Less than two weeks after it was sued by an oil supplier for breach of contract, Norwalk-based Levco Tech Inc. has countersued, claiming the supplier failed to liquidate oil futures contracts it had bought on Levco”™s behalf at prices between $2.82 and $4.34 a gallon, and failed to warn it of the scope of damages Levco could incur as prices fell below that range.
Joining the lawsuit against Portsmouth, N.H.-based Sprague Energy Corp. are several members of the Levene family who control Levco Tech and its Levco Energy affiliate. In its countersuit, Levco claims Sprague bought oil contracts on its behalf in the summer of 2008 at fixed prices, on the assurance it would save money compared with what it could get under Sprague”™s “rack” winter pricing scheme, which changes according to market conditions.
In a story on the initial lawsuit in the Jan. 26 edition, the Fairfield County Business Journal reported the dispute involved gas contracts. According to Levco, the dispute revolves around heating oil, not gas supplies.
Last summer, Levco directed Sprague to buy futures on the New York Mercantile Exchange representing more than 4.2 million gallons of heating oil, which Levco planned to pick up from Sprague”™s Stamford terminal and deliver this winter to customers throughout lower Fairfield County.
In early December, Levco claims it directed Sprague to “lock in its damages, liquidate the contracts, and quantify the loss, with all parties working together to quantify the losses at a mutually agreeable price.” Sprague did not do so until nearly a month later, according to Levco.
Sprague Energy is a subsidiary of Axel Johnson Inc., which has offices in Stamford and New York City.
Levco is suing under multiple counts, including negligent and intentional misrepresentation of a contract”™s terms; breach of fiduciary duty; and violating the federal Commodities Exchange Act and the Connecticut Unfair Trade Practices Act.
In its own lawsuit, Sprague said Levco owes it $8 million and says that multiple members of the Levene family agreed to act as guarantors of the contract.
The Levenes are plaintiffs to Levco”™s countersuit, and say that at least one family member had previously guaranteed Levco”™s obligations to Sprague Energy, but declined to renew that guarantee.
