Two forklift manufacturers are in the midst of a legal battle over a disagreement about a dealer relationship in the mid-south of the USA.

Yale Materials Handling Corp (YMHC), a unit of Nacco Industries Inc, is suing equipment maker Toyota Materials Handling USA Inc (TMHU) and dealer Lilly Co.

In a related move, Toyota has terminated a dealer agreement with ToyotaLift South, of Jackson, Tennessee, USA, effective from August 1. Toyota acknowledged having ongoing discussions with Memphis-based Lilly about a new deal to represent the Toyota line but said that, as of August 7, no new agreement existed.

In the lawsuit, filed on July 30, Nacco unit YMHC, of Greenville, North Carolina, alleged that competitor Toyota, of Irvine, California, caused a breach in a long-time dealer agreement under which Lilly had sold Yale equipment.

Toyota issued a rejoinder in a message to its dealers: "This lawsuit is without merit and will be defended fully and completely by TMHU."

Yale's suit seeks compensatory damages of USD9.6 million and asks that the amount be trebled because of Toyota's alleged breach of the Yale agreement with Lilly. Yale also seeks a judgement against Lilly.

Yale filed the suit in a Tennessee state court in Memphis, but Lilly filed the next day to move the case to a US district court in Memphis.

"We value highly the relationship we have with our dealers," Yale president Don Chance said, in a statement. "Tortious interference by a competitor with ... any of our dealers will be dealt with firmly."

Mr Chance said Toyota had threatened Yale with litigation and had demanded Yale release the dealer from contractual commitments.

The suit said Yale had had a dealer relationship with Lilly for five decades. Under their most recent agreement, dated July 2, 2002, Lilly "agreed not to represent a competitor's product".

Yale blames Toyota for any break-up: "In an effort to unfairly gain a competitive advantage, Toyota has engaged in a deliberate course of conduct to cause Lilly to breach the agreement, by selling and offering for sale in the geographic area new products manufactured by Toyota that directly compete with Yale products."

Lilly has represented Yale in 21 counties in Tennessee, 25 in Mississippi, 10 in Arkansas and two in Missouri, through branches in Jackson and LaVergne, Tennessee; Tupelo, Mississippi; and Jonesboro, Arkansas.

The suit said Toyota "improperly advised Lilly" that a key section of the Yale-Lilly agreement was unenforceable. Yale said it sought assurances Lilly would honour its Yale agreement, and sued after determining "Lilly has failed and refused to provide Yale with the requested assurances", the court filing said.

Yale is an operating division of Nacco Materials Handling Group Inc of Portland, Oregon. The group's parent firm, Nacco Industries Inc, is based in Mayfield Heights, Ohio.