Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Equipment manufacturer charged with fraudulently inducing distributor to enter agreement, (Dec 10, 2013)

By John W. Arden, J.D., LL.M.

Heavy equipment manufacturer Terex Corporation induced TL of Florida to enter into a distributorship agreement through fraud, in bad faith, and in violation of the Florida Deceptive and Unfair Trade Practices Act, according to a complaint filed in the federal district court in Wilmington, Delaware (TL of Florida, Inc. v. Terex Corporation, December 9, 2013).

TL of Florida alleged that Terex made express and implied representations that there was a market for heavy equipment and parts in Southern Florida and that it needed the representation of a distributor of its products in the area, failing to disclose (1) that the market for parts was already saturated in Southern Florida; (2) that there were already at least six distributors in the area that sold parts only, which did not carry the financial burden of purchasing and maintaining whole goods and therefore could undercut TL on parts prices; and (3) that Terex was in economic straits and was “signing up virtually any person who would agree to purchase whole goods as a heavy equipment distributor, regardless of the market and regardless of the qualifications” of the distributor.

In reliance on those representations, TL executed a distributorship agreement for Terex heavy equipment distributorship and invested substantial amounts of money in whole goods and parts, only to find that there was, in fact, very little market for whole goods and that South Florida was flooded with authorized Terex parts-only distributors, the action alleged. As a result of Terex’s alleged fraudulent omissions, bad faith performance of the distributorship agreement, and failure to take steps to protect its distributors, TL suffered $3 million in damages, it was alleged.

The lawsuit alleged fraudulent non-disclosure of necessary facts, negligent misrepresentation, violation of Florida’s Deceptive and Unfair Trade Practices Act, and breach of the implied duty of good faith and fair dealing. TL requested an award of actual damages in an amount to be determined at trial, but in no event less than $75,000; an award of attorneys’ fees; costs of suit; and further relief deemed just and proper.

The case is No. 1:13-cv-02009-UNA.

Attorneys: Alyssa S. Rothman (Offit Kurman) and W. Michael Garner (W. Michael Garner, P.A.) for TL of Florida, Inc.

Companies: TL of Florida, Inc.; Terex Corporation

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