Southern Track & Pump Inc. v. Terex Corporation
Filing
353
MEMORANDUM OPINION regarding proposals for how this case should now proceed. Signed by Judge Leonard P. Stark on 10/16/2015. (rpg)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
SOUTHERN TRACK AND PUMP, INC.,
Plaintiff,
Civil Action No. 08-543-LPS
v.
TEREX CORP., d/b/a TEREX
CONSTRUCTION AMERICAS,
Defendant.
Peter J. Walsh, Jr., POTTER ANDERSON & CORROON LLP, Wilmington, DE.
Suzanne H. Holly, BERGER HARRIS LLP, Wilmington, DE.
Attorneys for Plaintiff.
John C. Phillips, Jr. and David A. Bilson, PHILLIPS, GOLDMAN & SPENCE, P.A.,
Wilmington, DE.
Attorneys for Defendant.
MEMORANDUM OPINION
October 16, 2015
Wilmington, Delaware
This case involves a dispute between Plaintiff Southern Track and Pump, Inc. ("STP")
and Terex Corp. ("Terex"). The parties entered into a contract in April 2007. (D.I. 190 at 3)
Under the contract, STP agreed to purchase and distribute Terex's equipment. (Id.) Pursuant to
this contract, STP purchased approximately $4 million of parts and equipment from Terex. (D.I.
205 at 8) In May 2008, STP sent a letter to Terex terminating the parties' distribution agreement
and notifying Terex of its intent to return to Terex all remaining inventory. (D.I. 206, Ex. K)
Terex denied an obligation to repurchase its inventory from STP. (Id., Ex. M)
On July 23, 2008, STP filed suit against Terex, alleging that Terex violated the Delaware
Dealer Statute, 6 Del. C. §§ 2720 et seq. ("Dealer Statute"). The parties disagreed as to whether
the Dealer Statute required Terex to repurchase all of the equipment it had sold to STP, or only
the equipment that was "new, unused, and undamaged."
On March 28, 2012, this Court concluded that the Dealer Statute required Terex to
repurchase all of the equipment, and that Terex violated the statute by refusing to repurchase all
of the equipment. (D.I. 267 at 12-15) The Court entered summary judgment for STP. (D.I. 267)
Terex appealed to the Third Circuit Court of Appeals. On December 18, 2014, following
briefing and oral argument, the Third Circuit certified the issue to the Delaware Supreme Court.
(D.I. 334) Specifically, the Third Circuit inquired of the Delaware Supreme Court: "Does a
supplier's repurchase obligation under§ 2723(a) of the Dealer Statute extend to used inventory
or is it limited to 'new, unused, undamaged, and complete inventory' under § 2723(b )?" (Id.)
"As the Third Circuit acknowledged,'§ 2723(a) can be read in one of two ways, each of which
has its problems."' (D.I. 334-2 at 7) (quoting 3d Cir. Certification Order, C.A. No. 13-4279, at
*8 (3d Cir. Dec. 18, 2014))
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On June 15, 2015, the Delaware Supreme Court issued an opinion on the certified
question, holding that a supplier's obligation under the Dealer Statute is limited to new, unused,
undamaged, and complete inventory. (Id.) On June 30, 2015, the Third Circuit adopted the
conclusion of the Delaware Supreme Court and remanded the case to this Court, providing:
For the reasons set forth by the Delaware Supreme Court, we
hereby reverse the decision of the District Court and remand for
proceedings consistent with the view of the Delaware Supreme
Court that the repurchase obligation under§ 2723(a) of the Dealer
Statute extends only to "new, unused, undamaged, and complete
inventory."
Id.
On July 28, 2015, the Court ordered the parties to provide a joint status report. (D.I. 335)
They did so on September 4, 2015. (D.I. 345) Given the parties' vastly different interpretations
of the proper scope of the proceedings that should be held on remand, the Court ordered the
parties to submit briefing on their competing proposals. (D.I. 346)
In its briefing, STP argues that the Third Circuit reversed the Court only with respect to a
single issue of law and that, as a result, the Court does not need to "revisit its determination that
Terex was liable for its refusal to repurchase 'new' inventory." (D.1. 348 at 9) STP contends
that the Court should conduct fact finding only to the extent necessary to determine an
appropriate amount of damages. (Id. at 11) Terex, however, argues that the Third Circuit's
mandate should be construed broadly. Under Terex's reading, the Third Circuit's decision
"reversed this Court's judgment in its entirety" and, thus, reopens each of the issues decided in
the Court's earlier order. (See D.I. 349 at 1) On October 9, 2015, the Court conducted a
teleconference to further discuss the parties' disputes and proposals.
Having considered the Third Circuit's mandate, the Delaware Supreme Court's opinion,
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the parties' briefing and statements during the teleconference as well as other materials
submitted by them, and pertinent caselaw, the Court concludes that the letter and spirit of the
Third Circuit's mandate is more consistent with Terex's position than with STP's. 1 The Court
will essentially adopt Terex's proposal for how this case should now proceed. Although the
Third Circuit's reversal was predicated on a single issue of law- the scope of Terex's
repurchase obligations under the Dealer Statute -this Court's prior misinterpretation of the
Dealer Statute necessarily impacted other issues this Court decided. As Terex contends, "[t]he
decision of the Third Circuit and the opinion of the Delaware Supreme Court necessarily
changed the lens through which the facts of this case must be viewed." (D.1. 349 at 6; see also
D.I. 351at2 ("[T]he Court did not issue its finding[s] in a vacuum."))
Accordingly, the following issues must be resolved as part of these proceedings on
remand:
(i) Whether Terex violated its repurchase obligations under the Dealer Statute. The
Court's earlier finding of liability was predicated on the interpretation of the Dealer Statute that
was reversed by the Third Circuit. (D.1. 267 at 15) (finding Terex liable because it "failed to
repurchase all of STP's remaining inventory"). The Court agrees with Terex that "[b]ecause this
Court found that the Dealer Statute required the repurchase of all inventory, it was not relevant
"It is axiomatic that on remand for further proceedings after decision by an appellate court, the
trial court must proceed in accordance with the mandate and the law of the case as established on
appeal." Bankers Trust Co. v. Bethlehem Steel Corp., 761F.2d943, 949 (3d Cir. 1985) (internal
citations omitted). However, when a remand order does not contain specific directions, the
district court has discretion with respect to how to proceed. See id. at 950 ("In the absence of
specific directions, the question as to what further proceedings can be had consistent with the
opinion of the appellate court must be determined from the nature of the case and the pertinent
statutory provisions."); see also United States v. Iriarte, 166 F.2d 800, 803 (1st Cir. 1948)
(reviewing trial court's implementation ofremand order under abuse of discretion standard and
stating, "the trial court has ... discretion ... as to the scope of [the proceedings on remand]").
1
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during the summary judgment proceedings that STP [allegedly] refused, despite repeated
requests, to identify which pieces of equipment in its inventory were new and which were used,"
yet this may now be "a key fact" pertinent to liability (if Terex is able to prove it). (D.I. 345 at
6)
(ii) Whether Terex acted inequitably toward STP. In its order granting summary
judgment to STP, the Court stated that Terex had "failed to do equity ... as a result of its
violation of the repurchase requirements under the Dealer Statute." (D.I. 267 at 17-18) Because
this conclusion relied on a finding that Terex violated the Dealer Statute - an issue that will be
revisited - it should be revisited in light of the Third Circuit's reversal.
(iii) The effect, if any, of GE's repossession of the equipment on Terex's obligation to
repurchase the equipment. The Court previously determined that Terex's effort to raise this
issue (at the pretrial conference) was untimely because it "goes to liability and not to damages."
(D.I. 308 at 70) Now that liability is once again in dispute, and not just damages, it is
appropriate that the Court consider the impact of the repossession on liability.
The Court emphasizes that the above are issues that "need to be resolved" on remand;
they are not yet resolved. To the extent the parties contend that this Court, the Third Circuit, or
the Supreme Court made factual findings that are binding on remand, the Court does not agree. 2
While undoubtedly much of the necessary discovery has already been conducted, it will be for
This is not to say that no facts were established in the prior proceedings. It may be that a party
can demonstrate that another party should be bound, for example, by a particular concession it
made, or that a particular finding by this Court was entirely unaffected by the misinterpretation
of the Dealer Statute. Resolving disputes of this nature, however, will require a specific focus on
specific facts and contentions. The Court rejects the parties' suggestions that the doctrine of law
of the case or the purportedly narrow scope of the Third Circuit's reversal mean at a general
level that the Court is now bound by all that occurred before.
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the parties in the first instance to determine whether (and, if so, what) additional discovery is
required in light of the correct interpretation of the Dealer Statute.
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