Wood flooring marketer BR-111 Imports & Exports Inc. (Medley, Fla.) has demanded that former distributors pay it back for $1.6 million in warranty claims, interest and legal fees stemming from its arbitration case with Triangulo Flooring and Panels (Curitiba, Brazil).
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Wood flooring marketer BR-111 Imports & Exports Inc. (Medley, Fla.) has demanded that former distributors pay it back for $1.6 million in warranty claims, interest and legal fees stemming from its arbitration case with Triangulo Flooring and Panels (Curitiba, Brazil).
In September 2010, an international court tribunal determined the claims "unproven." Before that decision, BR-111 paid the claims with the expectation Triangulo, its former supplier, would credit its account. Instead, BR-111 and Triangulo commenced legal arbitration, and the tribunal determined that the overwhelming majority of claims submitted by BR-111 lacked merit.
Earlier this month, 13 distributors received a letter from BR-111's legal counsel demanding "immediate payment" for the claims. In the letter, BR-111 alleged that Triangulo said the claims "contained false claims of defect" by the distributors; however, Clarissa Rodriguez, assistant counsel for Triangulo, denied that. "[Triangulo] never said BR-111 had submitted fraudulent claims or its distributors had. [Triangulo] asserted BR-111 did not submit meritorious claims" during arbitration, Rodriguez said. Distributors mentioned in BR-111's letter and contacted for this article declined to comment.
According to the final award handed down by the International Chamber of Commerce, BR-111 and Triangulo had a "back-to-back" warranty agreement in which Triangulo agreed to provide the same warranty to BR-111 that BR-111 provided to its customers. In the event of a claim from one of BR-111's customers, BR-111 would undertake an inspection performed by a third-party inspector, or the claim would be handled informally with BR-111 submitting a form documenting the alleged problem to Triangulo. "The system initially worked well … However, as time progressed, many later claims were made without the support of an Inspection Report," according to arbitration documents.
Included for consideration in the arbitration proceedings were 193 disputed claims-totaling $880,077.83-that BR-111 submitted to Triangulo during the course of their business partnership, which lasted from approximately April 2004 to January 2009, when Triangulo terminated the partnership agreement, according to arbitration documents. Of those claims, the tribunal rejected 184 for a wide range of reasons. For instance, 63 claims were rejected because the inspection reports did not cite manufacturer defects, and 72 of the claims lacked an inspection report. Some claims lacked crucial information like signatures or dates, which would have been needed to determine whether the product was Triangulo's. In addition, Triangulo had already credited BR-111 for 27 of the claims, so the tribunal rejected them, as well.
According to arbitration documents, BR-111 "paid many claims in order to keep good relations with its clients." However, paying warranty claims to maintain good customer relations was not part of the Partner Agreement between the two companies.
Today, the two sides are still battling in court. In January 2012, a district judge ordered BR-111 to follow through on the arbitration decision and pay Triangulo nearly $1.6 million, but BR-111 has yet to pay, according to Quinn Smith, counsel for Triangulo. Due to BR-111's delay, Triangulo motioned in March to re-open the case, and that motion was granted. BR-111 resisted re-opening the case and claims Florida's Southern District Court has no jurisdiction in the matter since BR-111 filed notice of appeal in May with the U.S. Eleventh Circuit Court of Appeals.
In motioning to re-open the case, Smith said BR-111 is "continuing on the same path it has pursued for years, consistently trying to evade payment of amounts it owes."