Milan To Appeal $31 Million Reversal In Navistar Decision

After seeing a $31 million jury award against Navistar International NAV wiped out by a Tennessee appeals court last week, Milan Supply Chain Solutions is confident it can convince the state's highest court it should get it back.

A three-judge panel sitting on Tennessee's Court of Appeals reversed a 2017 trial court decision that awarded Milan over $10 million in compensatory damages and $20 million in punitive damages against the truck manufacturer for selling over 200 trucks with defective MaxxForce engines to the Milan, Tennessee-based truckload and logistics company.

Milan had also charged Navistar and Volunteer International, which sells and services Navistar trucks, with making "misrepresentations" about the trucks, including false information regarding their performance capabilities and fuel economy.

According to the decision, filed on August 14, the panel was swayed by several issues raised by Navistar on appeal, including its contention that Milan's fraud claims are without legal merit based on the "economic loss doctrine" in the state of Tennessee.

"The essence of their argument is that the plaintiffs received trucks that were not as good as Navistar had promised during negotiations," asserted Navistar attorney Roman Martinez during oral arguments. "Under the Tennessee economic loss rule, that's a contract or a warranty claim, not a fraud claim, and those were defeated at summary judgement."

Navistar also argued that because the trucks were not purchased by an individual and were not for personal, family or household use, they are not covered by the Tennessee Consumer Protection Act.

But a lawyer for Milan said that the company plans to "exhaust all options," including taking the case to the Tennessee Supreme Court. "[Navistar's] applying the economic doctrine rule to a true case of fraud has never been done before, so we're confident that the supreme court will find in our favor," the lawyer told FreightWaves. The company has 60 days to apply to the higher court for a hearing.

Stock price during mid-day trading Aug. 20. Source: SONAR

The dispute with Milan is separate from Navistar's class action settlement in May, in which the manufacturer agreed to pay $135 million to settle similar complaints about defective MaxxForce engines.

Navistar's engine problems began a decade ago after the company decided to invest heavily in technology meant to control nitrous oxide emissions from MaxxForce-equipped trucks. Since then the company has been focused on regaining lost market share.

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