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Ditch Witch of Charlotte, Inc. v. Bandit Industries, Inc.

United States District Court, W.D. North Carolina, Charlotte Division

January 27, 2017

DITCH WITCH OF CHARLOTTE, INC., d/b/a Ditch Witch of the Carolinas, Plaintiff,
v.
BANDIT INDUSTRIES, INC., Defendant.

          ORDER

          Graham C. Mullen United States District Judge

         This matter is before the Court upon both Plaintiff's and Defendant's Motions for Partial Summary Judgment. Both motions have been fully briefed and are ripe for disposition.

         FACTUAL BACKGROUND

         Plaintiff Ditch Witch of Charlotte, Inc. (“Ditch Witch”) is a dealer of heavy equipment with its headquarters in Charlotte, North Carolina and with facilities in both North Carolina and South Carolina. Defendant Bandit Industries, Inc. (“Bandit”) manufactures heavy equipment and related parts used primarily in the tree care and forestry industries and landscaping and land clearing operations, including construction related land clearing. Bandit's line of equipment includes hand-fed chippers, whole tree chippers, stump grinders, and Beast Recyclers (also known as “horizontal grinders”).

         Ditch Witch has been a dealer for Bandit in North Carolina and South Carolina since 2004. On July 23, 2007, Bandit and Ditch Witch entered into a new Dealer Agreement in which Ditch Witch was appointed as Bandit's authorized dealer for the retail sale of hand-fed chippers and stump grinders in thirty-five counties in North Carolina and all but two South Carolina counties, and for the retail sale of whole tree chippers and Beast Recyclers in all of South Carolina and sixty-four counties in North Carolina. The Dealer Agreement was amended in 2008 to allow Ditch Witch to be the authorized dealer for Bandit's large equipment line only (whole tree chippers and Beast Recyclers) in Georgia. The Agreement was amended once again in 2009 so as to appoint the Plaintiff as the Defendant's authorized dealer in the entire state of North Carolina for “the complete line of Bandit hand-fed chippers, stump grinders, whole tree chippers and Beast Recyclers.” (Doc. No. 59-1, p.20).

         The Dealer Agreement stated that its initial term of one year would be automatically renewed for successive terms of one year unless certain notice of non- renewal was given. The Agreement also specified that, with respect to any “statutes or common law regulating or directly affecting the relationship between manufacturers or distributors of machinery, equipment, implements or attachments of the type covered by this Agreement and their dealers, ” Ditch Witch “shall have the rights and duties provided by like statutes or laws, if any, of the state where [Ditch Witches'] facilities are located.” (Id. at p. 13). At the time of execution of the Dealer Agreement and at all times subsequent thereto, Ditch Witch has had facilities in North Carolina and South Carolina.

         Ditch Witch alleges that it fully and faithfully performed its obligations under the Dealer Agreement and that it was one of Bandit's most successful dealers. Bandit, on the other hand, alleges that the parties' business relationship had become strained due to various disputes, including Ditch Witch's failure to open facilities in Georgia and Eastern North Carolina, and failure to hire and retain adequate staff.

         During the parties' relationship, Ditch Witch designed and sold aftermarket cutter-body assemblies that could be used on Bandit horizontal grinders. Cutter-body assemblies are typically sold to the customer and then installed by the customer. There is no evidence that Ditch Witch ever installed any aftermarket cutter-body assembly on any customer's machine.

         In May of 2014, Bandit began to engage in discussions with Yancey Bros. Co. regarding a Bandit dealership in Georgia. Subsequently, in November of 2014, Bandit informed Ditch Witch that it intended to terminate Ditch Witch's dealership in Georgia.

         On April 13, 2015, Bandit sent Ditch Witch a letter by certified mail notifying Ditch Witch that it did not intend to renew the Dealer Agreement when the term ended on July 23, 2015. In the letter, Bandit specifically provided a statement of reasons for the non-renewal, [1]including such things as failing to “aggressively promote the sale of Products, ” failing to maintain an adequate sales staff, failing to open full-service sales facilities in Georgia and Eastern North Carolina, and selling machine parts that infringe Bandit's patents. (Doc. No. 24-2). The letter specifically listed what Ditch Witch must do in order to cure the deficiencies within 60 days. It is undisputed that Ditch Witch did not cure the deficiencies.

         After receiving the letter, Ditch Witch filed suit in this court as well as a motion to enjoin Bandit from terminating its relationship with Ditch Witch. After a hearing, the Court denied Ditch Witch's motion.

         After the Dealer Agreement was terminated, Ditch Witch became a dealer for Trelan.

         Ditch Witch owns the www.banditofthesoutheast.com URL. At some point, content was linked to the URL which stated, in pertinent part,

It has been our pleasure to serve you as a Bandit dealer for more than 10 years. Our name and our products have changed, but our service and our dedicated team have not. . . . Authorized Dealer for Trelan Whole Tree Chippers and Micro-Chippers.

         The link between this URL and the Trelan content was removed on February 9, 2016, when Bandit raised it as an issue.

         Ditch Witch has filed an Amended Complaint alleging claims for breach of contract, unlawful termination under the North Carolina Farm Machinery Act, N.C. Gen. Stat. §§ 66-180 et. seq. (the “NC Act”), unlawful termination under the South Carolina Fair Practices of Farm, Construction, Industrial, and Outdoor Power Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act, SC Code Ann. §§ 39-6-10 et. seq. (the “SC Act”), Unlawful Failure to Pay Warranty Obligations under the NC Act, Unlawful Failure to Comply with Repurchase Obligation under the NC Act, and Unfair and Deceptive Trade Practices under N.C. Gen. Stat. §75-1.1 (“UDTPA”). Bandit has counterclaimed for breach of contract, violation of the UDTPA, and trademark infringement. The parties engaged in discovery and have now filed motions for partial summary judgment. Bandit has moved for partial summary judgment as to Ditch Witch's claim for violation of the NC Act (Claim II), paragraphs 39(a) and (b) of Claim I for breach of contract, and Paragraph 73 of Claim VI for violation of the UDTPA. In addition, Bandit seeks to have the Court find as a matter of law that Ditch Witch's damages under the S.C. Act are limited to those in connection with South Carolina sales and services only. Ditch Witch moves for partial summary judgment as to Bandit's Second and Third Claims for Relief (Unfair and Deceptive Trade Practices and Trademark Infringement) and as to paragraphs 60(b), 60(c), and 60(d) of Bandit's First Claim for Relief (breach of contract).

         DISCUSSION

         A. Summary Judgment Standard

         “A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought.” Fed.R.Civ.P. 56(a). Rule 56(c) of the Federal Rules of Civil Procedure mandates that “[s]ummary judgment is appropriate where the Court is satisfied that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986) (internal quotation marks omitted). Legal questions in particular are “appropriate for summary judgment based on the pleadings, affidavits of the parties and their legal arguments.” N.C. Const. Party v. Bartlett, No. 3:12-CV- 00192-GCM, 2012 WL 5185852, at *2 (W.D. N.C. Oct. 18, 2012).

         B. Bandit's Motion for Partial Summary Judgment

         1. The North Carolina Farm Machinery Act

          N.C. Gen. Stat. § 66-182 governs the termination of the parties' Agreement with regard to the North Carolina dealership. The statue provides:

(a) Notwithstanding any agreement to the contrary, a supplier who terminates or otherwise fails to renew or substantially changes the competitive circumstances of an agreement with a dealer without good cause shall notify the dealer of the termination not less than 90 days prior to the effective date of the termination and shall provide a 60-day right-to-cure the deficiency. If the deficiency is cured within the allotted time, the notice is void. In the case where cancellation is enacted due to market penetration, a reasonable period of time shall have existed where the supplier has worked with the dealer to gain the desired market share. If there is any reason constituting good cause for action, the notice shall state that reason.
(a1) Notwithstanding any agreement to the contrary, a supplier who terminates or otherwise fails to renew or substantially changes the competitive circumstances of an agreement with a dealer for good cause is not required to notify the dealer of ...

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