PLAINFIELD TOWNSHIP, Mich. (WOOD) — A boat dealership with a location in the Grand Rapids area is suing boatmaker Malibu Boats Inc.

Tommy’s Boats, which has three locations in Michigan including one on Morrissey Drive off of West River Drive in Plainfield Township, filed the lawsuit on April 10 against Malibu Boats.

Tommy’s is also facing its own court case, accused by its bank of defaulting on loans, News 8 partner Crain’s Grand Rapids Business reports.

TOMMY’S BOATS SUES MALIBU BOATS

Tommy’s Boats is accusing Malibu of an “intentional and fraudulent scheme on the part of its CEO, Jack Springer.”

The lawsuit claims Malibu pressured the dealership, which has 15 locations throughout the state, to increase its floor plan for the Malibu and Axis brands from $50 million to $85 million, and then increase it again to $110 with a $20 million over limit. It says Malibu withheld financial incentives the dealership had earned in 2022, and “used promises of additional incentives to be earned as additional financial pressure on Tommy’s to increase its floor plan financing capacity.” It says Springer did so to inflate Malibu’s stock value and market share.

Tommy’s alleges Malibu did not pay millions of dollars in incentives the dealership was owed, and “reneged” a promise to repurchase unsold boats.

Malibu is also accused of sending more high-priced, high-margin Malibu brand vessels than the 65/35 mix of Malibu and Axis boats Tommy’s had requested.

According to the lawsuit, Tommy’s represented Malibu at a Miami boat show in February. While there, three “Malibu stakeholders” pulled aside Matthew Borisch, a Michigan resident and the principal owner of Tommy’s. They told him the Malibu CEO “would not turn the spigot off” when it came to manufacturing boats, even though the market had slowed since the pandemic, the lawsuit claims. It claims they told Borisch they were “nervous” after the company’s former CFO left on bad terms, and that Springer would not last as CEO.

Malibu announced the next week Springer was stepping down, and in March Borisch met with the company’s interim CEO, the lawsuit says. The lawsuit describes that meeting as productive and positive, but says two days later Malibu sent a letter — signed by Springer — ending its business relationship with the dealerships as Tommy’s prepared for the beginning of its busiest season.

Tommy’s asked the court to award monetary and punitive damages.

In a Thursday statement, Malibu said it will defend itself against the lawsuit.

“The Company intends to vigorously defend itself against the claims made by Tommy’s,” the statement said. “Tommy’s was formerly a longtime dealer partner of ours, and we ended our relationship due to concerns about Tommy’s own conduct and its financial soundness. …We will always act to protect our business, our customers and our shareholders.”

It says all the boats it sent to Tommy’s were ordered by the dealership.

“Malibu is working to mitigate any disruption for our partners and customers – as well as our business,” it says. “We have been working with our dealership network and are in discussions with strong dealer partners to limit any service gaps in markets previously served by Tommy’s. We remain committed to serving Malibu’s end-users in all our markets.”

REPORT: BANK SUES TOMMY’S BOATS

Malibu said Tommy’s lender, M&T Bank, is suing the dealership over breaching a lending agreement. It says Tommy’s was selling boats “out of trust,” or selling boats that were collateral and then either not reporting the sales or not repaying the bank.

“Upon learning that Tommy’s was selling out of trust, Malibu engaged with Tommy’s and M&T Bank, on numerous occasions, regarding Tommy’s financial position and potential paths forward,” the Malibu statement goes on to say. “Those discussions did not result in a resolution that we believed was in the best interest of our shareholders, dealer partners and end-customers, and we therefore ended our relationship with Tommy’s. We do not currently have any dealership agreements in effect with Tommy’s.”

It says Tommy’s has been sued by M&T Bank for breaching its agreement and the bank has filed for a receiver over Tommy’s assets.

Crain’s reports M&T Bank filed a motion on April 1 against Tommy’s Boats, saying it had defaulted on more than $115 million in loans and owes $2.2 million in interest. It reports the bank has requested access to Tommy’s assets as collateral.

A spokesperson for M&T Bank told News 8 the company does not comment on ongoing litigation.

Tommy’s told Crain’s that Malibu “forced Tommy’s into default,” and that it is working with the bank to resolve the issue.

Crain’s reports the lawsuit says there are 17 boats that are unaccounted for.

In response to the statement from Malibu, Tommy’s in a Friday statement said, “While we were disappointed in Malibu’s public comments this week that mischaracterized the issues and our relationship, we look forward to more productive discussions in court.”

“Tommy’s has been a provider of Malibu Boats for over a decade. We are very appreciative of our incredible partnership over the years and for the dedication and hard work of Malibu’s employees. During this time, we have built relationships with customers and employees that are irreplaceable,” Tommy’s said in the statement. “Unfortunately, after multiple attempts to resolve the issues between Tommy’s and Malibu, we were left with no choice but to allow the legal system to address the impasse.”

It thanked its customers, employees and M&T Bank for their “patience.”

“As always, our focus will be on servicing all customers and continuing to build strong, lasting relationships as we move into the future,” it said.