NECCO Takes Distributor to Court Seeking $380,000

April 11, 2012
By

It appears to be a case of a real dirty trick played upon a true Sweetheart.

The New England Confectionary Company (Necco), of Revere, recently filed a civil suit in Boston’s federal court demanding more than $300,000 from its long-time distributor for, basically, being duped.

Necco filed the suit on March 30th against Allied Industries of Virginia for breach of contract and failing to act in good faith, among several other charges. The Revere candy company alleges that Allied owes it $379,000 for product supplied to Allied between January and March.

Attorneys for Necco did not respond in time to comment on the story.

According to court documents, Necco and Allied had been working together for more than 20 years and Allied has served as a broker to facilitate the sale of Necco products to stores/customers.

However, documents indicated that things began to go awry between the two last October, climaxing with Allied allegedly duping Necco into trusting them one last time.

Necco had provided Allied with a line of credit for goods that had not shipped, which had been standard practice. However, beginning in October, Necco says that Allied ran up to and over the credit limit routinely, forcing Necco to decided whether to withhold product from Allied, which in turn would hurt their reputation in the marketplace with customers.

In this case, Midwestern bargain store giant Dollar General Stores was the end customer.

But not only that, Necco alleges that Allied not only put them in a tough position, but also threatened to ruin Necco’s business.

“Allied, though its representative Chad Akhavan, threatened that, if Necco exercised its right to withhold product and/or ship directly to Dollar General, Allied would seek to materially harm Necco’s business through, but not limited to, flooding the market with knock-off product that would compete directly with the Necco brand. Allied made these threats in order to coerce Necco to continue to deal through Allied,” read the suit.

Necco then began to try and avoid Allied by distributing directly to Dollar General.

The struggle continued between the two, until this past February when Allied allegedly called in a favor for old time’s sake.

But Necco says it ended up being a dirty trick.

“In order to induce Necco to release product to Allied despite its then-present exceeding of the unsecured credit limit and ongoing and repeated threats to materially harm Necco’s business through flooding the market with cheap product, winning distribution from Necco and other means, Allied represented to Necco that Allied would make payment to Necco by wire transfer by a certain date,” read the suit. “In reasonable reliance upon Allied’s promise to pay, Necco released product to Allied despite its then-present exceeding the unsecured credit limit…Allied intended Necco to rely upon Allied’s representations and, as a result of that reasonable reliance, to release Necco product to Allied. Allied would therefore profit from the shipment of Necco product for which it had no intention of paying. Allied failed to make the promised payment and other payments to Necco.”

Necco attorneys have already made one appearance in federal court on the matter, and Allied has yet to respond to the suit in the record.

Attorneys Catherin Murillo and Thomas Reith III, of Boston Burns & Levinson, are handling the case for Necco.

  • http://twitter.com/MikeFROMRevere Mike Carter

    How many truckloads of crap candy can you buy for $380k at the wholesale price? 

Search the Journal

Recent Activity

Full Print Edition

Get Adobe Flash player