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Business News – U S Telebrokers, TELSTAR Name Davel in Lawsuit

Posted: 06/2000

Business News

U S Telebrokers, TELSTAR Name Davel in Lawsuit
By Tara Seals

Master agents U S Telebrokers, Inc. (www.ustelebrokers.com) and TELSTAR have filed a joint lawsuit in a Los Angeles District Court, charging Davel Communications Group Inc.
(www.davelgroup.com) and its subsidiary, Telaleasing Enterprises Inc., with breach of contract as well as breach of good faith and fair dealing.

The agencies call for monetary damages of a minimum of $700,000, plus interest and legal fee reimbursement. The companies also seek a declaration that the defendant has no legal or factual basis for the alleged breach.

According to the lawsuit, U S Telebrokers and TELSTAR signed a commission agreement in October 1998 to act as independent agents on behalf of Davel in approaching CSK Auto
(www.cskauto.com), the largest auto parts retailer in the western United States. The Payphone Installation and Royalty Agreement dated Sept. 17, 1999 officially contracted Davel for CSK Auto’s pay telephone business.

The agreement called for Davel to provide pay telephone service to approximately 1,100 CSK Auto locations throughout the United States, and for installations in 542 locations within the first six months. According to the suit, the parties anticipated an average of two payphones at each location, each of which would generate a minimum of $200 gross income per month. According to the October commission agreement, Davel would pay $350 to the agencies per payphone installed.

A notice of rescission on behalf of Davel to TELSTAR, dated Oct. 6, 1999, unilaterally terminated the commission agreement, sparking the suit.

Davel also is coming under fire in a separate but related lawsuit. CSK Auto has filed in an Arizona county superior court against Davel, claiming bad faith and breach of contract. The auto parts company seeks damages in the minimum amounts of $704,600 in bonus money and $4.4 million in revenue.

According to the September Payphone Installation and Royalty Agreement, Davel would pay CSK Auto a signing bonus of $650 per installation, along with 35 percent of the gross revenue, payable monthly. CSK Auto alleges that Davel breached the agreement by refusing to install any of the payphones set forth in the installation and royalty agreement.

“In both cases, Davel has been given every opportunity to meet their agreed upon duties and responsibilities,” states Evelyn McDonald, president of TELSTAR. “They have chosen to intentionally ignore their legal obligations under the pretense of, ‘Contract Rescission.'”

Davel attorneys declined comment, while CSK Auto representatives were unavailable.


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