Friday, June 24, 2022

The Case of the Disappearing Deposits

or... No Deposit, No Return

More customers are coming forward to report how they paid hefty deposits to a Madison County company for generators that were not delivered.  WLBT reported last night: 

What one family thought would be the simple purchase of a generator for their home has turned into a year-long financial burden.

After weeks without power during the ice storm of 2021, Cheryn Netz’s parents went searching for a generator.

“They contacted the Costco in Ridgeland, and they sent out a sales rep to my parents’ home in Flora to talk to them about this generator. The owner of the company, Mr. Battles, came to visit my parents,” Netz explained. “So my parents, you know, charged it on their credit card and got a purchase contract with this name of this vendor on it that said, you know, the vendor said they were they’re going to be the ones that were going to deliver it and install it.”

The company that came to visit was Generator Technologies — a local business in Madison that was a vendor through Costco.

According to the contract, Netz’s parents had to pay nearly $11,000 up front for the generator and installation to happen by November 2021.

But now, a year since the purchase, the family said they haven’t seen the generator or a sales rep. Article

The victims' daughter said Costco brushed off the family and Generator Technologies will not return phone calls.  The Madison County company replied to WLBT's quiz: 

“We do not receive any payment from the big box store until we complete the installation. We have been short-staffed due to the pandemic, supply chain, and lead-time issues, and we were not able to get back to our customers as we had hoped.”

Unfortunately, Ms. Netz's parents were not aware Generator Technologies filed a Chapter 11 (5) bankruptcy petition.  JJ reported on May 26: 

Unfortunately for Generator Technologies, there is a national shortage of generators.   The company's main supplier, Generac, simply can not meet the demand for natural gas generators...

Despite the shortage, Generator Technologies continues to sell generators. Customers pay a 50% deposit.  Several said the company told them  the generator won't be delivered for at least 25 weeks.  Generac sends a letter to customers stating they will experience a delay in receiving their generators. The letter is posted at the bottom of this post.   The owner's wife told a customer on social media: 

Months and months and months passed while customers waited for the delivery of their generators.  Frustrated, some customers began demanding refunds.  When they could not get their money back, they contacted their credit card companies to cancel the transaction.  The company claimed in several bankruptcy filings it will deliver the generators when it receives them from Generac. 

Generator Technologies filed a Chapter 11, Subchapter 5* bankruptcy petition on April 29.  The petition states Generator Technologies has approximately 201 creditors. 150 creditors are individuals. Among the creditors is none other than Generac Technologies ($42,147). The largest debt is a SBA loan of $150,000. 

Generator Technologies filed motions to stay and enforce sanctions against the customers who attempted to cancel the sales through their credit card companies.... Earlier post and copy of court file.

Customers tried to get refunds through their credit card companies but Generator Technologies sued them in bankruptcy court, claiming the refunds would put it out of business.  



 

21 comments:

Anonymous said...

Sounds like a fraud case for the DA and/or the AG.

Anonymous said...

“ Customers tried to get refunds through their credit card companies but Generator Technologies sued them in bankruptcy court, claiming the refunds would put it out of business. ”

Sounds like it would be a good thing if they were put out of business, hopefully the judge sees it that way quickly so everyone gets their money back.

Anonymous said...

Ms. Netz is an attorney. She has been very patient but the hammer could soon drop. I know the owner of Generator Technologies. He is a nice guy, but the supply chain issue started the chain of events that led to this mess. He was painted into a corner. Mine was installed by him before the China virus without any issues. Regardless, you can't take a large deposit and then not deliver. The deposit should be returned on demand.

In this case, Costco needs to accept some responsibility. I was in there yesterday and at the exit there is still a Generac generator sign advertising their services, and their vendor is Generator Technologies.

Anonymous said...

10:13, no he wasn't painted into a corner. Take a small deposit, not half, and put it in a separate account other than you operating account. Don't spend deposit money until their generator is in your possession and final invoice is paid. It is simple accounting. They are trying to play the poor pitiful business owner when they are spending money they cant return to customers when there is no product. I bet they don't pay Generac 50% upon ordering the generator. They ran out of money and used customer deposits as operating funds. You can't do that.

Anonymous said...

I don't know anything about Generator Technologies or their business practices. I do know that it's a tough business to be in right now. Lead times on large generators are in the 12-18 month range even if you pay up front due to supply chain issues. An unexpected danger of those long lead times, besides the obvious inconvenience, is that prices on components, freight, etc. are going up so dramatically that a unit sold today at a good profit margin could ship out the door to the customer 12-18 months later that actually loses money for the manufacturer. A number of manufacturers have had to force price increases on those already sold units or cancel the orders outright.

Anonymous said...

Serious consideration by all should be given to Miss. Code. Ann. 97-23-103. Does one escape the criminal penalty imposed upon Mr. Fix It by filing for bankruptcy protection?

Anonymous said...

Someone needs to ask the DA and the AG to read Miss. Code Ann. 97-23-103.

Anonymous said...

@10:41 AM - 10:13 AM here --- I should have penned "he painted himself into a corner" with his customer deposit business practices. I agree, deposits shouldn't be put in with operating funds; they need to be held in trust and not touched except for the generator purchase. The owner is a good electrician but maybe a terrible businessman.

Anonymous said...

I don't know anything about Generator Technologies or their business practices ...

Suffice to say the owners of Generator Technologies don't know anything either about sound business practices.

Anonymous said...

This is not about being a nice guy. Bottom line: he was robbing peter to pay paul.

County Cletus said...

Just wasting your money anyway once the fuel runs out because our government an idiot

Anonymous said...

@1:16
These aren’t the Harbor Freight gasoline generators you use. These are Kohler and Generac standby gensets that run on LPG or natural gas. They aren’t subject to the same supply chain disruptions as gasoline because the LNG we use is coming out of the ground here locally.. Though the cost of LPG and LNG are both rising.

Anonymous said...

At some point I expect the bankruptcy judge to be given the opportunity to decide whether these deposits made by would-be purchasers constitute funds held in a constructive trust such that the funds are not assets of the bankruptcy estate. That's the argument that I would make if I were a depositor.

Anonymous said...

@1:16 PM - That's your government, not mine. You likely voted for Joe Xiden, right?

Anonymous said...

Ms. Netz is a Jackson attorney, so after almost a year one would think that she could do more to help her aggrieved parents than going to "3 on your side." Maybe she is trying to "generate" some support? Sympathy?

Krusatyr said...

If Ms Netz builds up a class base of enough clients with same beef against Costco and Generator installer, she gets more leverage, bigger fee and can force Costco to settle?

Anonymous said...

If Costco is still promoting a bankrupt vendor, Costco should be forced to repay every customer that ordered through their sales channel.

Anonymous said...

Thanks, 2:04. I'm not a bankruptcy attorney, but that seems to me to be a great point.

4:32, I've read your comments over numerous posts, and you seems to put time and thought into them. So, I'll extend you the same courtesy and try to answer your question, which has a lot going on in it.

1. Mississippi does not have a class-action rule of civil procedure. That said, the plaintiffs would probably have to litigate in federal court anyway because

2. they could not sue the in-state defendant installer due the automatic stay in bankruptcy court,

3. which would give rise to federal diversity jurisdiction because of the complete diversity of citizenship between the plaintiffs and the big-box retailers/manufacturer, assuming the amount in controversy exceeds $75,000.

4. The plaintiffs' claims could possibly be litigated together in a single action, irrespective of a class action rule, assuming all claims arose in the same federal district. (There may be a fight over severance of the claims, depending on the facts vis-a-vis the different retailer-defendants).

5. The attorney fee would likely be a separate, standard contingency contract with each plaintiff. Assuming this would not be multi-district litigation, the fee/percentage of recovery would be the same, though the attorney(s) would obviously make more money with more clients.

6. Corporate defendants don't settle cases because they are afraid of being sued, unless they know they face real liability, that can be proven at trial,

7. Which in this putative case could possibly be based on imposing vicarious liability on the big-box retailers/manufacturer for the actions/inactions of the installer through theory of apparent agency. After all, the act of delivering a usable product was only possible through the installer, which was dictated by Generac, acting through the retailers.

8. Because agency is generally an issue of fact for trial, the plaintiffs would probably have to complete discovery and survive a motion for summary judgment before they could even think about forcing a settlement.

9. It would take a lot of work, and a lot of time, but the possibility of punitive damages with attorney fees on top could make these cases attractive, especially if one could sign up a number of them.

10. On the other hand, maybe Generac, Costco, Academy, Lowe's, etc., will wake up tomorrow and decide to do right by their customers, even if it costs them a few pennies on the dollar. Stranger things have happened.

11. Last but not least, plaintiffs' lawyers can tend to be idealistic, and this fact pattern certainly has the moral outrage factor.

12. Bottom line: I'd probably take these cases, with my eyes wide open and no illusions of quick and easy money.

Anonymous said...

Ms Netz left the Jackson area a few years ago. She lives in Texas.

Anonymous said...

@6:38am - She’s a smart woman then. Get out of this sinking shithole.

County Cletus said...

2:20…. I wrote in for Rand Paul and my point is the current administration is going to kill us all.



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