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Tort/Negligence – Contract – Dealership Termination – Machine Tools – Unfair Trade Practices

By: Teresa Bruno, Opinions Editor//May 27, 2016

Tort/Negligence – Contract – Dealership Termination – Machine Tools – Unfair Trade Practices

By: Teresa Bruno, Opinions Editor//May 27, 2016

Machinery Solutions, Inc. v. Doosan Corp. (Lawyers Weekly No. 002-092-16, 14 pp.) (J. Michelle Childs, J.) 3:15-cv-03447; D.S.C.

Holding: Although the complaint alleges that the actions of the defendant-manufacturer’s new distributor (defendant Ellison) are ongoing against other members of the manufacturer’s “North American Dealer Family” and are not just a one-time transaction against the plaintiff-dealer, the complaint does not present specific facts demonstrating that Ellison’s conduct is the result of standard procedures or business practices that have an adverse impact on public interest. Moreover, the complaint’s allegations show that the outcome of this case will affect only these parties and not the broader public. Accordingly, the complaint does not state a claim under the South Carolina Unfair Trade Practices Act.

Ellison’s motion to dismiss is granted as to plaintiff’s claims of unfair trade practices, tortious interference with existing contracts, and tortious interference with prospective contracts. Ellison’s motion to dismiss is denied with respect to plaintiff’s civil conspiracy claim.

In support of its civil conspiracy claim, plaintiff alleges, “In July 2015, representatives of Defendant Ellison Technologies purchased the domain name

“Prior to August 21, 2015, Plaintiff’s employees received calls from its customers indicating that Ellison Technologies’ employees had told them that they will be handling the sale and servicing of Defendants Doosan’s products moving forward.

“Further, Defendants’ actions have caused Plaintiff to incur special damages including, but not limited to, damage to reputation, loss of goodwill with suppliers, customers, and employees, and interference with the Plaintiff’s ability to protect its investments.”

Plaintiff’s allegations (1) allow for an inference that defendants were acting for the purpose of injuring plaintiff and (2) are sufficient to state a civil conspiracy claim.

However, the complaint purports to allege a claim of tortious interference with existing contracts, but its allegations do not create an inference of valid contracts between plaintiff and its customers either by generally referencing the manufacturer’s warranty or by using the word choices of “commitments” and “business and economic relationships” instead of “contract” or “agreement.” Nor do the allegations create an inference of Ellison’s knowledge of any such contracts since plaintiff only specifically alleges the manufacturer’s knowledge of the contracts. Therefore, plaintiff fails to state a claim for tortious interference with existing contracts against Ellison.

With regard to the complaint’s claim of intentional interference with prospective contractual relations, the court is able to discern only one paragraph with relevant allegations. Moreover, in that one paragraph, plaintiff only alleges that it disclosed “all … active negotiations” to the manufacturer and plaintiff “does not … know how Defendants Doosan and Ellison have used or intend to use that confidential information.” This allegation neither identifies a specific contract that plaintiff expected to enter into nor demonstrates an improper purpose or method as it relates to prospective business relationships. Therefore, plaintiff has not sufficiently alleged a claim for intentional interference with prospective contractual relations.

Motion granted in part, denied in part.

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