Texas store, liquidator at odds over GOB sale
By Clint Engel -- Furniture Today, January 15, 2006
Longview, Texas — The owner of the former ADA Wholesale Furniture here is suing sales specialist Planned Furniture Promotions, claiming breach of contract, fraud and other charges in a case set to go to trial in May.
PFP has countersued ADA with claims including breach of contract and fraud.
ADA's initial suit, filed more than a year ago in District Court in Gregg County, Texas, said that in April 2004, after ADA owner J.D. Davis became ill and unable to operate the business, he entered into an agreement with PFP to assist in the liquidation of inventory and other assets.
"Almost immediately problems and question arose regarding expenditures, income and accountings for the transactions occurring under the (agreement)," the suit said. Davis, who most of the time was absent from the business for medical treatments, repeatedly asked for accounting and other information but "little or no such information was provided," the suit said.
In an interview with Furniture/Today, Davis said he has brain cancer that was life threatening at the time he brought in PFP. The cancer has abated, but treatments continue.
ADA was a store and warehouse of about 100,000 square feet in Longview, about two hours east of Dallas.
On Sept. 29, 2004, the liquidation of ADA was completed, with PFP saying it had resulted in a loss of $2,078, although other information provide by the liquidators indicated a small profit, the suit said. The suit maintains that since then, in response to Davis' demands for more information, PFP has provided confusing and often conflicting reports.
ADA charges that PFP should be ordered to make a complete accounting, and said Davis would show the agreement was breached in a number of ways, including through PFP's alleged failures to prepare a proper inventory and provide properly skilled personnel, and in the alleged payment of "excessive and unnecessary charges, expense, salaries and commissions."
The suit asked for damages in an amount to be determined and said PFP should forfeit its 9% commission totaling at least $220,741.
In its counterclaim, PFP denies all the allegations and adds that ADA was negligent and at fault. Among other things, the counterclaim charges ADA with breach of contract by allegedly failing to cooperate with PFP during the inventory and sale, and refusing to pay sales tax after PFP forwarded the appropriate amounts of money to Davis.
"Not only did Davis fail to cooperate with PFP during this sale, but he actively interfered with the conduct and, as a result, the success of the sale," the countersuit said.
It also alleges Davis provided PFP with "false financial information with the intention of fraudulently making PFP believe that the furniture market was more successful than in reality."
PFP is asking for damages of at least $650,000.
"The only thing they've ever said under oath is they felt I had overstated the previous year's sales," Davis said in the interview with Furniture/Today.
"I can tell you the bank statement and my personal 2003 income tax record clearly shows in the year 2003, we did not have the $4 million in sales (introduced in the lawsuit)," Davis said. "We had nearly $6 million in reported sales to the IRS and on my personal income tax. Those records were made available to (PFP)."
Roy Hester, PFP national vice president of sales, said ADA's charges are "false and contrived," and that Davis was absent during the sale.
"We're defending these spurious allegations that have no basis in fact," Hester said. "The sale was conducted by one of our leading managers, who has a strong documented record of running profitable sales."
At a recent hearing, PFP was given until Feb. 15 to present certain evidence to support its countersuit. A trial has been scheduled for May 8.
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