AKRON—A bitter contract dispute between Good-year and one of its former wholesaler distributors has led both to file breach-of-contract suits against each other.
In reaction to Robison Tire Co. Inc.'s going to court Aug. 10 seeking a restraining order to halt Goodyear's move to foreclose on the wholesaler, the tire maker filed its lawsuit against Laurel, Miss.-based Robison Aug. 17 in the U.S. District Court for the Northern District of Ohio. Goodyear is seeking nearly $6.3 million plus interest, attorneys' fees and court costs from Robison Tire on allegations of breach of contract, action on account and unjust enrichment.
The same day, Goodyear won its motion to have Robison Tire's breach-of-contract lawsuit against Goodyear moved to the U.S. District Court for the Southern District of Mississippi from a Mississippi chancery court.
The Akron-based tire maker further moved to have Robison Tire's case moved to the Ohio court, a motion Robison Tire is opposing.
In its original complaint filed Aug. 10 in the chancery court, Robison Tire sought not only damages in an unspecified amount against Good-year, but also a temporary restraining order and permanent injunction to stop a foreclosure action against Robison Tire undertaken by Goodyear and First Bancshares Inc., the lien holder in the foreclosure.
According to both companies' filings, Goodyear and Robison Tire had a wholesaler distribution agreement (WDA) with each other.
“Goodyear advanced Robison tires on an open account line of credit,” said the Robison complaint. “Robison would sell the tires advanced to them to local retailers for a profit, and then pay funds to Goodyear to satisfy the existing line of credit.”
Among the dealers Robison Tire supplied with Goodyear tires was Tuscaloosa Tire & Service Center in Tuscaloosa, Ala., according to the complaint. (Tuscaloosa Tire is not a party in any of the complaints.)
When Tuscaloosa Tire had a dispute with Goodyear over money, Robison Tire agreed to make a payment to Goodyear on Tuscaloosa Tire's behalf, according to the Robison complaint. Goodyear required Robison Tire to sign both a promissory note and a deed of trust to memorialize the conditions and terms of the payment, it said.
Although the note only required payment of less than $1.1 million, the deed of trust secured up to $4 million, the Robison complaint said.
In addition, Goodyear agreed both orally and in writing to renew its WDA with Robison Tire for two years beginning in January 2015, according to the Robison complaint.
“In fact, Goodyear worked with Robison to expand their territory into the state of Tennessee,” it said. “This was done at Goodyear's request, as it did not have adequate wholesale distribution dealers in Tennessee.”
However, in January 2015, Goodyear informed Robison Tire that it had cut the wholesaler's credit line based on information Goodyear had received from Robison Tire competitor American Tire Distributors Holdings Inc. (ATD), which also is not a party to these legal actions.
Later that month, Goodyear informed Robison Tire that it was canceling its WDA with Robison. Before either Goodyear or Robison Tire could inform customers of the change, ATD sent a flyer to Robison's customers stating that Robison was no longer a Goodyear distributor, the complaint alleged.
“This, of course, made it extremely hard for Robison to sell its existing inventory,” Robison said. Goodyear refused to take its tires back from Robison and demanded payment in full of its original advance, according to the complaint.
“Robison agreed as long as Robison could return any remaining unsold inventory against the open account,” Robison said. “Goodyear refused to reduce that agreement to writing.”
Goodyear blocked Robison's attempts to sell the tires to other distributors, the complaint alleged. At the end of April 2015, Goodyear allegedly locked Robison out of its computer system, preventing Robison from learning its outstanding balance. In May, Goodyear instituted foreclosure proceedings against Robison, the complaint said.
Robison suffered serious financial damage because of Goodyear's breach of good faith, according to the complaint. Among other things, it said, Robison was forced to liquidate some of its corporate assets at substantially reduced prices.
A spokeswoman for TBC Corp. confirmed the company has purchased some assets of Robison in Nashville, Tenn., and Montgomery, Ala. Those assets will operate under the Carroll Tire name, she told Tire Business.
For its part, Goodyear accused Robison of stopping payment on checks made out to the tire maker for more than $864,000, as well as other infractions against the WDA. Goodyear's complaint consists of four counts, including:
c Breach of contract for failing to pay the money due Goodyear, for which Goodyear seeks $2.09 million;
c Action on account, in which Goodyear claims Robison owes it the principal amount of $1.97 million;
c A second action on account, in which Goodyear claims Robison owes it $120,000 on a separate export account; and
c Unjust enrichment, for which Goodyear demands $2.09 million.
In its answer to Robison's complaint before the Mississippi court, First Bancshares asked the court to excuse it from the lawsuit, because Robison seeks no damages against it, and for permission to proceed with the foreclosure.
Goodyear declined comment on the litigation, as did Derek R. Arrington, a Hattiesburg, Miss.-based attorney representing Robison.
Robison Tire has a telephone number posted on the Internet, but the person who answered a call from Tire Business to that number said it no longer belonged to Robison Tire.
According to Bloomberg L.P., Robison Tire, founded in 1945, distributed tires and tubes for passenger and commercial vehicles.
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