PAUL, Minn.—CH Bus Sales has sued former president Duane Geiger for allegedly breaking an employment contract and taking proprietary information to vehicle manufacturer and distributor REV Group.
Geiger, now general manager of REV Coach, states in his counterclaim that he left CH Bus to avoid participation in illegal transactions. As a CH shareholder, Geiger further alleges that CH Bus Chairman Michael Haggerty harmed CH by transferring motorcoaches, parts and tools to another company that he owns.
The suits were filed in the U.S. District Court for Minnesota. CH Bus headquarters are in Faribault, Minn. CH Bus is involved in court proceedings in Delaware regarding the cancellation of its agreement to distribute Turkish Temsa motorcoaches.
The related CH suit, filed Aug. 21 against Geiger and REV, states that Geiger joined CH in 2011 and served as an officer, director and shareholder until Dec. 20, 2017, then “he abruptly resigned” with “valuable confidential and proprietary information and strategic relationships.”
Geiger’s employment contract contained “confidentiality, non-compete and non-solicitation provisions” and a two-year “non-competition/non-solicitation clause,” CH states.
CH charges that REV is a competitor that expressed an interest in buying CH Bus in 2016 and was granted access to proprietary information. REV did not acquire CH Bus, the suit notes, and became the U.S. distributor for Setra motorcoaches last January.
CH alleges that Geiger also has violated his employment agreement by “contacting, on REV’s behalf, certain of CH Bus’s key employees” with job offers.
CH lists eight claims against Geiger and REV: breach of contract, breach of fiduciary duties, misappropriations of trade secrets (under state and federal laws), unjust enrichment, unfair competition, tortious interference with contractual relations and tortious interference with prospective business relations.
On each count CH tells the court it is entitled to damages “in excess of $50,000.”
The Geiger and REV response, filed Aug. 27, identifies Geiger as a defendant to the CH claims and as a plaintiff making new claims against Haggerty.
Geiger states that he is a five-percent shareholder in CH Bus but left after “CH Bus’s business deteriorated because of the actions of Haggerty, who executed near-authoritarian control.”
The counterclaim alleges that late in 2017 Haggerty began talking of a plan to sign a financing note to obtain titles to Temsa motorcoaches, sell them and then refuse to pay the bank that financed the note.
“Geiger wanted no part of Haggerty’s deceptive and potentially fraudulent scheme,” his suit states. “He therefore refused to sign any further financing documents . . . Haggerty began signing them himself.”
As the payment date approached for one of the notes, “Geiger remained concerned that Haggerty was not going to pay it . . . (he) felt he had no choice but to resign.”
Geiger alleges that Haggerty had conflicting interests because he “benefited from an ownership and/or economic interest in a Las Vegas coach bus company . . . that has directly competed with CH Bus to CH Bus’s detriment.”
It is claimed that Haggerty transported approximately 15 buses from CH to Las Vegas “with the intention of allowing (the Nevada company) to use those buses during the busy holiday season . . . without paying CH Bus.”
An additional 42 buses were taken from CH “for the exclusive economic benefit of himself and (the Nevada company) . . . Upon information and belief, Haggerty also took approximately $75,000 in parts and other equipment from a CH Bus facility . . . purchased upwards of 10 new buses from CH Bus’s inventory for less than the purchase price . . . turned (the Nevada company) into a bus-selling business… taking business opportunities and property away from CH Bus’s business. . . and retained the profits.”
The countersuit also claims that Haggerty dispatched workers to the CH facility in Dallas “to send all or most of the tools, equipment, parts and buses” to Las Vegas.
These actions were “a direct economic detriment” to CH Bus and its shareholders, including Geiger. “By his unlawful conduct and his unsound business judgment, Haggerty caused the downfall of CH Bus, with its employees and officers forced to resign their positions to avoid complicity in Haggerty’s schemes.”
The Geiger and REV counterclaims list four counts of “Breach of Fiduciary Duty” against Haggerty – usurpation of corporate opportunities, corporate waste, self-dealing and conduct undertaken in bad faith. Damages are requested on each count “in excess of $50,000 to be determined in trial.”
Haggerty’s responses to Geiger and REV, filed Sept. 4, state that Haggerty “denies each and every allegation… unless otherwise admitted or qualified herein.”
Haggerty alleges that CH “was forced to sell some of its bus inventory” due to “Geiger’s mishandling of CH Bus finances.” He says it was necessary to centralize CH bus parts and equipment because two facilities had to be closed “due to Geiger’s mismanagement.”
Haggerty denies that he has an interest in the motorcoach company named in the Geiger/REV counterclaim – TourCoach Las Vegas. The civil suits filed by Temsa in the U.S. District Court for Delaware identify the implicated Las Vegas carrier as TC Nevada LLC. The Nevada Secretary of State’s records list that company’s officers as John and Olga Haggerty, who Temsa identified as Michael Haggerty’s son and wife.
Haggerty says Geiger and REV “fail to state a claim upon which relief can be granted” and asks the court to dismiss the counterclaims.
When asked for comment, Haggerty added the Geiger had “violated his fiduciary duty to the company” and left CH with $11 million in floor plan debt. He said REV used information obtained during the potential purchase of CH to conspire with Geiger and lure him to REV.
Geiger did not respond to a request for further comment.