A California manufacturer that supplies products to Town of Genesee-based
Generac has filed a breach of contract lawsuit against the company for allegedly requesting an influx of parts and then later cancelling several orders.
Chatsworth, California-based
Epic Technologies, d.b.a. NEOTech, is a contract manufacturer focused on electronics manufacturing services in the aerospace and defense, high-tech industrial, and energy industries.
NEOTech has filed a breach of contract claim against Generac for approximately $6.5 million, alleging this amount is related to “reasonable expenses” the company incurred from orders issued by Generac that were later cancelled. NEOTech has also filed a “quantum meruit” claim for approximately $3.4 million. Quantum meruit is a doctrine that states there is an inferred promise to pay a fair amount for work and material provided.
NEOTech and Generac have had a business relationship since at least 2018. Over time, the types of goods NEOTech manufactured for Generac grew to include some products not explicitly mentioned in their manufacturing agreement, according to a complaint in the case. At the end of 2021, Generac experienced a boom in demand for its products.
"To meet this demand, Generac dramatically increased its requests for non-covered product production to NEOTech through issuance of purchase orders, modifications to existing purchase orders, and forecasting against which Generac instructed NEOTech to begin purchasing critical and long lead time component parts for production of non-covered products," according to the complaint.
NEOTech alleges that beginning in October 2022, Generac began cancelling purchase orders that had already been accepted by the company.
“As of December 2022, however, NEOTech had incurred $20,769,139.50 in reasonable expenses acquiring critical and long lead time components to manufacture the non-covered products,” according to the complaint.
NEOTech claims it spent several months attempting to return some components to its suppliers and cancel other orders for components. As a result, the company was able to reduce its total expenses incurred to about $9.9 million.
This is the
second recent lawsuit filed by one of Generac’s suppliers. In June, Williamsport, Pennsylvania-based Spartronics Vietnam alleged that contracts cancelled by Generac had exposed the company to more than $100 million in liabilities.
“The company strongly disputes the allegations in the complaint,” said Generac in a previously issued statement. “Spartronics misrepresents several issues in their lawsuits and ignores their own accountability. We intend to vigorously defend the matter. We cannot comment further since this is pending litigation.”
Representatives for Generac were not immediately reachable for comment on the NEOTech lawsuit Wednesday.
