Pendragon, a car dealer in France, is fighting to get a £260m claim of software fraud against it dismissed by the High Court. It wants to sell its dealerships.
Court documents state that a Pendragon subsidiary was accused of fraud and contract breach by a marketing firm for allegedly reselling the new software to dealerships in Asia and Pacific.
The company has been sued for not supplying the latest customer software to Pinewood AP Ltd., a marketing specialist, despite a contract for them to sell the new product in Asia.
Pendragon’s response was to try and have Pinewood AP’s claim thrown out.
During a recent hearing in court, Pinewood AP requested disclosure from its subsidiary as to whether or not there was evidence of “fraud”, under the reseller agreements.
Pendragon’s application will be decided soon.
The lawsuit is filed at a difficult time for the struggling car dealership.
Pendragon has agreed to sell the UK Motor Division to Lithia, a US-based group for £280 Million.
Hedin , its largest shareholder two days later, tried to derail this deal by launching an takeover bid. This was rejected.
Pendragon, now Pinewood Technologies, will continue to be listed but will only operate its Pinewood software that will be rolled-out across Lithia’s 50 UK sites.
The High Court is currently engaged in a bitter legal battle over the marketing of software.
Pinewood AP claims that Pendragon contracted them to sell software overseas.
They were able to secure agreements with dealers and clients in Asia, covering 631 accounts, as well as with Porsche, Jaguar and Audi in Japan.
The software had to be modified to suit local needs.
Pinewood AP claims that the Pendragon subsidiary failed implement these changes and asked for internal data about their clients, before selling the software directly to the customers in Asia.
Pinewood claims that this was “fraud” or “fraudulent misrepresentation”, based on its claim.
David Neilsen was a former Harley-Davidson sales strategist and Josephine Lee was a former Lamborghini marketing director.
The purpose of the plan was to sell high-quality Pendragon Software to their Asian contacts and dealers. Neilsen, however, believes that Pendragon’s subsidiary was conspiring to eliminate them from the business.
He said: “As a startup, we invested significant time, expertise, and money into the contract. We believed we were in a partnership with Pinewood UK and Pendragon”.
In the process we hired over 40 people in order to service the countries where we held contracts. We were unable to fulfill these contracts due to Pinewood UK’s conduct. We had to lay off most of our employees and suffer significant damage to our company.
“Our disappointment is not to be underestimated or overlooked. “Our leadership and investors have made it clear that they will not allow Pinewood UK to see this as a professional or acceptable way of working.”
Bill Berman, CEO of Pendragon, described the lawsuit last month as shocking. He said, “It’s an egregious issue”.
Pinewood Technologies said that it was unable to comment on any ongoing legal proceedings.