CH Bus agrees to return 72 motorcoaches to Temsa

Final settlement signed in federal court

CH Bus Sales and Temsa agreed to a “final judgment and permanent injunction” in the U.S. District Court for Delaware, a major step in ending disputes prompted by Temsa’s decision to terminate its distribution agreement with CH.

“Judgment shall enter in favor of the Plaintiff (Temsa),” stated the order signed by U.S. District Judge Richard G. Andrews on Aug. 21. “Defendant (CH) shall specifically perform the obligation contained in the parties’ Security Agreement requiring Defendant to turn over to Plaintiff the Motorcoaches listed on the Attached Schedule A that are in the possession, custody or control of Defendant and/or which become within the possession, custody or control of Defendant at a later date.”

Temsa notified CH on March 20, 2018, that it would end the North American distribution agreement on June 20, 2018. The Turkish manufacturer claimed CH was delinquent on $7.7 million in payments for motorcoaches and parts. CH, in turn, claimed it was owed money for claimed defects in a shipped motorcoach. The dispute reached the U.S. District Court for Delaware in Wilmington.

In the beginning

In a court filing on Aug. 24, 2018, Temsa expanded its allegations to claim that CH Bus “intends to abscond” with 74 motorcoaches worth $21.8 million.

Temsa stated that CH “has unlawfully disposed of 51 Motorcoaches through improper leases or sales with third parties” although Temsa lawyers retained possession of the manufacturer’s certificates of origin. “Under Delaware law, altering, falsifying, counterfeiting, or holding/using an altered, forged or falsified manufacturer’s certificate of origin is a class E felony.”

The Delaware Code lists a sentence of up to five years for conviction of a class E felony.

According to Temsa, “CH’s counsel subsequently informed Temsa’s counsel” that revenue from the sale of 33 of the Motorcoaches “was used to pay another creditor.”

CH’s counterclaim, filed August 24, denied those allegations and sought damages for alleged defects in motorcoaches and interference in attempts to sell CH to a new owner and distribute a shuttle bus.

Court documents do not account for the 73rd and 74th motorcoaches Temsa cited in its August 2018 filing. Temsa has not responded to a request for comments.

Temsa entered the North American market with CH in 2010 and sold its 1,000th coach here in 2017. The manufacturer incorporated Temsa North America last year and began operating as its own distributor.

Permanently enjoined

The order entered by the judge stated that CH and all people associated with it “are hereby immediately and permanently enjoined, restrained and prohibited, directly or indirectly, from:

“1. Possessing, selling, renting, leasing, moving, disposing, transferring, destroying, exercising any ownership and/or control over, and/or diminishing the value of any of the Motorcoaches listed on the attached Schedule A;

“2. Issuing any Manufacturer’s Certificate of Origin and/or aiding any third party in obtaining certificates of the title or registration for any of the Motorcoaches.

“This Final Judgment and Permanent Injunction is final and non-appealable.”

Temsa v. TC Nevada

Still pending is another related civil suit in U.S. District Court for Nevada.

On Sept. 7, 2018, Temsa sued CH Bus Chairman Michael Haggerty, his wife Olga and son John. The suit also names bus operator TC Nevada, of which Olga and John are listed as owners.

Temsa’s suit seeks redress for TC Nevada’s use of motorcoaches. “TC Nevada is improperly using several motorcoaches that are the property of Temsa (to) run shuttle services in and around Las Vegas… thereby rendering them unsellable as new motorcoaches.”

Temsa alleges that “TC Nevada is improperly in possession of at least seven and as many as 30 motorcoaches, thereby causing damage to Temsa ranging in magnitude from $1,463,000 to $9,800,000.”

The latest filing in this case, entered on the court docket Aug. 13, stipulates that the parties agreed to extend deadlines “to respond to discovery requests, produce documents and depose witnesses.”

Under the new case schedule, the parties will file motions for a pre-trial order by Feb. 12, 2020.

CH Bus v. Geiger and REV

In a related battle, CH Bus sued Duane Geiger, its former president, in August 2018 for allegedly breaking an employment contract and taking proprietary information to vehicle manufacturer and distributor REV Group. Geiger is now general manager of REV Coach.

CH included REV in some of its claims, which included breach of contract and fiduciary duties, misappropriation of trade secrets, unjust enrichment, unfair competition and interference with contractual relations and prospective business relations.

That action was filed in the U.S. District Court for Minnesota. CH Bus headquarters are in Faribault, Minnesota.

The case has been remanded to Hennepin County District Court, a Minnesota state court, because the only federal issue involved was dismissed by U.S. District Judge Susan Nelson.

Judge Nelson had granted Geiger and REV motions to dismiss six of the eight claims made by CH, “including the one federal law-based trade secrets claim, but denied their motion with respect to two of the state law claims (breach of contract and tortious interference with contract).”

No activity in the case has appeared on the state court docket.

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