a written cost estimate before he started work. Curley Affidavit, Exhibit E. See also, Exhibit E: Casagrande Affidavit; Vanderminden Affidavit; Combs Affidavit; Killen Affidavit; Klinck Affidavit; Nadig Affidavit; Regan Affidavit. 23. In some cases, after performing the work, and without consumers' knowledge,
Respondents filled in a description of the work allegedly performed and the fees associated therewith on the "proposal/invoice" previously signed by the consumer: Eventually, American Tree Company provided me with a copy of the "Proposal/Invoice" form that I had signed on August 29, 2011, which now 9
included a handwritten description of the work allegedly done and the fees American Tree was charging me. I was shocked, angry and disappointed when I saw this document because when I signed the document, it did not contain any prices or cost estimates, but it now appeared as though I had agreed to the charges. Curley Affidavit, Exhibit E. John Stranahan asked me to sign a document that he said gave him permission to enter our property. This document did not contain any prices or cost estimates…Attached hereto is a copy of the American Tree "proposal/invoice" that was provided to me by State Farm in or about May, 2012. This document contains my signature but when I initially signed it at John Stranahan's request, it did not contain any prices or cost estimates. Peter Brothers Affidavit, Exhibit E. Also attached hereto is a copy of a "Proposal/Invoice" with my signature on it. This is the document I signed at Mr. Stranahan's request when he came to my home following the storm, but it did not contain any prices or cost estimates when I signed it. The first time I saw this document in its present form was when it was provided to me by the New York State Attorney General's Office. Killeen Affidavit, Exhibit E. See also, Klinck Affidavit, Exhibit E. 24. Respondents subsequently used these altered documents to engage in collection
efforts,3 and submitted the fraudulent document to at least one insurance company: In early February, 2012, the law firm of Hacker Murphy, LLP sent my husband and me a collection letter seeking $31,565.00 from us on behalf of American Tree. The letter included and made reference to an "executed August 29, 2011 Proposal/Invoice," which contained a handwritten description of the work allegedly performed by American Tree and a listing of all the charges. My husband's signature appears at the bottom of this document but when he signed it the day after the storm, it did not contain any prices or cost estimates. Klinck Affidavit, Exhibit E. John Stranahan asked me to sign a document that he said gave him permission to enter our property. This document did not contain any prices or cost estimates…Attached hereto is a copy of the American Tree "proposal/invoice" that was provided to me by State Farm in or about May, 2012. This document contains my signature but when I initially signed it at John Stranahan's request, it did not contain any prices or cost estimates. Peter Brothers Affidavit, Exhibit E.
By letter dated April 26, 2012, American Tree agreed not to "pursue any further collection activities" until the Attorney General's investigation was concluded. See letter from John Harwick, attached as Exhibit F.
Shockingly, in at least one instance, American Tree billed an elderly consumer
almost $29,000.00 for work that neither the consumer nor his relatives ever authorized American Tree to perform: During the storm one large tree fell on my house when I was in the house. I did not call anyone to take the tree off of the house. I never spoke to anyone from American Tree Company about removing the tree from my property. I never signed any contract, proposal, work authorization or any other document that gave American Tree Company permission to remove the tree from my house. I never verbally authorized anyone from American Tree to remove the tree from my house. My daughter-in-law Nancy Hemenway received a bill from American Tree Company charging me roughly $28,584 for taking one tree off of my house. Affidavit of John Hemenway, attached to Exhibit E. I never contacted American Tree about my father-in-law's property and never requested or authorized American Tree to go to his property. No neighbor of my father-in-law is authorized to act on his behalf. Affidavit of Nancy Hemenway, Exhibit E. B. Respondents Charged Unconscionably Excessive Prices for the Work Performed in Connection with Tropical Storm Irene General Business Law § 396-r prohibits businesses from charging
"unconscionably excessive" prices during an "abnormal market disruption" for goods and services that are "necessary for the health, safety and welfare of consumers…" Under GBL § 396-r, a natural disaster such as Tropical Storm Irene constitutes an "abnormal market disruption" and the tree removal services provided by Respondents during and following the storm were necessary for the health, safety and welfare of consumers. Whether a price is unconscionably excessive is a question of law for the courts and evidence of a "gross disparity" between prices charged during an abnormal market disruption and prices charged "immediately prior" to such disruption is prima facie proof of price gouging under the statute. The term "immediately prior" is not defined in GBL § 396-r.
To determine if American Tree engaged in price gouging, OAG reviewed thirty-
five invoices covering the thirty-day period preceding the storm that were produced by American Tree pursuant to the OAG's subpoena. Tellingly, none of the thirty-five invoices were for more than $3,745.00 and most were for significantly smaller amounts. Of the sixteen pre-storm invoices that contained sufficient detail to permit a more specific comparison with storm-related invoices, the invoices show a breathtaking spike in storm-related prices. Compare Pre-Storm Invoices, Attached as Exhibit G (sixteen invoices arranged chronologically) to Exhibits E (poststorm invoices attached to consumer affidavits) and I (additional post-storm invoices where American Tree charged unconscionably excessive prices).4 As discussed in paragraphs 29 through 51 below, the storm-related invoices were for outrageous amounts. Indeed, ten consumers were charged amounts ranging from approximately $11,000 to nearly $50,000. Notably, even the smallest bill issued by American Tree to a victim of price gouging ($4,547) was greater than the most expensive bill issued immediately prior to Tropical Storm Irene ($3,745). 28. It is amply clear that the fees charged by Respondents for work related to Tropical
Storm Irene grossly exceeded the fees Respondents charged for its services before the storm. This is due to wildly inflated charges for tree and stump removal as compared to pre-storm charges and the undisclosed after hours and emergency services charges tacked on to the stormrelated bills. As a result, the total amount demanded by Respondents for the storm-related work allegedly performed was staggering. See, e.g., invoices attached to Brothers Affidavit, Exhibit E ($49,835); Klinck Affidavit, Exhibit E ($31,565); Hemenway Affidavit, Exhibit E ($28,584);
The remaining nineteen pre-storm invoices did not identify the number of trees removed or otherwise describe in any detail the work that was done, and instead, simply stated, for example, "tree removal" or "tree work." These invoices, which are often for hundreds, not thousands of dollars, are attached hereto as Exhibit H for the Court's reference.
Haven Invoice, Exhibit I5 ($20,865); Curley Affidavit, Exhibit E ($19,260); Baldwin Affidavit, Exhibit E ($17,945); Jarvis Invoice, Exhibit I ($14,445); Casagrande Affidavit, Exhibit E ($12,840); Simms Invoice, Exhibit I ($12,840); Molinaro Invoice, Exhibit I ($11,235). 1. 29. Tree Removal
Respondents repeatedly charged consumers thousands of dollars more per tree to
remove trees that were uprooted or blown down during the storm than for pre-storm tree removal. In fact, the mean price charged by American Tree during the pre-storm period was approximately $624 per tree. Based on an analysis of the 27 invoices for storm-related work where Petitioner alleges price gouging, the mean per tree price was approximately $1,675.6 30. For example, Respondents charged John and Noel Brothers $10,000.00 per tree
for three trees that were leaning on the Brothers' house (as well as approximately $17,000 in additional fees for removal of stumps and other trees, among other things). 31. In connection with other storm-related work, Respondents charged John
Hemenway $8,000.00 per tree for two trees American Tree claims it removed from Mr. Hemenway's roof, another $3,500 for a poplar tree, and $1,500 for a hemlock tree (as well as other fees for stump and debris removal, among other things). 32. In connection with storm-related damage, Respondents charged Patricia Klinck
$3,500.00 per tree for the removal of seven "large" trees that had fallen on various structures on the property, a total of $24,500.00. See also, Exhibit E (Casagrande Affidavit ($6,500 for "multiple stem white pine tree" on house); Cox Affidavit ($4,000 for two "large" pine trees);
Attached as Exhibit I are additional storm-related invoices where American Tree charged unconscionably excessive prices. 6 The storm-related average price per tree does not reflect the true magnitude of Respondents' price gouging because Petitioner did not include in its calculation the exorbitant "emergency" and "after hours" fees, or the inflated fees for debris or stump removal, which in many cases added thousands of dollars to consumers' bills.
Baldwin Affidavit ($3,500 for each of three pine trees that were on the ground); Casagrande Affidavit ($6,500 for "multiple stem white pine tree" on house); Combs Affidavit ($2,500 for "large poplar tree off roof of house…"); Cox Affidavit ($4,000 for two "large" pine trees); Vanderminden Affidavit ($2,500 for one tree fallen on a pool)). 33. These fees represent an increase of as much as 100% to more than 1000% of the
fees Respondents charged for similar work in the thirty-day period leading up to the storm. In this period, American Tree never charged more than $1,500 per tree for tree removal services and more commonly charged in the hundreds, not the thousands, per tree. 34. For example, shortly before the storm American Tree charged one consumer an
average of $800 per tree, see Perre invoice, Exhibit G ($1,600.00 for the "complete removal of 1 large hazardous dead pine tree, 1 large white oak tree over road way…"), another consumer $1,500 for one "large tree" "off top of garage," see Robinson invoice, Exhibit G, and another consumer $850.00 for the removal of a "white pine tree on structure." See Cowley invoice, Exhibit G. These pre-storm invoices were in the higher range, as other pre-storm tree removal prices ranged from $212.50 to $750. See Exhibit G: Berthiaume invoice, dated August 16, 2011, (removal of large ash and red maple tree for a total of $1,500, an average of $750 per tree); Berger invoice, dated August 9, 2011 (removal of one dead pine for $600 plus two additional trees for $1,200, an average of $600 per tree); Fletcher invoice, dated August 9, 2011, (removal of two maple trees for $850 and one white pine for $300, an average of $383 per tree); Koone invoice, dated August 10, 2011, (removal of 3 poplar trees and one pine for a total of $850, an average of $212.50). 35. Even where pre-storm work performed by American Tree was seemingly more
difficult and time-consuming than certain storm-related work, American Tree still charged 14
thousands more for the storm-related work. For example, on August 3, 2011, American Tree charged an average of $1,000.00 per tree for the "complete removal of large dead elm and large dead pine over lake" that had to be "climbed by hand" and "carried out," LaRose invoice, dated August 3, 2011 (number 1167), Exhibit G. See also, LaRose invoice, dated August 3, 2011 (number 1166) (complete removal of 2 "huge" maple and 1 "huge" pine tree for $3,500, an average of $1,166 per tree), Exhibit G. In stark contrast, American Tree charged $5,000 per tree for two trees on the ground, see Curley Affidavit, Exhibit E, and $3,500 for two trees that were on the ground and deck, see Killeen Affidavit and invoice, for storm-related tree removal, Exhibit E. 36. Even comparing the highest per tree fee charged by Respondents before the
storm, $1,500 per tree for the removal of a "large" tree from the top of a garage (Robinson invoice, Exhibit G), to various per tree fees charged by Respondents for storm-related work reflects a shocking price increase for storm related work: American Tree's Largest Pre-storm price $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 $1,500.00 Examples of American Tree's Prices for Storm-related Work $10,000 $8,000 $6,500 $5,000 $3,500 $2,500 Percentage Increase in Storm Related Prices 566% 433% 333% 233% 133% 66%
Thus, under any analysis, the evidence plainly shows that American Tree hiked its
fees exponentially for Irene-related work. 38. In contrast to the storm-related work, most of American Tree's pre-storm invoices
presumably involved the removal of trees that were standing. However, Respondents have failed
to present any evidence to the OAG showing that the gross disparity in the prices it charged during the storm were due to increased costs associated with removing trees that were uprooted or blown down, despite an invitation from the OAG to present such evidence. See subpoena duces tecum, cover letter and affidavit of service attached as Exhibit J. Moreover, each of the three individually named Respondents did not appear for testimony before the OAG despite being personally served with a subpoena ad testificandum. 39. Indeed, it is unlikely that there would be increased costs involved in such removal
because in many cases it took American Tree less than an hour or two to perform Irene-related work for which it charged consumers thousands of dollars. See, e.g., Exhibit E: Casagrande affidavit ($12,840 for work that took no longer than forty-five minutes); Cox affidavit (over $6,000 for approximately forty-five minutes of work); Vanderminden affidavit ($5,885.00 for work that took less than an hour); Regan affidavit ($4,547.50 for work that took no longer than an hour and a half). In contrast, three days before the storm, American Tree charged only $1,700 for "tree removal for ½ day." See Grasso invoice, Exhibit G. 40. Even if, in some cases, it was arguably more costly for American Tree to remove
trees that were leaning on structures or uprooted, the added difficulty certainly was not of the magnitude reflected in the exponentially higher prices American Tree charged during and after the storm. 2. 41. Stump or Debris Removal
Further, in many cases, Respondents also charged storm-related consumers
thousands of dollars for stump or debris removal. See, e.g., Exhibit E: Hemenway Affidavit ($3,500.00 for the "excavation and removal of 2 huge sets of stumps with disposal."); Baldwin affidavit ($3,500.00 for the "removal of uprooted stumps" from three trees); Haven invoice, 16
Exhibit I ($3,500.00 for the "clean up and removal of uprooted stumps and debris on site" where three trees were removed). 42. However, in the two instances where American Tree charged a separate fee for
stump removal/grinding immediately before the storm, the fees were only a fraction of the fees charged by American Tree during and immediately after Tropical Storm Irene. See, Exhibit G: Duval invoice ($200 to grind six stumps); Robichaud invoice ($100 for "stump"). 3. 43. Emergency and "After Hours"Fees
In addition to the unconscionable fees for the work performed, Respondents also
engaged in price gouging and fraudulent and deceptive practices by charging many consumers (a) an undisclosed $1,500 "emergency tree service call" fee, even in cases where consumers did not call American Tree and request its services; and (b) an undisclosed $1,000 "after hours" service fee, even where the work was not requested to be performed outside of business hours. 44. As noted, most consumers never contacted Respondents to request their services,
and those who did, did not request that the service be performed within any specific time frame. These "emergency service call" and "after hours" fees alone constitute price gouging because they were imposed solely as the result of the abnormal market disruption caused by Tropical Storm Irene. There is no evidence establishing that these exorbitant fees reflected increased costs imposed on American Tree as a result of the storm. 45. Further, in many cases these additional fees surpassed, equaled or were a
significant percentage of the fees Respondents charged for the actual tree removal. See Mahon invoice, Exhibit I ($2,500.00 in "emergency" and "after hours" fees and $2,000.00 for the removal of two trees); Combs Affidavit and attached invoice, Exhibit E ($2,500.00 in "emergency" and "after hours" fees and $2,500.00 for tree removal); Vanderminden Affidavit 17
and attached invoice, Exhibit E ($2,500.00 in "emergency" and "after hours" fees and $2,500.00 for tree removal); Gunning invoice, Exhibit I ($2,500.00 in "emergency" and "after hours" fees and $3,000.00 in tree removal and other charges); Cox Affidavit and attached invoice, Exhibit E ($2,500.00 in "emergency" and "after hours" fees and $4,000.00 in tree removal fees). 46. Thus, in some cases, the "emergency" and "after hours" fees charged by
Respondents more than doubled the consumer's bill. See, e.g., Mahon invoice, Exhibit I (125% increase); Combs Affidavit and attached invoice, Exhibit E (100% increase); Vanderminden Affidavit and attached invoice, Exhibit E (117% increase). 4. 47. False and misleading invoices
Further, in some cases, Respondents attempted to justify and collect the inflated
charges by submitting invoices to consumers and/or their insurance companies that falsely described the work that was done by, for example, (a) overstating the number of hours or personnel it took to perform the work; (b) charging for work that was not performed; or (c) misrepresenting the complexity or difficulty of the work, for example, by stating that Respondents had removed trees that were leaning on homes when, in fact, the trees were lying on the ground: American Tree sent my insurance company a bill for $17,945.00 for the work that was performed on my property. I also saw a copy of this bill. The bill included a charge of $10,500.00 for the "emergency tree removal of 3 large white pine trees on house with crane and excavator" and a separate $3,500.00 charge for the removal of the uprooted stumps. As I noted, the trees were not on my house. I was on the property when the work was performed and American Tree did not use a crane. Also on the bill is a $1,500.00 charge for an "Emergency tree service call," even though I did not contact American Tree to request their services, and a $1,500.00 charge for "clean up and removal of debris." Baldwin Affidavit, Exhibit E. On or about September 23, 2011, I received an invoice from American Tree for $19,260.00. I could not believe this was the amount they charged me. Since I 18
previously gave Mr. Stranahan the name of my insurance company, I contacted my insurance company to alert them to the exorbitant prices. The invoice included a $1,500.00 "emergency service call" fee, a fee of $15,000.00 for "emergency tree removal of 3 huge pine trees off top of house and deck structures with crane," and a total fee of $1,500.00 fee for "clean up and removal of debris." As noted, I did not call American Tree and ask them to come to my property and only one tree was leaning on my house. Moreover, my son, one of our workers and I cleared most of the debris... Curley Affidavit, Exhibit E. [T]he American Tree bill states that two large pine trees were "on" our house but the trees were on the ground and on the deck - not on the house itself. Finally, American Tree did not have five men working on my property for eight hours, as stated on the invoice. As noted, the crew was at my house for no more than two hours and one worker came the following day for about two hours to clean up the debris. Killeen Affidavit, Exhibit E. The invoice also included charges of $3,500.00 for each of seven trees removed from the property and a charge for $3,500.00 for "clean up and removal of debris and stumps." This invoice also stated, "8 men for 4 days (8 hour days) emergency rate is per man." This was the first time that I saw a detailed bill from American Tree. American Tree never completely cleaned up the debris so we had to pay a third party to do it. Further, American Tree spent no more than two days working on our property. Klinck Affidavit, Exhibit E. 48. As a result of the undisclosed and grossly excessive fees American Tree charged
for tree removal, combined with the "after hours" and "emergency" call fees, consumers were shocked to learn of the exorbitant amounts Respondents had charged for their services: On September 2, 2011, I received an invoice via email from American Tree charging my father-in-law $28,584.81 for the work allegedly performed on his property… I knew immediately that something was terribly wrong. I was shocked. Hemenway Affidavit, Exhibit E. About three weeks after the storm, I received a bill from American Tree for a total of $12,840.00. I was shocked by the charges. Casagrande Affidavit, Exhibit E. When I heard these charges [$5,350], I thought they were exorbitant and believed American Tree took advantage of me and my wife. Combs Affidavit, Exhibit E. 49. inflated fees: In some cases, insurance companies refused to pay American Tree's
I learned that American Tree had submitted a bill of approximately $6,500.00 to my insurance company. I was shocked at this price. My insurance adjustor informed me that the most the insurance company would pay for the work performed by American Tree was $2,000.00 because that was the amount that was fair for the work involved. Cox Affidavit, Exhibit E. On or about January 12, 2012, I sent a letter to John Stranahan offering to pay American Tree Company $9,614.73, which was the amount I ultimately received from my insurance company for the claim. I offered to send this amount as payment in full because it was the most my insurance company said it would pay for the removal of the trees without any further documentation, such as pictures of the tree damage. American Tree did not respond to my offer. Klinck Affidavit, Exhibit E. (American Tree billed the Klincks a total of $31,565, including $24,5000 for the removal of seven trees.). My insurance company subsequently informed me that the most it would pay for the work American Tree performed on our property was $4,000.00. I paid American Tree $4,000.00 out of the proceeds we received from the insurance company but American Tree continued to bill us for the remainder of the fee and has been charging us interest on the unpaid balance. I received a bill in May of 2012 from American Tree for $6,103.92, which I have not paid. Killeen Affidavit, Exhibit E (American Tree originally charged $9,095.00). Sometime thereafter, a representative from my insurance company contacted me to advise that they would not pay the full fee because they thought it was excessive for the work done. Regan Affidavit, Exhibit E. 50. When consumers contacted American Tree to complain about Respondents'
exorbitant fees, Respondents repeatedly refused to lower them. Instead, Respondents continued to bill consumers the full amount and added "finance" charges of 2% per month on the unpaid bills: When I called American Tree to obtain an itemized copy of my bill, I repeatedly informed its representatives that I was willing to pay a fair amount for American Tree's services but American Tree would not accept anything less than what they originally charged me. I have not sent any payment because American Tree will not accept any lesser amount, and I am concerned that if I send them any payment without an agreement, they will just continue to attempt to collect the remainder of their inflated fees from me. Cox Affidavit, Exhibit E. See also, Exhibit E: Suits Affidavit; Klinck Affidavit.
Some consumers have not yet paid American Tree's inflated bill in part or in
whole because the consumer's insurance company refused to pay the exorbitant fees, or the consumer was concerned that American Tree would continue to engage in collection efforts even if the consumer made a partial payment: Ultimately, my insurance company informed me that the most they would pay for the work was $9,000…I am concerned that if I pay them without approval of my insurance provider and an approved agreement, they will continue to attempt to collect without cause. Curley Affidavit, Exhibit E. I have been forced to retain an attorney to represent me in response to American Tree Company's unauthorized action on my property and their collection activities against me…I offered to pay American Tree Company $5,250.00 for the work they did. Because they refused this offer, and because they took down so many trees without my authorization, I have not sent them any money. Suits affidavit, Exhibit E. See also, Exhibit E: Klinck Affidavit; Cox Affidavit, N. Hemenway Affidavit, Killeen Affidavit.
Respondents Daniel Stranahan, John Stranahan and Merwin "Skip" Stranahan Personally Participated in, and had Knowledge of, the Fraudulent and Illegal Activity Alleged Herein American Tree advertises itself as a "family owned and operated" business. See
American Tree webpage, attached as Exhibit K. Upon information and belief, American Tree is owned and operated solely by Daniel Stranahan, his brother, John Stranahan and father, Merwin "Skip" Stranahan. 1. 53. Daniel Stranahan
Daniel T. Stranahan is American Tree's chief executive officer. See New York
State Department of State webpage, attached as Exhibit L. Daniel Stranahan is personally involved in the day-to-day operation of American Tree and participated in the work performed on the property of at least three consumers who were victims of Respondents' price gouging 21
scheme. See, letter from John Harwick and email from Emily Stranahan to John Harwick, attached as Exhibit M. Further, as an owner of American Tree, Daniel Stranahan personally profited from the illegal and fraudulent acts alleged herein. 2. 54. John Stranahan
John Stranahan personally participated in the illegal, fraudulent and deceptive
conduct described herein, and as an owner of American Tree, he personally profited from the illegal and fraudulent acts alleged herein. For example, John Stranahan: • personally solicited work for American Tree during Tropical Storm Irene. See Exhibit E: Vanderminden Affidavit; Nadig Affidavit; Cox Affidavit; Regan Affidavit. failed to provide prices to consumers for the work to be performed, including informing consumers of the "after hours" and/or "emergency" service fees. See Exhibit E: Noel Brothers Affidavit; Casagrande Affidavit; Killen affidavit; Klinck Affidavit; Nadig Affidavit; Vanderminden Affidavit. misrepresented that insurance would cover the entire cost of Respondents' services. See Exhibit E: Vanderminden Affidavit; Casagrande Affidavit; Regan Affidavit. asked consumers to sign documents that did not contain prices. See Exhibit E: Killeen "Proposal/Invoice"; Curley "Proposal/Invoice"; P. Brothers "Proposal/Invoice"; Klinck "Proposal/Invoice". signed "Proposal/invoice" forms where the pricing was filled in after the consumer signed the document. See Exhibit E: Killeen "Proposal/Invoice"; Curley "Proposal/Invoice"; P. Brothers "Proposal/Invoice"; Klinck "Proposal/Invoice". personally participated in tree removal services. See Exhibit E: P. Brothers Affidavit; Cox Affidavit; Curley Affidavit; Klinck Affidavit; Nadig Affidavit; Regan Affidavit, Exhibit E. engaged in collection efforts for work performed in connection with Tropical Storm Irene. See N. Brothers Affidavit, Exhibit E.
Merwin "Skip" Stranahan personally solicited business for American Tree
during Tropical Storm Irene, provided oral cost estimates that were a small fraction of what American Tree ultimately charged the consumer, participated in tree removal services, failed to disclose American Tree's fees, including its bogus "emergency service call" and "after hours" fees, and failed to provide consumers with written contracts as required by the Home Improvement Contracts Law. See Exhibit E: Klinck Affidavit; Brothers Affidavit; Baldwin Affidavit. Thus, Merwin "Skip" Stranahan personally participated in the fraudulent and illegal activity alleged herein.
CONCLUSION 56. Respondents preyed on vulnerable consumers who were victimized once by
Tropical Storm Irene and a second time by Respondents' price gouging scheme and other repeated illegal, fraudulent and deceptive conduct. During a time of devastation in the community, Respondents repeatedly violated the law and used unconscionable means to extract unconscionably excessive prices from trusting citizens faced with exigent circumstances. Respondents exploited their leverage to charge those consumers thousands of dollars more for work that was performed in connection with the storm than they charged for similar services immediately prior to the storm. Accordingly, the Court should enjoin Respondents from engaging in such practices in the future, require Respondents to make restitution to consumers, disgorge their ill-gotten gains, and pay appropriate penalties.
WHEREFORE, it is respectfully requested that the petition be granted in all respects. DATED: Albany, New York December 12, 2012 _____________________ Christopher Staszak Assistant Attorney General
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