Gateway Management Services, Ltd. , provides warranties for automobile and truck parts. For years, it had an agreement to distribute and warranty a lubricant manufactured by Advanced Lubrication Technology, Inc. (ALT) that is used in automobiles and trucks. In March 2006, after receiving complaints that the lubricant was allegedly clogging filters and causing significant damage to vehicles, Gateway learned that ALT had changed the lubricant's formula without informing Gateway that the product was altered or that the new product had a different shelf life. Over the next year, Gateway received multiple complaints of clogged filters, curdled lubricants, and component failures allegedly caused by the altered lubricant.
The company paid out more than $80,000 in warranty claims. It also lost about $130,000 worth of sales of lubricant that was sold to automotive and truck dealers, who refused to use the product after March 2006 and returned it to Gateway. ALT allegedly would not accept return of some of the product still held by Gateway or compensate Gateway for the product it was able to return. Gateway sued ALT, alleging unfair and deceptive trade practices and breach of contract in not notifying it of the altered formula. Defendant contended it had no obligation to inform customers of alterations in the product's composition, which the company changed at least two times per year. It also argued that plaintiff's claims were barred by the statute of limitations and by the economic loss doctrine and that plaintiff was contributorily negligent, though it offered no proof to that effect. Defendant also counterclaimed against plaintiff, alleging breach of contract and quantum meruit, among other claims. The parties settled for a confidential amount during mediation. Defendant dismissed its counterclaims.
Plaintiff's Counsel Charles E. Rawlings, Winston-Salem, N.C