A supplier of Racine-based
Modine has filed a lawsuit against the manufacturer seeking to recover more than $12 million in damages after Modine allegedly refused to fulfill a master purchase agreement.
PXI Auto Components, a Chinese manufacturer of parts used in auto thermal management systems, filed the lawsuit in U.S. District Court for the Eastern District of Wisconsin this week.
In February 2022, PXI and Modine entered into a memorandum of understanding through which Modine allegedly agreed to purchase parts from PXI. Those parts would be made at a new extrusion plant, which was built by PXI in Mexico.
In April 2022, both companies negotiated and entered into a master purchase agreement relating to the extrusion plant.
Before PXI could begin making the parts, Modine was required to conduct an audit of the Mexican plant to ensure it met required standards. PXI alleges that Modine never completed the plant audit, so no finished products could be made at the facility.
A similar scenario played out with a castings plant, which was also built by PXI in Mexico. The lack of an audit and inspection allegedly prevented PXI from manufacturing finished goods.
"The castings plant was completed by 2023 and serial production commenced in the first quarter of 2024 for a few industrial parts; production never commenced for any automotive related parts," according to the lawsuit. "PXI expended over $4 million of its own funds, not including the extensive internal work hours spent on this project."
The extrusion plant was also completed in 2023, but serial production was never started. PXI says it spent more than $10.6 million to build the extrusion plant.
"Modine failed and refused to place any orders under the extrusion global master purchase agreement,” according to the lawsuit. “As to the castings global master purchase agreement, while Modine placed some small initial orders, the volume of orders swiftly decreased to zero within approximately six months after initial production."
PXI is suing for 50% of the $8 million investment it made in beginning construction of the Mexican extrusion plant. The company also seeks damages in excess of $4 million, to be determined by the court.
Representatives with Modine did not immediately respond to a request for comment issued Thursday.
