Terex Corp. v. Southern Track & Pump, Inc.
117 A.3d 537
| Del. | 2015Background
- Southern Track & Pump (dealer) entered a distributorship with Terex (supplier); Southern Track bought ~$4M in equipment and financed via GE, which held security interests.
- Southern Track struggled, terminated the agreement, and demanded Terex repurchase remaining inventory under Delaware’s Equipment Dealer Contracts Statute (6 Del. C. § 2720 et seq.).
- Terex contended the statute’s repurchase obligation applies only to "new, unused, undamaged and complete" inventory per § 2723(b); Southern Track argued "all inventory" in § 2723(a) means all equipment, new or used.
- District Court held § 2723(a) requires repurchase of all unsold inventory and awarded Southern Track ~$4.35M; Third Circuit certified the legal question to the Delaware Supreme Court.
- Delaware Supreme Court reviewed statutory text, structure, legislative history, and comparators; concluded § 2723(b)’s specific pricing for new inventory and the statute’s overall detail indicate the repurchase obligation is limited to new, unused, undamaged, and complete inventory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 2723(a) "all inventory" requires repurchase of used inventory | "All inventory" means all equipment dealer purchased from supplier must be repurchased | Statute limits repurchase to new, unused, undamaged, complete inventory per § 2723(b) and legislative intent | Held: Repurchase obligation is limited to new, unused, undamaged, complete inventory |
| If repurchase includes used equipment, how is price determined | Dealer originally sought statutory "current net price" and remedies under § 2727 | Supplier argued statute is silent on used pricing; judicial gap-filling is improper | Court rejected gap-filling; silence implies used equipment excluded from statutory repurchase scheme |
| Whether interpreting statute to require repurchase of used equipment would create constitutional/takings concerns | Dealer argued statutory remedy restores dealer’s position (no constitutional issue) | Supplier warned statutory 100% "current net price" penalty could be punitive/taking for used items | Court avoided constitutional question by construing statute not to cover used inventory |
| Whether the term "all" in § 2723(a) is rendered superfluous by limiting repurchase to new inventory | Dealer: limiting scope makes "all" meaningless | Court: "all" reasonably modifies inventory that remains unsold and that qualifies as new/unused/undamaged/complete | Court held "all" applies to all qualifying new inventory (not to used equipment) |
Key Cases Cited
- Duncan v. Theratx, Inc., 775 A.2d 1019 (Del. 2001) (standard for de novo review of pure legal questions)
- Delaware Bd. of Nursing v. Gillespie, 41 A.3d 423 (Del. 2012) (statutory construction principles and presumption of legislative intent)
- LeVan v. Independence Mall, Inc., 940 A.2d 929 (Del. 2007) (holistic statutory interpretation; avoid absurd results)
- Whitman v. American Trucking Ass’ns, 531 U.S. 457 (U.S. 2001) (canon against reading major policy changes into vague or ancillary provisions)
- Town & Country Equip., Inc. v. Massey-Ferguson, Inc., 808 F. Supp. 779 (D. Kan. 1992) (illustrative discussion of balance between wholesaler and retailer in dealer-repurchase statutes)
- FMS, Inc. v. Volvo Const. Equip. N.A., Inc., 557 F.3d 758 (7th Cir. 2009) (purpose of dealer statutes to protect dealers with unequal bargaining power)