Lumber Liquidators Files Lawsuit Against Founder's New Company
Richmond, VA, March 25, 2019-Lumber Liquidators has filed a lawsuit against founder and former leader Tom Sullivan’s new company Cabinets To Go, seeking at least $10 million in damages, according to Richmond BizSense.
The suit claims Cabinets To Go reneged on an agreement the two companies struck in 2010.
Sullivan was chairman of Lumber Liquidators at the time the agreement was struck, as well as one of its largest shareholders and on its payroll as an employee.
“The 2010 agreement is described in the suit as a memorandum of understanding that outlined a deal through which Cabinets To Go agreed not to directly compete with Lumber Liquidators for 10 years. That included a provision to not sell wood floors, the bread and butter of Lumber Liquidators.
“Now, nine years later, the lawsuit alleges that Cabinets To Go is selling flooring, in addition to its namesake cabinets, in violation of the MOU.
“’Despite this clear and enforceable covenant between two sophisticated business entities, CTG is now selling hardwood flooring products both in e-commerce and in retail stores, many of which CTG has located adjacent to Lumber Liquidators stores,’ the lawsuit states.”
Cabinets To Go filed its response to the allegations, claiming the case is an attempted retaliation to a lawsuit by Sullivan’s F9 Properties against Lumber Liquidators in February in James City County, related to an alleged breach of lease and seeking $6 million in damages.
“Cabinets To Go calls for the latest suit to be dismissed, arguing that the MOU is ‘defunct and unenforceable’ and that it is a ‘naked restraint of trade’ in violation of federal antitrust and other state laws.”