CHICAGO — Navistar International said this week that it has filed a counter-complaint against Ford Motor Co. for breach of contract and is seeking damages.
Navistar filed its counter-complaint following a hearing before Judge John J. McDonald of the Circuit Court of Oakland County, Mich. The hearing related to a lawsuit filed by Ford against Navistar involving 2007 engine pricing and prior period warranty claims. Navistar counter-sued, stating that pricing is consistent with contractual agreements, that the warranty claims are entirely without merit and that Ford has stopped honoring the terms of an agreement under which engines were built.
Navistar amended its counter-complaint in Wednesday’s filing. Two previous hearings have been held and Judge McDonald has asked the two companies to meet privately to see if a settlement to the dispute could be reached prior to a trial.
Art that point the feuding business partners were ordered to enter into a consent injunction in which Navistar will continue shipping 6.4L Power Stroke diesel engines to Ford, and the carmaker will pay, without deductions, for each engine.
The amended counter-complaint filed Wednesday states that Ford’s breach is based on indications that Ford plans to develop its own diesel engine for introduction prior to 2012. Ford’s failure to honor the contract, which runs through 2012, entitles Navistar to damages that have been preliminarily calculated to more than $2 billion, the complaint states. In addition, Navistar states that Ford’s actions are interfering with supply-base agreements.
International has been the exclusive diesel engine supplier for Ford’s heavy-duty pickup trucks since 1979.
Navistar believes the new Power Stroke 6.4L diesel engines provide Ford the opportunity to maintain or improve this leadership position.