Chatsworth Firm to Pay for Fraud Claims

A Chatsworth water damage restoration company will pay almost $500,000 relating to an alleged four-year history of fraudulent business practices, according to city of Los Angeles’ attorney’s office. City Attorney Mike Feuer announced Tuesday that California Restoration will pay $88,000 to 23 former customers, a $150,000 civil penalty and $250,000 to set up a restitution fund for additional customers who may come forward with related complaints about the company. The amounts followed a lawsuit filed by the attorney’s office relating to customer experiences between July 15, 2012 and May 15. Feuer claims that the company, owned by Matthew and James Monroe, used service contracts that left out significant details about the work to be performed, such as cost, estimated date of completion and a three-day cancellation window. His office also alleged California Restoration made false statements about claims it said it submitted to insurance companies and took unlawful legal action against former customers. The case formed out of a collaboration between the Contractor’s State License Board, the Attorney General’s Office and the Department of Insurance after the state suspended the company’s contractor license. Under the settlement agreement, Feuer’s office said California Restoration must drop liens and dismiss any lawsuits against former customers, as well as instill certain business practices regarding its contracts and relations with customers such as using truthful language and adding more details in contracts, among others. The company’s attorney for the case, Bob Muller of L.A. firm Cypress LLP, said he has worked with Feuer’s office and California Restoration to change certain business practices and procedures. For one, written agreements will be very clear, he said, and they will be revised, simplified, made more legible and understandable. Their language will also be more precise with disclosures on customers’ rights, he added. Additionally, Muller said, the company will increase staff training and ensure customers have more direct contact with project and company management. “We think that those efforts, given the nature of emergency work being done, will help customers to understand what is going on and be satisfied with work when work is done,” Muller said. “And we’ve had the city work with me and the company to review these revised contracts.” The city’s case against California Restoration emanated from the state’s investigations of customer complaints, and according to Muller, those have been resolved. Those investigations also involved Cal Restoration Inc., another company owned by the Monroes, which did contracting work. As a result of the investigations, that company’s contractor license was suspended for three years, Muller said, and it is not currently operating. California Restoration spent about $78,000 to reimburse the state agencies’ investigation fees, he confirmed. “California Restoration believes that each and every customer deserves to receive the highest standard of care,” Muller wrote in a statement to the Business Journal. “To that end, California Restoration has simplified and updated its contracts and work orders so that customers can better understand their rights and the services it provides,” he wrote. “California Restoration has invested further in staff training to give its customers first-class service and to support their needs during a water-intrusion crisis. California Restoration has also instituted improved customer communication procedures to assist customers with California Restoration’s team and senior managers to answer customer questions and address concerns as soon as they arise about water-intrusion situations.”