Volume 10, Issue 6 - November/December 2008
A G R R e p o r t s
L E G A L N E W S
The complaint, filed in the U.S. Bankruptcy Court for the District of Delaware on Friday, September 5, alleges that Levine originally contributed $6 million in equity to Diamond in January 2007 as part of the agreement with the company’s main lender, Guggenheim. The agreement also made it possible for Guggenheim to provide commitments for up to a $20 million term loan and a $15 million revolving line of credit; it also granted Guggenheim a lien on Diamond’s assets.
In late April and early May 2007, Diamond requested that Guggenheim “relax the liquidity requirements contained in the Credit Agreement, thereby allowing the Debtors to borrow more money without increasing their total debt commitment under the Credit Agreement.” According to court documents, Guggenheim agreed to do so only if Levine would “increase his equity stake … by making another $4 million capital contribution.”
In July 2007, Guggenheim issued a notice of default to Diamond, “stating that the Debtors had breached a covenant regarding [their] cumulative earnings.”
The complaint alleges that, as a result of the default on the Guggenheim loan, the company could have at any time collected Levine’s $10 million contribution—but did not, and continued financing the company, despite the default.
Though Levine resigned from his post as chairman of the board of directors and chief executive officer of the company in October 2007, Levine remained on the company’s three-person board of directors. In December 2007, Levine met with fellow directors Bill Cogswell, who was then president of the company, and Myron Levine, Ken Levine’s father. The three at that time passed a resolution authorizing filing for bankruptcy protection, according to the complaint, but delayed filing until April 1, 2008, “in order to protect Levine and his Capital Contribution.”
According to Plainfield, had Diamond filed for bankruptcy within 90 days of the decision to do so, Guggenheim could have been classified as an unsecured creditor. Likewise, the company alleges that despite his possible concern for Guggenheim, “Levine was primarily motivated by self-interest, since the Debtors’ decision to delay filing for bankruptcy protection until after the 90-day period greatly improved his changes of recovering his $10 million capital investment.”
In June 2008, Levine filed a claim for more than $10 million (the amount of his contribution plus interest) against the Diamond estate, claiming rights as a “secured creditor,” according to the complaint.
Via the complaint, Plainfield both objects to the filing of Levine’s claim and “seeks to have the claims re-characterized as equity.” The company also requests that Levine’s claim be disallowed, “because they reflect not claims of a creditor, but equity interests in the Debtors.” As an alternative, the plaintiff requests that if Levine’s claims are not re-characterized as equity, that the claims should be “equitably subordinated to the claims of all unsecured creditors.”
“The complaint completely lacks any merit whatsoever and we will vigorously defend [our client],” says Russell C. Silberglied of Richards Layton & Finger, who represents Levine.
Robert J. Dehney, who represents Plainfield and is with the firm of Morris, Nichols, Arsht & Tunnell LLP, was not available for comment.
Levesque Denies Belron US Allegations, Files Counterclaim for Damages in Excess of $1 Million; Alleges She Family Members Being Followed Former Belron US employee Michelle Levesque has filed both her response to the company’s complaint against her and a counterclaim against the company in the U.S. District Court of Massachusetts. In a suit filed in August, Belron US alleged that Levesque and an associate, Edward Lee, solicited Belron US employees to leave the company and join a new venture (see related story in September/October AGRR, page 20).
Levesque denies the allegations made against her, and, with regard to the claims made against Lee in the suit filed against her, claims to be “without knowledge or information sufficient to form a belief as to the truth of the allegations.”
Levesque, who worked for Diamond Glass and joined Belron US as part of its purchase of Diamond’s assets in June 2008, says she originally signed a non-compete agreement with Diamond in July 1996, and again in February 1998, both of which contained an “18-month covenant not to compete or solicit employees.”
In September 2005, however, Levesque became integration leader for the Kingston, Pa.-company, and was involved in integrating the Settles Glass team with that of Diamond.
“She never received, nor did she sign, a non-solicitation agreement or covenant not to compete in connection with this new position,” reads the most recent filing, made on behalf of Levesque by her attorneys, Michael P. Boudett and Sheila O’Leary of Foley Hoag LLP in Boston. Likewise, Levesque claims that in July 2007, she again changed positions- to district manager for Massachusetts-and did not sign an employee or non-solicitation agreement with this new position either.
“The changes in Levesque’s position, managerial status, compensation and duties and responsibilities vitiated the prior agreements with Diamond Triumph,” reads the filing.
In the counterclaim, Levesque makes several allegations, including claims that Belron US required her to work during leave taken under the Family Medical Leave Act (FMLA) leave earlier this summer, and did not pay her for doing so.
The counterclaim goes on allege that Belron “is concerned that [Ken] Levine may start or expand a new auto glass business, and is taking active steps to deter him from doing so.”
Levesque also alleges that since the filing of the suit, “Belron has recently caused someone to follow [her] and observe her whereabouts.”
The complaint alleges that, “In particular, during Levesque’s recent visit to New York City, while she and others were in a parking lot where they were meeting Mr. Levine, Levesque observed an unknown individual in a vehicle pull into the parking lot and observe the group.”
Likewise, the counterclaim claims Levesque’s husband, Greg (who until recently was employed by Belron US) was followed by someone in a Safelite van. “Mr. Levesque became concerned and stopped his vehicle to try and speak with the driver and ask his purpose in following him,” reads the complaint. “The individual refused to speak with Mr. Levesque and drove away.”
Greg Levesque’s employment with Belron was terminated in mid-September 2008, according to court documents, and his wife’s complaint alleges that this termination was “part of [Belron’s] ongoing campaign to pressure Mr. Levine not to operate a competitive business.”
Levesque goes on to allege that “Belron has engaged in a series of tactics pressuring employees into providing false information about Levesque in support of its lawsuit against her.”
“In particular, on information and belief, with regard to at least one employee, Belron procured a statement from her after offering monetary incentives in close conjunction with the request to sign the statement,” reads the counterclaim. “On information and belief, the pendency of Belron’s planned layoffs and the possibility of what would happen to her employment if she did not sign the statement was a factor in the employee signing the statement.”
Levesque claims all of these alleged actions have resulted in “significant emotional distress, for which she has sought and received medical treatment.”
The counterclaim includes counts of Abuse of Process, Defamation, Intentional Infliction of Emotional Distress and Violation of the FMLA Act.
Levesque is requesting that the Court dismiss Belron US Inc.’s complaint, and “that the appropriate judgment be entered in favor of Michelle Levesque on her counterclaims and that the Court order such further and other relief as this Court deems just and proper, including awarding Michelle Levesque damages in excess of $1,000,000 for emotional distress and the harm to her reputation, and also awarding treble damages and attorneys’ fees.”
C O M P A N Y N E W S
“This realignment will enable us to adapt to the changing demands of the industry,” says Mark Orcutt, PPG vice president of performance glazings. More specifically, Orcutt cites demand for specialized glass for the emerging solar market and energy-efficient glass to satisfy evolving building codes fueled by the green building movement, which is driving the commercial construction market.
In addition, PPG announced that its third-quarter 2008 financial results will be affected negatively by several nonrecurring items, including impacts from weather-related events, and by further deterioration in the automotive original equipment manufacture market. The company said these items will likely affect its third-quarter after-tax earnings negatively by between $35 million and $40 million, or 20 cents and 25 cents per share.
W E B S I T E S
“Our readers have advised us they often find themselves looking for this crucial information, and we wanted to provide a quick, easy source for them,” says AGRR magazine/glass- BYTEs.com™ publisher Debra Levy. “Not only does the site provide a quick reference for DOT numbers—but it also provides a one-stop source for further information on manufacturers— from locations to websites. In many cases, this information is invaluable and hard to locate.”
Mitchell International, the parent company of National Auto Glass Specifications International, is sponsoring the site.
“Mitchell Glass is proud to sponsor the DOT look-up site,” says James Patterson, director of glass product management, repair solutions, for Mitchell International. “As the publisher of the NAGS database, Mitchell Glass supports the creation of information and technology tools that improve quality, safety and consistency in the auto glass repair and replacement industry. As a member of the AGRSS Standards Committee, Mitchell believes this tool works side-by-side with the AGRSS requirement that the DOT number be recorded for every replacement. The creation of this DOT number lookup site is a welcome addition to the resources available to auto glass professionals.”
M A N U F A C T U R I N G N E W S
State regulations require facilities that have more than a threshold quantity of a regulated substance to have a risk management plan. Federal law requires users of hazardous chemicals to submit a risk management plan detailing how they will reduce the risk of accidents and promptly respond if an accident occurs.
The Rossford auto glass manufacturing plant contains two storage tanks, which each hold 1,500 pounds of titanium tetrachloride. The threshold limit for titanium tetrachloride is 2,500 pounds.
Regulations require the risk management plan to be submitted on the date the regulated substance first exceeds the threshold quantity. Pilkington did not submit a plan until 11 months after the titanium chloride was stored on site.
In November 2007, Ohio EPA audited the facility and found six violations. These included failing to: develop a risk management plan, submit the plan when required, conduct a hazard review and conduct required training.
The company will pay $12,120 to Ohio EPA’s risk management plan fund. The remaining $3,030 will be paid to Ohio EPA’s Clean Diesel School Bus Program.
A copy of the settlement is available online at http://www.epa.state.oh.us/dapc/enforcement/year_2008/ PilkingtonNA_081308.pdf.
In other news for the auto glass manufacturing arm of Pilkington, its parent company, the NSG Group, has announced that it will expand its glazing capacity in Brazil with the construction of an additional windshield production line adjacent to its existing facilities at Cacapava, near Sao Paulo.
The company anticipates the total investment in the new production line to cost more than $63 million U.S. dollars (43 million EU) and to add capacity of more than one million windshields per year. NSG expects to commission the production line in early 2010.
“Brazil is an important and growing market for Pilkington
Automotive and this investment will ensure that we are well
positioned to support our customers locally,” says Pat Zito,
president of the automotive business. “The investment represents
a further step in the NSG Group’s preparations for Phase
2 of our three-phase strategy, with strategic investments in
key emerging markets.”