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Unconscionable Gouging After Storm, NY Says

ALBANY, N.Y. (CN) - An upstate tree service gouged consumers with "repeated and persistent illegal conduct" after Hurricane Irene, charging $20,000 and more to remove trees after "show(ing) up uninvited" on their property, New York's attorney general claims in court.

The state sued American Tree Co., of Lake George, and its owners Daniel, John and Merwin "Skip" Stranahan, in Albany County Supreme Court.

The Stranahans "exploited the extensive damage" Irene caused when it blew ashore as a tropical storm in late August last year, "to price gouge vulnerable consumers who desperately needed tree-removal services," Attorney General Eric Schneiderman said in the complaint.

The Stranahans charged "more than $20,000, and in one case nearly $50,000, for tree removal services," far more than it charged for identical work in the months before the storm hit, the attorney general says.

The complaint states: "In repeated instances, respondents showed up uninvited on consumers' properties during and immediately after the storm and offered their services but repeatedly failed to provide consumers with written contracts, as required by New York Law. When consumers asked about respondents' fees, respondents gave them oral estimates that were a fraction of the fees respondents ultimately charged for the work. Respondents advanced their price gouging scheme by obtaining consumers' signatures on 'proposal/invoice' forms that did not disclose the scope of the work to be performed or pricing information and, in some cases, subsequently inserting this information without consumers' knowledge. Consumers were ultimately charged unconscionable prices that exceeded by thousands of dollars the prices respondents charged for similar services in the month preceding the storm. In some cases, consumers were charged more than $20,000, and in one case nearly $50,000, for tree removal services. These charges included undisclosed and exorbitant additional fees, such as a $1,500 'emergency tree service call', charge, even when consumers had not called respondents for services and a $1,000 'after hours' fee, even when consumers did not request that the work be performed at any particular time."

The attorney general says in the complaint that Daniel Stranahan is the company president, John Stranahan the vice president, and Merwin Stranahan, like Daniel and John, an owner of American Tree.

The job titles are unconfirmed because the men failed to appear after the Attorney General's Office subpoenaed them, Schneiderman said.

In a statement blasting American Tree, Schneiderman warned that his office would not tolerate similar conduct in the wake of Superstorm Sandy.

"The tactics used, and the excessive amounts charged, by this company during a time of crisis in the community shocks the conscience," Schneiderman said in the statement. "Whether it is Tropical Storm Irene or Hurricane Sandy, our office has zero tolerance for price gouging."

Heavy rain from Irene caused extensive damage to interior New York and New England on Aug. 28, 2011. Estimates of damages from this year's storm Sandy are as high as $50 billion, for sections of New York, New Jersey and Connecticut.

In the lawsuit, the state claims that "before the storm [Irene] had fully subsided," American Tree was soliciting business by knocking on doors in affected neighborhoods in the Lake George region.

"Most consumers, many of whom had trees leaning on their homes or otherwise creating a dangerous situation, did not ask [American Tree] how much they would charge for the work and respondents did not disclose the charges," the complaint states.


When a homeowner did ask, "Respondents typically either 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 insurance, when this was not always the case," according to the complaint.

The Stranahans also violated the Door-to-Door Sales Protection Act, which requires that consumers be given three days to cancel a contract, the attorney general said.

American Tree's "proposal/invoice" did not describe the company's work or fees, but gave it permission to enter consumers' property and contact their insurance company. No consumer received a copy of the document, Schneiderman said. American Tree filled in the signed document afterward, with a description of the work and the fees.

"In at least one instance, respondents then used the signed and completed document to engage in collection efforts against a consumer and as evidence that the consumer had agreed to pay respondents the inflated amounts they charged for their services," the complaint states.

In at least one case, the "doctored form" was submitted to an insurance company for payment, according to the complaint.

Filed with the lawsuit were affidavits from 15 consumers who describe their dealings with American Tree. In one, a homeowner near Glens Falls claims John Stranahan "knocked on my door, unsolicited" and inquired about removing two trees that had fallen on a storage shed.

The homeowner says he initially turned Stranahan away, but "I ultimately decided to give John Stranahan permission to do the work because he was persistent and pointed out that he had a crew in the neighborhood already and could do the work immediately."

The work, done in the late afternoon, took about 1½ hours, according to the affidavit, but the homeowner was charged emergency and after-hours fees. The bill came to $5,550, including $2,500 for removal of the two trees.

The homeowner said his insurance company told him it would not pay the full bill "because they thought it was excessive for the work done," according to the affidavit.

Ultimately, the insurer settled with American Tree for $4,547.50, the affidavit states.

The attorney general claims that American Tree hiked its fees "as much as 100 percent to more than 1,000 percent" above what it charged before the storm.

Per-tree fees before the storm averaged $800 to $850; after Irene, they were as much as $8,000 and $10,000 per tree, according to the complaint.

"Indeed, the most expensive bill issued immediately prior to Tropical Storm Irene ($3,745) was less than even the smallest bill issued by American Tree to a victim of price gouging ($4,547)," the complaint states.

After the Attorney General's Office announced the lawsuit, the Stranahans defended their business in Albany-area newspapers. The Daily Gazette in Schenectady identified Merwin Stranahan as the father of Daniel and John and said he was no longer involved in the company. He told the newspaper that American Tree had an A-plus rating from the Better Business Bureau for 30 years.

Schneiderman's lawsuit indicates that the company was formed in 2003 but was dissolved by proclamation the New York secretary of state on April 25 this year, after failing to file tax reports for two years.

The Glens Falls Post-Star reported in early 2011 that the company had filed for Chapter 11 bankruptcy protection, citing an accident in 2009 in which John Stranahan broke his neck, which limited the amount of work the company could take on.

Schneiderman wants American Tree enjoined from tree-removal or home-improvement work and door-to-door sales until it files a $50,000 performance bond with the state, to guarantee that it will comply with any injunction issued.

The state also seeks restitution to consumers who have contacted the Attorney General's Office about the company, and to any others who may file complaints with the office within 180 days of the court's grant of a restitution order.

The state also wants American Tree to disgorge "all profits resulting from the illegal, deceptive and fraudulent acts described herein."

Schneiderman also seeks a $25,000 civil penalty for violation of the price-gouging statute, up to $5,000 per violation for deceptive acts/false advertising, and $250 for each violation the law governing home-improvement contracts.

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