Company pledges to remain, continue parts servicing, despite pending lawsuit
By Rick Stoff
WILMINGTON, Del.—As the battle between Temsa and CH Bus Sales escalates in federal court, Temsa is assuring customers that service and support will continue “better than ever.”
Temsa has alleged that U.S. distributor CH Bus “intends to abscond” with 74 motorcoaches worth $21.8 million and already has sold or leased 51 through possibly felonious transactions. The statement was part of a Temsa motion filed Aug. 14 in U.S. District Court for Delaware to request for a court order protecting its interest in the vehicles, and the judge responded with a temporary restraining order that granted part of Temsa’s motion.
Specifically, the court ordered that: CH Bus Sales be prohibited from selling, renting, leasing, moving, disposing, transferring, destroying or intentionally diminishing the value of motorcoaches or issuing a manufacturer’s certificate of origin for Temsa motorcoaches. The court also required CH to provide in writing the location of each motorcoach and existence of any lease agreements with a third party. The court additionally ordered Temsa to arrange for any motorcoaches not proven to have been leased or sold to be transferred into the custody of a neutral third party pending final resolution of the suit and to pay associated costs.
CH’s counterclaim, filed Aug. 24, denies the allegations and seeks damages for alleged defects in motorcoaches and interference in attempts to sell CH and distribute a shuttle bus.
Temsa, of Adana, Turkey, notified CH on March 20 that it was terminating their distribution agreement. Temsa alleged that CH violations of the agreement included delinquency on $7.7 million in payments for motorcoaches and parts. The stakes were raised in the Aug. 14 motion in which Temsa charged that CH has sold or leased 51 motorcoaches for which it has not paid the manufacturer.
In preparation for separation from CH Bus, on June 29 Temsa incorporated “Temsa North America Inc.” in Tenn. Members of the International Motorcoach Group were told that 20 former CH employees have signed on with Temsa North America.
“As we told IMG at its recent meeting, we have 1,200 coaches in the U.S. market,” a new company executive told Bus and Motorcoach News.
“The Temsa organization really loves our U.S. market, is enthusiastic and thinks it did well in the first five years. They want to continue that. They’re not going anywhere.”
Back in court
In its last motion, Temsa stated that it could face “the loss or devaluation of whatever remains of 74 Motorcoaches with a wholesale value of $21,751,157.50. Temsa will likely not recover the Motorcoaches or proceeds therefrom if CH is not immediately enjoined from selling, leasing, disposing of, or otherwise dissipating the value of the Motorcoaches.”
Temsa stated that CH “has unlawfully disposed of 51 Motorcoaches through improper leases or sales with third parties” although Temsa lawyers retain 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.”
The CH Bus responded to most Temsa claims with the same statement: “The allegations in paragraph __ are legal conclusions to which no response is required. To the extent a response is required, denied.
In its counterclaims CH alleged, “The complaint, and each and every cause of action therein, is barred, in whole or part, by Plaintiff’s own material breaches and failure to perform its own contractual duties.”
CH claimed it is entitled to recover not less than $4 million in damages due to Temsa’s breaches. CH also stated it spent $4 million to open and improve four facilities to handle Temsa business.
CH alleged “Temsa provided motorcoaches to CH Bus that were laden with quality issues and were defective. From 2012 through 2018, CH Bus made in excess of 20,000 warranty claims . . . Temsa has failed to reimburse CH Bus for approximately $5.5 million in warranty expenses.”
Another counterclaim: “Temsa improperly, and in bad faith, restrained the trade of CH Bus by preventing CH Bus from marketing for sale mini-motorcoaches manufactured by REV Group, which is not a competitor of Temsa,” CH stated.
Under “Tortious Interference with Prospective Business Opportunity,” CH stated it was negotiating the company’s sale to Main Street Capital and in May 2017 agreed to a price of $19 million but Temsa “intentionally thwarted the transaction.”
CH believes Temsa “desired to compete with CH Bus in the distribution of motorcoaches in the United States.”
The final CH counterclaim is “Poaching of Employees.” CH stated that Temsa has solicited contract and non-contract employees to leave CH and join Temsa.
In its Aug. 14 motion, Temsa said its representatives visited Las Vegas to inspect motorcoaches stored there by CH.
“Seven of the motorcoaches contained clear evidence that they were being used by TC Nevada LLC,” the motion states. “TC Nevada is an entity registered to John and Olga Haggerty.” The motion identifies John and Olga as the son and wife of CH Bus Chairman Michael P. Haggerty.
Temsa was told “three [motorcoaches] were at undisclosed locations on the West Coast being used as demonstration vehicles and one was either lost or stolen.”
The representatives inspected 17 coaches, the motion stated. “The Motorcoaches, which were all required to be maintained as new until sold, had mileage ranging from 3,000 miles to as many as 49,000 miles.”
The Temsa motion stated that current operators of the 51 motorcoaches “may be unaffiliated third parties completely unaware of the relationship between Temsa and CH and thus entitled to continued possession as an innocent purchaser and/or buyer in the ordinary course of business under the Uniform Commercial Code.”
As the suit moves forward, Temsa is moving ahead to directly distribute and service its buses. A spokesperson told Bus & Motorcoach News that four containers of parts had arrived at a Miami port and were being stocked at a facility in Orlando. A ship left Turkey in late August with new vehicles.