The plaintiffs allege that TransDigm, Inc. made misrepresentations about how it would operate the businesses post acquisition and failed to describe its poor relationship with the plaintiffs’ key customers and acquisition candidates.
Los Angeles, CA (PRWEB) March 01, 2012
Judge Melvin D. Sandvig of the Superior Court of the State of California, County of Los Angeles, has ruled (PC 051408) against a demurrer from TransDigm, Inc. and Dukes Aerospace, Inc. and ordered a civil trial of charges made against the two companies by Infinity Aerospace, Inc., Aviation Design Group, Inc., The Dukes Group, LLC and Chet Huffman, alleging that the defendants committed acts of fraud and misrepresentation and breaches of contract, resulting in $41.7 million of damages.
TransDigm, Inc. and Dukes Aerospace, Inc. are wholly-owned subsidiaries of TransDigm Group Incorporated, an international company based in Cleveland, Ohio, which engineers, produces and supplies aircraft parts.
The plaintiffs, based at the time in Northridge, CA and Mesa, AZ, agreed in 2009 to sell to TransDigm Inc. all of the assets of Infinity Aerospace, Inc. and Aviation Design Group for a $95.75 million base price plus an earn-out payment of up to $60 million if certain revenue targets were exceeded over the next four years. The plaintiffs supplied fuel pumps, valves and cabin pressure systems to some of the most advanced aircraft in the world.
The plaintiffs allege that TransDigm, Inc. made misrepresentations about how it would operate the businesses post acquisition and failed to describe its poor relationship with the plaintiffs’ key customers and acquisition candidates and also did not disclose TransDigm, Inc.’s intent to significantly raise prices and slash costs post acquisition. The plaintiffs in the case allege that TransDigm, Inc.’s management also made several enforceable promises in the asset purchase agreement that they have not fulfilled – including a promise to retain specific key executives.
The plaintiffs allege that the defendants’ conduct post acquisition made the earn-out payment impossible to achieve, including the termination of key executives, the termination or inducement of 42 of 105 employees to quit or leave, the cancellation of distribution agreements, the implementation of drastic price increases and the closing of key facilities in Arizona and Minnesota.
The plaintiffs are asking for compensatory damages of $41.7 million plus punitive damages, pre- and post-judgment interest, and attorney’s fees. The plaintiffs are also asking for an order requiring TransDigm, Inc. to release $10.5 million in funds held back from the sales price and to comply with the earn-out provisions of the asset purchase agreement.
Lead attorney for the plaintiffs is Francis J. Burke Jr. of Seyfarth Shaw LLP in Los Angeles.
Case No. PC 051408
Superior Court of California
For the County of Los Angeles
North Valley District