Plastech Holding Corp., based in Dearborn, Mich., brought a company to court, saying it interfered with its partnership with Chinese automaker Jianghuai.
The company filed a complaint with the Eastern District Court of Michigan on October 21st, and the defendant was WM GreenTech Automotive Corp. of Virginia, USA. The plaintiff accused GreenTech of deliberately interfering with Plastech's relationship with Anhui Jianghuai Automobile Co., Ltd. (Jianghuai Automobile).
Plastech said GreenTech signed an electric vehicle distribution agreement with Jianghuai Automobile this year, but Jianghuai has signed an exclusive contract with Plastech.
However, GreenTech's representative lawyer responded that Plastech refused to submit a copy of the exclusive contract to the defendant or court. At the same time, Jianghuai Automobile said it had not signed the contract.
Plastech and GreenTech blamed each other on litigation documents, focusing on whether the US market is not ready to introduce Chinese-made cars.
According to the complaint filed in October, Plastech signed a framework agreement in October 2010 to sell electric passenger cars produced by JAC to US dealers. Plastech said that GreenTech and Jianghuai Automobile established a partnership in April 2013 to introduce Chinese cars to the US market, infringing Plastech's exclusive agreement, which expires in October 2015 with automatic renewal terms.
Plastech lawyer Andrew Kochanowski said the company hopes to obtain compensation for the amount of damage that has not yet been determined, possibly reaching $4 million.
Kochanowski said that Plastech invested millions of dollars in engineering companies and introduced US dealers to JAC. Now, the company is in trouble and there is no Jianghuai car available for sale.
According to the October complaint, GreenTech deliberately violated the agreement between Plastech and Jianghuai Automobile in various aspects.
The complaint alleges that GreenTech hired Marianne McInerney as executive vice president of sales and marketing in March 2012. McInerney was the COO of Plastech.
The complaint said: "McInerney helped raise most of the funds and attracted the interest of the US auto dealers and dealer groups in the Jianghuai passenger car (which will be distributed by Plastech)."
The complaint alleges that McInerney knew about Plastech's terms of the deal and should tell GreenTech.
Plastech also said it had met with GreenTech CEO Charles Wang to ask Plastech to act as a middleman and sell Jianghuai to GreenTech.
Kochanowski said: "They are very aware that we signed an agreement but deliberately violated.
GreenTech says that if there is an agreement, they will be bound by the agreement. However, the company stated in the motion submitted on October 31 that JAC confirmed that it had not signed such an agreement.
GreenTech's attorney asked Plastech to provide its contract with Jianghuai Automobile as a response to a warning letter issued by Plastech's lawyers.
GreenTech's lawyer Larry Murphy said that Plastech has not yet reached an agreement or drafted an agreement in court for review.
Murphy said: "We asked them to provide the contract, but the result was a lawsuit. We just wanted to see a copy of the contract."
Kochanowski said there were confidentiality clauses in the contract, so Plastech could not provide the contract. He said that an agreement will soon be reached in court.
He said that Plastech will also arbitrate with JAC on this issue in Hong Kong.
The lawsuit took place at a time when sales of Chinese-made cars in the US market were strongly promoted.
As of now, the United States has not imported Chinese-made cars. One of the reasons is that Chinese-made cars fail to meet US safety standards.
Fred Hubacker, general manager of consulting firm Conway Mackenzie Inc., said: "I firmly believe that Chinese-made cars will eventually land in the US market. It is very likely." "But it seems to me that this will not happen in the short term and will take some time. It is only after solving a series of quality, branding and distribution issues that it is possible to see a large number of Chinese-made cars appearing in the United States."
"strategic conspiracy"
The lawsuit also called GreenTech a "shell company."
The allegations focused on GreenTech's predecessor, and Kochanowski said that GreenTech's approach to operations is misleading and involves ethical issues.
Founded in 2009, GreenTech Automotive was founded by Democratic fundraiser Terry McAuliffe and is currently the governor of Virginia, who originally planned to produce 1 million cars a year. Now it is recommended to produce thousands of low-speed "community vehicles" every year.
The day after Plastech filed the complaint, GreenTech became the Mississippi assembly plant on October 22nd.
In 2009, the company estimated that the Mississippi plant invested $1 billion and employed 2,500 people. The company initially envisioned the production of multiple models, most of which were exported to foreign markets.
Since 2009, GreenTech has been chased by various delays and political disputes.
To make things even more complicated, McAuliffe and Wang plan to fund the controversial EB-5 US investment immigration program. The EB-5 was established by the US Congress in 1990. Foreigners can obtain immigrant visas by investing at least $500,000 in employment-affiliated businesses in the federal government's listed regions.
GreenTech's initial fundraising initiative was made to the wealthy in China, promising to give US visas in return.
When Jimmy Carter, Bill Clinton and Hillary Clinton’s campaign fundraiser, McAuliffe, was elected to the governor of Virginia in 2013, the company became a political goal to a certain extent. The US Securities and Exchange Commission also launched an investigation into the company.
McAuliffe said in a media report that he had terminated his relationship with the car company by the end of 2012.
Plastech accused GreenTech of misleading economic incentives about its car's production capacity, saying it only imported Chinese cars and installed battery packs.
Kochanowski said: "GreenTech has invested a lot of time to convince state and federal investigators that they will create production jobs for Mississippi. But in fact, they will not produce cars in the US. They will not buy kits; they will buy Completely assembled vehicle."
Murphy said that these issues have gone beyond the scope of Plastech's complaint, which is "misleading" and submitted a bill to revoke the allegations. He called Plastech's complaint "a little trick" in order to undermine GreenTech's public image.
The bill said: "(Plastech) did not file a lawsuit against the allegations of contract interference, but instead chose to make false, irrelevant, non-substantive and defamatory allegations against GreenTech, this (Plastech) complaint Or its claim for relief is irrelevant."
Dan Sharkey, a partner at Brooks Wilkins Sharkey & Turco PLLC, said that Plastech's complaints are commonplace in the automotive industry.
Sharkey said: "In general, infringement interference prosecution is very common in commercial litigation, but in this lawsuit, I did not see the conspiracy, and the plot fell like a novel."
The root cause of the problem GreenTech is not the only company with poor profitability. Plastech is even more frustrated.
Plastech Engineered Products was once the largest minority supplier in the United States, and on February 1, 2008, the company filed Chapter 11 bankruptcy protection after its largest customer, Chrysler, cancelled the order.
According to Chrysler, the poor quality of Plastech's production is the reason for the cancellation of the contract. In 2007, Chrysler issued a 449 "Quality Warning Ticket" to Plastech for the "failed" material of the injection molded parts it delivered. Chrysler believes this is a substantial violation of the provisions of the purchase agreement. At the time of filing the appeal, Plastech had a total of 35 factories with more than 7,700 employees. At the time, Plastech owed creditors debt of up to $560 million.
The supplier's mold problem also triggered a lawsuit against Chrysler. Finally, Plastech sold its exterior business to the Goldman Sachs Group and Magna International for $24.7 million, and sold the interior business to Johnson Controls and Goldman Sachs for $199.5 million and sold the stamping business. For JD Norman Ohio Holdings Inc., the price is $4.5 million.
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