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Kavlico suit says Honeywell broke deal on product


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Kavlico Corp. in Moorpark has filed a multimillion-dollar lawsuit against Honeywell International Inc. for allegedly reneging on a deal.

The company claims it manufactured a "vane position sensor" for turbochargers that Honeywell was supplying to General Motors Corp.

In 2002, Honeywell found it was unable to design and produce the sensor, so it sought help from its competitor Kavlico, according to the complaint.

Kavlico developed a working design and began delivering the part to Morristown, N.J.-based Honeywell in June 2003, the suit states.

Problems arose in late 2006 when Honeywell supposedly informed Kavlico that it "had not met certain delivery, quality and price targets."

Kavlico alleges that it was faced with making "a significant investment in redesigning the vane position sensors" to meet Honeywell's needs. So, the company pursued a long-term supply agreement to justify more investment.

As a condition to such a deal, Honeywell allegedly sought a price reduction, which Kavlico granted, and Honeywell promised to "negotiate in good faith for a three-year supply contract."

Kavlico states that it relied on Honeywell's promise to negotiate in good faith and "repeated assurances" that Kavlico had an opportunity to expand its business with Honeywell.

The company took more orders and began spending money to address Honeywell's concerns, including buying raw materials and tools, as well as hiring production workers.

But the complaint alleges that Honeywell breached the agreement by making June 1, 2007, the last day it would accept Kavlico's parts.

Kavlico claims the deal was broken by Honeywell employees who "were secretly preparing to replace Kavlico with an alternative supplier both before and after promising to negotiate in good faith toward a long-term supply contract."

Honeywell spokesman Michael Timmermann said the company is not commenting because the case is pending.

Attorneys for Kavlico could not be reached for comment.

Kavlico is seeking at least $4 million in restitution for the money it says was lost on the deal.

The company is also asking for unspecified punitive damages.

The suit, filed on Feb. 5 in federal district court in Los Angeles, also names Switzerland-based affiliate Honeywell Technologies S.A.R.L. as a defendant.

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