Distributor Sea-Pac Sues Armstrong

Lancaster, PA, July 25, 2006--A former Washington state wholesaler of Armstrong World Industries flooring products is seeking $4.9 million from the company, alleging Armstrong broke its contract, according to the Lancaster New Era. But Armstrong wants U.S. Bankruptcy Court to throw out the claim, saying its actions were warranted and the claim was filed two years too late. The key issue in the dispute between Armstrong and Sea-Pac Sales Co., of Kent, Washingon, is whether Armstrong was allowed to add a second distributor in Sea-Pac's territory. Armstrong says it was, citing its 1999 wholesaling contract with Sea-Pac, which required Sea-Pac to buy certain minimum amounts of Armstrong products in return for exclusivity. For 2002, the wholesaling agreement called for Sea-Pac to buy at least $10.1 million worth of Armstrong commercial flooring, according to Armstrong. But Sea-Pac bought only $8.4 million worth, Armstrong says, letting Armstrong add a distributor in the region. It signed Pacific Mat in February 2003. Beyond that, Sea-Pac missed the November 2003 deadline for filing this type of claim, known as an administrative claim. Sea-Pac filed in November 2005. Timing aside, the Sea-Pac claim is not "administrative," as defined by law, because the contract was signed before Armstrong entered bankruptcy, among other reasons. Sea-Pac argues that Armstrong broke the contract by adding the second distributor of commercial flooring in its region, without mentioning the minimum-purchase issue. Sea-Pac further contends that Armstrong broke a separate contract for distributing residential flooring by failing to reimburse Sea-Pac for certain expenses. Armstrong counters that Sea-Pac's residential flooring arguments should be disallowed because the distributor failed to provide supporting documents. Sea-Pac's contracts to distribute Armstrong flooring ran out at year-end 2004, the filing says. Armstrong filed for bankruptcy in 2000 to resolve nearly 200,000 asbestos-injury claims.