West Virginia Record

Wednesday, October 16, 2019

Funeral home owners named in another lawsuit

By Chris Dickerson | Mar 7, 2016

WINFIELD – The grandson of the founders of a Poca funeral home is suing the current owners, who already were facing legal troubles.

J. Michael Gatens III filed his lawsuit Feb. 12 in Putnam Circuit Court claiming Chad Harding owes him $113,000 on a promissory note as well as interest. Harding is the owner of Gatens-Harding Funeral Home and has been accused of falsely reporting 111 deaths to an insurance company, allegedly to collect pre-need funeral services.

Gatens – who lives in Calgary, Alberta – claims Harding also didn’t provide him with the deed to the property allegedly used as collateral for the loan.

In August, Iowa-based Homesteaders Life Company filed a federal lawsuit claiming the funeral home falsely reported the deaths of 111 people who had signed up for pre-need funeral services and collected more than $900,000 from the insurance company. In their answer, the Hardings deny any wrongdoing and seek to have the complaint dismissed.

But earlier this year, U.S. District Judge Chuck Chambers granted a motion to Homesteaders that would allow it to sell the property in question if it wins its lawsuit against Chad and Bobbie Harding.

In its original federal complaint, Homesteaders said it sells life insurance and annuity products, including life insurance policies to consumers entering into pre-need funeral contracts. In 2005, the companies entered into an agreement for the sale of pre-need contracts. For each enrollment, Chad Harding would be paid a commission, the complaint states. A similar agreement was signed again in 2007 with Chad Harding. Another similar agreement was signed in 2010 and again in 2012 for Chad Harding and additional employees of Gatens-Harding Funeral Home.

Homesteaders paid commissions totaling $136,719.73 to Chad Harding and other funeral home employees for enrollments, according to the complaint. The funeral home also received an additional $14,667.23 override and bonus. Chad Harding received an additional $7,242.62.

Homesteaders would release funds upon the death of a consumer who had signed up for a pre-need funeral contract. Beginning around September 2012, Chad Harding allegedly started filing false death claims with Homesteaders.

He “engaged in a continuous pattern and practice of submitting materially false death claims to HLC, by telephone, and filling out and signing materially false bank drafts, wherein he fraudulently misrepresented that the … consumers had died … and that the contracted-for funeral services had been provided, when, in fact, said consumers were no deceased and said funeral services had not been provided,” according to the complaint.

“Chad R. Henning, on behalf of Gatens-Harding Funeral Home, signed his name … and falsely certified thereon the date of death of the consumer and that funeral services and goods had been provided.”

To these consumers who still are alive, Homesteaders says it has reinstituted the life insurance policies. Of the 111 people the funeral home claimed to be dead, 14 people did pass away after the funeral home claimed they had passed.

Homesteaders accuses the defendants of fraud, violation of RICO laws for racketeering, conversion, breach of contract and unjust enrichment. It seeks compensatory damages, actual damages, special damages, punitive damages, attorney fees, court costs, pre-judgment interest and other relief.

In September, West Virginia Attorney General Patrick Morrisey’s office filed its own lawsuit against the funeral home for violating the state’s Preneed Funeral Contracts Act.

In that complaint, Morrisey’s office says Gatens-Harding Funeral Home and the Hardings misappropriated money from consumers who were trying to prepay their funeral costs and did not register some preneed funeral contracts with the state.

The AG's complaint was for injunction and related relief, claiming the defendants have violated the West Virginia Consumer Credit and Protection Act and the state’s Preneed Funeral Contracts Act continuously since at least 2012.

In his new complaint, Gatens seeks compensatory damages for Harding’s breach and fraud, punitive damages for Harding’s fraud and misrepresentation, court costs, attorney fees, pre- and post-judgment interest and other relief.

Gatens is being represented by Charleston attorney Joshua A. Johnson of Bowles Rice LLP. The funeral home and the Hardings are represented by Jeff C. Woods of The Law Office of Jeff C. Woods in Scott Depot.

Putnam Circuit Court case number 16-C-39, U.S. District Court Southern District of West Virginia case number: 3:15-cv-12544

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Bowles Rice LLP Virginia Attorney General's Office

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