O’Reilly Fails to Deflate Wholesale Contract Suit

(CN) - An auto parts wholesaler can pursue contract claims in New Jersey against the Missouri-based retailer O'Reilly Automotive, a federal judge ruled.

O'Reilly contracted with the New Jersey-based Coni-Seal Inc. in May 2009 for the purchase and delivery of wholesale auto parts.

Coni-Seal filed suit after noticing in January 2011 that O'Reilly had allegedly begun taking improper deductions from its payments and placing reduced orders.

Both parties submitted copies of slightly different versions of the agreement to the court.

Though Coni-Seal alleged a further agreement, dated December 2008 or 2009, neither Coni-Seal nor O'Reilly has produced a copy.

U.S. District Judge Anne Thompson found Monday that the agreements contain several inconsistencies regarding whether Coni-Seal had contracted with O'Reilly or its subsidiary Ozark Purchasing LLC.

Ozark's vice president of merchandise, Tom Seboldt, stated in an affidavit that no "O'Reilly affiliated company had any direct contractual relationship with" Coni-Seal.

Known as O'Reilly Holdings prior to 2010, O'Reilly Automotive is either the parent or indirect parent of O'Reilly Automotive Stores Inc. and Ozark Purchasing LLC.

O'Reilly failed to show that the case lacks of jurisdiction or should be transferred to the Western District of Missouri, Southern Division.

"The court finds that Missouri's interest in this case does not trump New Jersey's interest in protecting one of its residents from a breach of contract," Thompson wrote. "Plaintiff is a New Jersey corporation that produced auto parts in New Jersey, and suffered damage from insufficient payment for services performed at least partially in New Jersey."

O'Reilly also failed to show that it is not the proper party since the Coni-Seal agreement predates its creation.

"From the many conflicting facts as to whether the vendor agreement submitted to the court was between plaintiff and Stores or plaintiff and Ozark; to the lack of clarity as to O'Reilly Automotive's existence before Dec. 20, 2010 under a different name and its possible role as parent entity, the court agrees with plaintiff that further investigation is necessary given the interrelated nature of the three entities," Thompson wrote. "Plaintiff may thus amend the complaint to include Stores and Ozark."

The 20-page opinion credits claims that Coni-Seal engaged in "regular and extensive" communication with O'Reilly.

"Plaintiff has provided evidence that the parties exchanged nearly 5,000 emails over the course of more than two years, O'Reilly extensively communicated with plaintiff's New Jersey headquarters, and engaged in contract negotiations while plaintiff was in New Jersey," Thompson wrote. "Thus, the court finds that O'Reilly had sufficient minimum contacts with New Jersey for this court to exercise personal jurisdiction."

O'Reilly boasts more than 3,800 stores across the United States.

Coni-Seal's complaint alleges breach of contract, unjust enrichment, and bad faith.

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