Central Cartage Co., et al. v. Terry L. Fewless, Susan Fewless, Susan A. Fewless d/b/a Skan Consulting; and Total Quality, Inc.

Central is one of several wholly-owned transportation
subsidiaries of CenTra. The majority of Central's business is in
the automotive industry, transporting parts from surrounding
states to various automobile plants in Michigan. Because Michigan
is considered an "inbound" state, one of Central's goals is to
produce business going out of Michigan so that its trucks do not
travel outward empty.

Terry Fewless began working for Central in 1976, eventually
becoming regional vice president of automotive sales. Fewless
secured Wyeth-Ayerst Laboratories (Wyeth) as a customer for
Central. Wyeth produced baby formula and other nutritional in a
plant in Mason and needed to transport its products out of state;
it was, therefore, an important account for Central. Various United
States Department of Agriculture and Food and Drug Administration
regulations require that Wyeth's infant formula stay within a
certain temperature range. Because Central had only

"dry vans," rather than more costly steel-lined
temperature-controlled trailers, Wyeth permitted Central to
transport Wyeth freight only within a relatively small area.
Central used cargo heaters on the trucks when needed in the
winter months, with limited success.

In 1991, Fewless made a "single source" proposal to Wyeth on
Central's behalf, in an attempt to obtain brokerage fees.
Fewless advised Central's owner/chief executive officer, Matty
Moroun, of the potential for large revenues from Wyeth if Central
were to obtain temperature-controlled trucks for more lengthy
trips. According to Fewless, Moroun said that he was not
interested, saying "That's not our type of business."

In the spring of 1992, Wyeth became concerned about a
potential, nationwide railway strike. Representatives of Wyeth
contacted Fewless for assistance in finding a
temperature-controlled carrier who could handle Wyeth's freight
on long interstate trips. Fewless learned that Navajo Express,
one of Central's carriers for automotive parts, had a large fleet
of temperature-controlled trailers and advised Navajo to contact
Wyeth.

Navajo offered Fewless a commission for sending the Wyeth
business its way, but Fewless declined, apparently recognizing
that it would be inappropriate

because he was an employee of Central. Wyeth continued to use
Navajo after the railway strike ended, and Fewless' wife; Susan,
set up SKAN, which received a six to seven percent commission on
the Wyeth freight transported by Navajo.[fn4] Fewless never
advised Moroun that Susan was going to be an agent for Navajo
with regard to Wyeth freight or that she was receiving commission
payments from Navajo.

Realizing that there was great potential for profit in the
field of temperature-controlled trucking, Fewless incorporated
TQI, applied for a property brokers license, and signed a lease
for office space in anticipation of establishing his own
third-party logistics company. Fewless testified that he did not
actually solicit any business for TQI while he was an employee of
Central, and this assertion was confirmed by representatives of
both Wyeth and Navajo.

In early December 1992, when confronted with rumors that he had
started another company, Fewless admitted that his wife had
formed a company that was receiving revenues from Navajo. Fewless
tendered a resignation letter to Moroun, in which he stated his
intention to start his own logistics company and his desire to
maintain a close relationship with Central. On December 7, 1992,
Central terminated Fewless employment. Within a few months after
Fewless left Central, TQI entered into written agreements with
both Wyeth and Navajo.

Meanwhile, Central began losing more and more of Wyeth's
business, which virtually ceased by the end of 1993. A
representative of, Wyeth testified regarding several
temperature-related service failures that required a quarantine
of its product, as well as a marked deterioration in the
cleanliness of Central's trailers and poor driver attitudes.
Wyeth instituted a new policy that required transportation in a
temperature-controlled environment to prevent product freezing.
Wyeth's position was that it would have continued to use Central
or P.A.M. if they had provided temperature-controlled trailers,
competitive rates, and competitive service.

Plaintiffs filed a multiple count complaint against defendants,
alleging breach of contract, a common-law obligation not to
compete, intentional misrepresentation, innocent
misrepresentation, silent fraud, conspiracy to commit fraud,
interference with existing contractual relationships,
interference with prospective business relations, interference
with contractual relations, a right to an accounting, and breach
of fiduciary duty.

At the close of the evidence, the trial court granted defendants' motion for a direct verdict with regard to several claims and granted plaintiffs' motion for a direct verdict regarding their claim for $55,000 paid by Navajo to SKAN while Fewless remained employed by Central. The jury specifically found that Fewless did not beach his fiduciary duty to Central after his termination and returned a verdict of no cause of action on all remaining counts.

Unknown

Unknown

Affirmed in part, reversed in part, and remanded by the Court of Appeals of Michigan. 591 N.W.2d 422 (Mich.App. 1998). The date shown above is the date of the appellate court decision and not the trial date.