AGCO Seeks Removal to Federal Court in Breach of Contract Case

On Sept. 17, defendant agricultural machinery manufacturer AGCO Corporation filed a notice of removal, shifting the case to the Western District of Texas, San Antonio Division, from the current state court, the 225th Judicial District in Bexar County. The breach of contract complaint was filed by plaintiff Holt Texas, LTD (Holt), and accused AGCO of failure to accept returned goods in breach of the parties’ retail sales agreement. Holt’s filing also asked the court to refer the case to private arbitration in San Antonio, Texas.

Holt alleged that it and AGCO were parties to a “Dealer Sales and Service Agreements whereby Defendant agreed to consider Plaintiff a retail dealer for the purchase, retail sale and after-sale servicing of Defendant’s products.” Reportedly, the parties’ 2014 agreement also contained an arbitration clause stating that, “‘any controversy arising out of or relating to’ the agreements (will) be determined by arbitration and conducted pursuant to the rules of the American Arbitration Association.”

Holt allegedly decided to terminate the dealership association in late 2019, and supposedly did so in accordance with contractual provisions and state law. It then returned two batches of parts to AGCO in exchange for cash refunds in November 2019 and February 2020. However, according to the filing, AGCO refused to accept the return of a third batch of parts for which the plaintiff paid $264,415.10.

Holt estimated that it is owed an additional approximately $25,000, for the unaccepted parts pursuant to Tex. Bus. & Comm. Code §§ 57.353 and 57.355. The latter section provides that a supplier who impermissibly refuses to accept returned inventory is liable for “110 percent of the amount that would have been due for the inventory had the supplier timely complied with the requirements of this chapter,” and accrued interest, among other items.

Holt also asked for referral to private arbitration, arguing that “(t)he claims asserted herein fall within the parties’ arbitration agreement.” For its injuries, Holt seeks judgment against AGCO including monetary damages with interest, and the recovery of its attorneys’ fees, and arbitration costs and expenses.

In AGCO’s notice of removal, it argued that transfer to federal court is proper on the basis of diversity jurisdiction. According to the notice, Holt is a Texas company, and AGCO is a Delaware corporation with its principal place of business in Duluth, Georgia.

AGCO contended that “(b)ecause there is complete diversity of citizenship between Holt as plaintiff, and AGCO as defendant, and because the matter in controversy exceeds the jurisdictional amount of $75,000, exclusive of interest and costs, this court has original jurisdiction over this matter…” Consequently, AGCO requested that the federal court oversee the case and discontinue the state court proceedings.

The plaintiff is represented by Caldwell East & Finlayson PLLC, and the defendant by Law Offices of Daniel P. O’Connor, P.C.