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Visteon Corp. v. VarrocCorp Holding B.V.

United States District Court, Eastern District of Michigan, Southern Division

March 31, 2015

VISTEON CORPORATION, Plaintiff,
v.
VARROCCORP HOLDING B.V. and VARROC ENGINEERING PRIVATE LTD., Defendants. AND VARROCCORP HOLDING B.V. and VARROC ENGINEERING PRIVATE LTD. Counter-Plaintiffs,
v.
VISTEON CORPORATION, VIHI, LLC, VEHC, LLC, and VISTEON HOLDINGS ESPANA, S.L., Counter-Defendants.

ORDER GRANTING VISTEON’S MOTIONS TO DISMISS

John Corbett O'Meara, United States District Judge.

Before the court are Visteon’s motions for partial dismissal of VarrocCorp Holding B.V. and Varroc Engineering Private Limited’s counterclaims and amended counterclaims. The court heard oral argument on March 19, 2015, and took the matter under advisement. For the reasons discussed below, Visteon’s motions are granted.

BACKGROUND FACTS

This is a breach of contract action involving an Asset Purchase Agreement (“APA”) between Visteon, VarrocCorp, and related entities. Through the APA, Visteon sold its automotive lighting systems business to Varroc. Visteon alleges that Varroc breached the agreement and filed its complaint in this court on June 20, 2014. The Defendants are VarrocCorp Holding B.V. and Varroc Engineering Private Limited. VarrocCorp Holding was served first and filed an answer and counterclaim on November 12, 2014. Visteon filed a motion for partial dismissal of the counterclaims on December 12, 2014. Varroc Engineering was served later and filed its answer and counterclaims (which are the same as those asserted by VarroCorp Holding) on December 17, 2014. Visteon filed a second motion for partial dismissal of Varroc Engineering’s counterclaims on January 16, 2015.

Varroc Engineering then filed an amended counterclaim as of right on January 23, 2015. (VarrocCorp Holding sought permission from Visteon to amend, which Visteon refused.)[1] Visteon filed a motion to dismiss Varroc Engineering’s amended counterclaim on February 9, 2015. Because their claims are identical, the court will refer to VarrocCorp and Varroc Engineering together as “Varroc.”

In the APA, the parties defined Visteon’s “Material Contracts” (Article 5.9) to be purchased by Varroc. With respect to these Material Contracts, Visteon made the following representations:

Each Material Contract is in full force and effect and is valid, binding and enforceable in accordance with its terms as to the respective Visteon Operating Company that is a party to the Agreement, and to Seller’s Knowledge, the other parties to the Material Contract.
(i) Each Visteon Operating Company has in all material respects performed and is performing all its obligations under the Material Contracts to which it is a party.
(ii) No Visteon Operating Company, nor, to Seller’s Knowledge, any other party is in default of any material obligation under any of the Material Contracts to which such Visteon Operating Company is a party;
(iii) No Visteon Operating Company has received any written notice of default under any of the Material Contracts, nor to Seller’s Knowledge has any event occurred that with notice or lapse of time or both would constitute a material default by any Visteon Operating Company under any Material Contract to which such Visteon Operating Company is a party; and
(iv) To Seller’s Knowledge, no Visteon Operating Company has received any written notice of intent to terminate any Material Contract to which such Visteon Operating Company is a party.

APA at § 5.9.

Varroc’s claims of fraud are based upon representations Visteon made regarding its customer, Fisker Automotive. According to Varroc, Visteon claimed that it had long-term programs with Fisker with a combined revenue of $14.3 million annually. Prior to the closing of the APA on August 1, 2012, however, Visteon learned that the Fisker business would decline substantially in the future. Visteon did not provide this updated information to Varroc. Additionally, the decline in Fisker business was causing problems for Visteon’s suppliers, who had contracted to provide parts to Visteon for the Fisker project. Varroc contends that it relied upon the information supplied by Visteon regarding Fisker in evaluating the business acquisition and purchase price.

In its amended countercomplaint, Varroc alleges that Visteon knew that Fisker was in breach of its agreement with Visteon and that, as a result, Visteon was in default of certain Material Contracts with its suppliers. Countercomplaint at ¶¶ 24-28, 38-42. According to Varroc, Visteon breached Article 5 of the APA. Id. at 46. Varroc alleges the following counterclaims against Visteon in the first amended countercomplaint: Count I, breach of contract; Count II, fraudulent misrepresentation; Count III, constructive fraud; Count IV, fraud in the inducement; and Count V, silent ...


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