By: Michael Lauzon
February 8, 2013
PAINESVILLE, OHIO -- Custom injection molder Core Systems LLC has countersued Whirlpool Corp., whose Jan. 24 lawsuit claims Core breached contract.
Core injection molded about 250 parts for Whirlpool plants in Findlay, Clyde, Marion and Greenville, Ohio, before Whirlpool terminated its services Jan. 24. The loss of that business forced Core to close its Mount Gilead, Ohio, plant.
The fates of Mount Gilead and of Core's headquarters plant in Painesville, Ohio, are still being discussed, according to Core counsel Philip Oliss of Cleveland.
Core has returned all of the relevant Whirlpool tooling, Oliss said in a telephone interview.
In the past five years, Whirlpool business has accounted for about $150 million in sales for Core, which had total sales of $47 million for its fiscal year ended Sept. 30.
In a Feb. 3 response to Whirlpool's complaint filing to the court, Core denies most of Whirlpool's allegations and says that, in some cases, it could not meet obligations because Whirlpool interfered with Core and misinterpreted the two parties' agreements.
A key issue in Core's countersuit is a performance improvement plan, agreed to Jan. 11, in which Whirlpool gave Core until March 28 to achieve certain milestones, according to Core. Core said it was coerced into signing the one-side agreement.
In any event, without notice, Whirlpool informed Core it would re-source components and demanded same-day access to Core facilities to reclaim tooling. Core alleges that, at about the same time, Whirlpool cut off a payment system in which Core could quickly sell accounts receivable within 15 days to receive immediate cash. Without that system, Core and its secured lenders were dealing with "tainted" collateral, and Core's relationship with those lenders was jeopardized, according to the molder.
A Jan. 28 interim court order requested Whirlpool pay for manufactured parts and negotiate on economic issues. Core said Whirlpool reneged on that order and offered to buy the parts at 40 percent of the contract price.
On Feb. 3 Whirlpool stopped buying finished parts and refused to compensate Core for raw materials bought for Whirlpool programs.
Core alleges Whirlpool owes it more $4.5 million for finished parts and dedicated raw materials, and it is seeking unspecified damages through the courts. Of that amount, $1.3 million was owed to raw materials suppliers Jan. 21; at that time Core had only $11,000 in cash.
When Core asked Whirlpool to provide it with $250,000 and $900,000 in revolving financing, Whirlpool declined.
Whirlpool, which had complained of delivery and quality problems and competitiveness, had hoped the performance plan would solve those problems.
Core's Feb. 3 filing brings several counts against Whirlpool, including breach of contract for purchasing orders and the performance improvement plan, negotiating in bad faith, interference with Core's accounts receivable system, unjust enrichment and broken promises.
Core is asking for an award of damages and fees to be decided at trial. The case is scheduled for trial by jury May 22, presided over by U.S. District Judge Donald C. Nugent.
Both parties have declined interviews to discuss the status of the tooling and of Core's plants.