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Teran v. GB Intern., S.P.A.

United States District Court, D. Kansas

January 29, 2013

Carlos TERAN, Plaintiff,
GB INTERNATIONAL, S.P.A., et al., Defendants.

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James M. Warden, Warden Grier, Kansas City, MO, Eleanor T. Barnett, Healthcare Service Group, Jefferson City, MO, Glen H. Waldman, Heller Waldman, P.L., Coconut Grove, FL, for Plaintiff.

Robert J. Hoffman, Timothy J. Davis, Bryan Cave LLP, Kansas City, MO, for Defendants.


JULIE A. ROBINSON, District Judge.

Plaintiff Carlos Teran brings this lawsuit against GB International, S.P.A. (" GB International" ) and GB Miami, S.R.L. (" GB Miami" ) (collectively " Defendants" ), asserting claims for breach of fiduciary duty, tortious interference with a business relationship, unfair competition, declaratory relief, and breach of contract.[1] After Defendants moved to dismiss his Complaint on jurisdictional grounds, the Court granted Teran's request to conduct limited discovery on the issue of personal jurisdiction. Teran was then granted leave to amend his Complaint, and this matter is now before the Court on Defendants' Motion to Dismiss Plaintiff's First Amended Complaint for Lack of Personal Jurisdiction and for Failure to State a Claim (Doc. 55). For the reasons explained in detail below, the Court denies the motion on personal jurisdiction grounds, and grants the motion in part with respect to Plaintiff's breach of Shareholder Agreement and tort claims.

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I. Background

The following facts are derived from the First Amended Complaint. Teran has been in the tractor part supply business for decades, with a sales concentration and strong relationships in South, Central, and Latin America. Starting in June 2002, Teran formed, owned and operated a successful tractor part supply company, Teran Tractor.

Defendants are foreign corporations organized under the laws of Italy. On January 9, 2004, GB International entered into a Supply Agreement with American Crane and Tractor Parts, Inc. (" ACTP" ), a Missouri corporation, that requires ACTP to purchase certain products from GB International, provided that the price did not exceed other sources by more than 15%.[2]

In April 2005, GB International purchased a 65% ownership of Teran Tractor, with Teran holding the remaining 35%. The perceived benefits to Teran Tractor from this transaction included the advantages of greater exposure from a bigger organization, introduction into new markets, and purchasing power efficiencies. In January 2004, prior to acquiring a controlling share in Teran Tractor, GB International purchased 65% of ACTP, a competitor of Teran Tractor. ACTP's strength was in the North American market, and they lacked Teran Tractor's connections and sales in South, Central, and Latin America. GB International also owned other companies in the tractor supply industry, including CGR, an Italian manufacturer of tractor supply parts that had little penetration or market share anywhere in the Americas.

Previously, Teran Tractor and ACTP discussed a merger of the two companies, and during the due diligence period shared confidential information with each other that included pricing data, sourcing data and customer information. Soon after GB International purchased Teran Tractor, and while the two subsidiaries were still separate, ACTP began to use confidential information it obtained during the due diligence process to undercut Teran Tractor's prices in an effort to steal away some of Plaintiff's market share in Latin America.

In November 2006, Teran Tractor and ACTP were merged, and began operating under ACTP's name; Teran Tractor remained only as a brand name. Plaintiff objected to the merger, but did not possess sufficient voting authority to stop it from occurring. On November 9, 2006, Teran entered into the Second Amended and Restated Shareholders Agreement (" Shareholders Agreement" ) with GB International, GB Miami and three individual shareholders in the newly-merged ACTP.[3] The individual shareholders, Jeffrey Weiner, Harry Pennington and Kenneth Stacy, were also employees of ACTP. At the time of the merger, Teran's 35% share was worth approximately $4.5 million.

Also on November 9, 2006, Teran entered into an Employment Agreement with ACTP, under which he served as ACTP's Managing Director of the Latin American markets.[4] The term of the Employment Agreement was until April 30, 2015.

Pursuant to a Redemption Agreement entered into on November 10, 2006, between GB International and ACTP, GB International exercised its right to require ACTP to redeem the 692.723 shares of ACTP stock that GB International's affiliate, GB Miami, received as part of the merger.[5] GB International took cash in the amount of $4.255 million for GB Miami's shares and forced Teran to take

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shares of ACTP instead of cashing out. Teran thereafter owned a 5.8% interest in ACTP, but had no ownership interest in GB International. This cash-out was orchestrated by Filippo Borghi, the largest shareholder and titular head of GB International and Chairman of the Board of ACTP. As a result of the cash-out, ACTP was further leveraged and was devalued by the amount of cash taken out for the benefit of GB International.

At the time of the merger, ACTP had four shareholders in addition to Teran, making it a closely held company. Pursuant to the Shareholders Agreement, GB International was permitted to designate four of seven members of the Board of Directors of ACTP.

After the merger, GB International over time systematically engaged in practices that caused significant losses to ACTP and diminished the competitive edge that it had gained through its own efforts and those added by the merger with Teran Tractor. As a direct result of these practices, it became virtually impossible for ACTP to remain profitable. These activities were undertaken to benefit GB International and CGR at the expense of ACTP and thus, Plaintiff, and included unreasonable ordering restrictions and requirements, purchase prohibitions, and minimum price requirements under the Supply Agreement. These activities were part of a scheme employed by GB International to boost the revenues and profitability of CGR, to which GB International had direct obligations and certain of its principals had personal guarantees, and whose strong balance sheet and profitability was critical to both the continued expansionist ambitions of GB International in Italy and as its goal to eventually take the Italian company public. The actions by GB International led ACTP to lose customers, including numerous customers in ...

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