Newsletter #122 (View other news stories)
US DEALER LITIGATION EXPANDS
MEMPHIS, TN, United States
Thursday, 28 Aug 2003
Another law suit involving forklift dealer relations and finances has been filed in the US District Court in Memphis.
Three commercial financing units of New York-based Citigroup Inc are suing former Toyota forklift dealer CTK Inc, controlling CTK shareholder Bernard Panchikal, equipment maker Toyota Materials Handling USA Inc (TMHU) and seven others. The suit was filed on August 18.
According to documents obtained by Forkliftaction.com News, CTK owed USD5.8 million to the Citigroup units and USD4.6 million to Toyota Financial Services America Corp. Both funding sources had blanket security on CTK's assets, according to the court documents.
CTK had done business through Lift X Technology, ToyotaLift South and related companies, but TMHU terminated its existing dealer relationship on August 1. CTK had operations in Memphis and Jackson, Tennessee; Tupelo and Jackson, Mississippi; and elsewhere in the USA.
Plaintiffs CitiCapital Commercial Corp and CitiCapital Equipment Leasing Corp, both of Irving, Texas, and Citicorp Del-lease Inc, of Harrison, New York, had provided financing for Tupelo-based CTK's sales and rental of lift trucks.
The CitiCapital suit said TMHU "unilaterally, surreptitiously and without legal authority" seized and relocated CTK assets on August 2 and August 3, in part during a major storm-related electrical blackout. The assets were moved to forklift dealer Lilly Co, in Memphis, and other locations, and those actions contravened CitiCapital's security of CTK assets, according to the suit.
Subsequently, TMHU agreed to pay CTK USD6.8 million, of which USD4.2 million was designated to pay off most of the debt to Toyota Financial Services.
Separately, TMHU negotiated a severe non-competition agreement with CTK.
CTK was limited to its current non-Toyota customer base for service and rentals and prohibited from "purchasing additional lift trucks of any brand", the CitiCapital suit said. "In effect, this would result in the destruction and liquidation of the CTK defendants" and "clear the way" for a TMHU-Lilly alliance "to operate as a Toyota lift truck dealer without competition from CTK".
Such an alliance is the subject of other pending litigation, reported in Forkliftaction.com News #121. The same Memphis court has scheduled an October 29 hearing, on the request of Yale Material Handling Corp (YMHC), for a preliminary injunction against TMHU, of Irvine, California, and Lilly. YMHC objects to the break-up of its decades-long business relationship with Lilly and blames TMHU for encouraging Lilly to breach an existing Yale-Lilly dealer agreement.
An August 22 teleconference set the court schedule for the YMHC suit. Attorneys are to complete depositions by October 15 and exchange documents for the hearing by October 20. Both cases were assigned to federal judge J Daniel Breen.
YMHC is an operating division within the materials handling group of Nacco Industries Inc, of Mayfield Heights, Ohio.
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