In Northeast Farm Sales and Service, Inc. v. Krone NA, Inc., a farm equipment dealer, Northeast Farm Sales and Service, Inc. (Northeast Farm), sued Krone NA, Inc. (Krone), a supplier of farm equipment, in the dealer’s home state of Vermont. Krone is a subsidiary of the German manufacturer of the farm equipment at issue, Bernard KRONE Holding SE & Co. Foley & Lardner LLP represented Krone in this lawsuit.

Krone and Northeast Farm had a dealership agreement and a related security agreement that Northeast Farm alleged Krone violated when it tried to terminate the relationship due to Northeast Farm’s “habitual late payments” and a “recent Sold Out of Trust (SOT) situation.” Krone believed that Northeast Farm sold inventory that was subject to a security interest without repaying Krone.

Northeast Farm filed suit in Vermont state court claiming that Krone tried to escape the parties’ agreements on false pretenses and enter a new dealership agreement with a competitor. Northeast Farm alleged those acts amounted to breach of contract, bad faith, and violations of provisions in the Vermont Consumer Protection Act (VCPA) and violations of two sections of the Vermont Machinery Dealership Protection Law (VMDPL). Krone removed the case to the federal District of Vermont court and sought dismissal of all three of those causes of action under Rule 12(b)(6).

The U.S. District Court for the District of Vermont denied Krone’s motion to dismiss the breach of contract and violations of the VMDPL because of genuine factual disputes about whether Northeast Farm breached their agreements. The court went on to deny dismissal of the bad faith claim because Vermont law permits pleading alternative causes of action in one lawsuit that would otherwise be exclusive of another pleaded cause of action.

The court, though, dismissed the VCPA claims because only “consumers” have standing to bring such claims. Northeast Farm is a seller of farm equipment. The court also dismissed the second VMDPL claim pertaining to prohibitions of limitations on dealers’ geographic selling and delivery areas. The contractual provision at issue in the parties’ agreements limited only the number and location of business locations Northeast Farm could open or in which it could sell Krone products. It did not affect where Northeast Farm could sell or deliver Krone products.

The court’s docket indicates the parties resolved the lawsuit after the rulings described above. This case is instructive because it demonstrates a court’s willingness to enforce the plain meaning of applicable statutes and dismiss a plaintiff’s claims.

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