Judge sides with RV CEO in fraud suit

Travel Lite RV headquarters in the 6 & 13 Technology & Industrial Park in Syracuse is seen in this file photo.

SYRACUSE — A Kosciusko County judge intends to toss a civil fraud suit against Travel Lite RV CEO Dustin Johns. But the plaintiff has an opportunity to file a do-over before the case is dismissed.

Johns is accused in the lawsuit of fraud, breach of contract and a state securities law violation stemming from a $4 million real estate deal in Syracuse last year.

His attorney countered with a motion to dismiss the case, arguing the claims didn’t meet Indiana trial rule standards for alleging fraud.

Superior Court 4 Judge Christopher Kehler agreed for the most part.

In a decision filed Monday, Kehler partially sustained Johns’ motion, finding the suit failed to “specify in sufficient detail the time, the place, the substance of the false representations, the facts misrepresented and the identification of what was procured by fraud,” the order states.

Kehler also gave the plaintiff, Michael DeWitt, about 10 days to amend the current complaint, essentially allowing him a chance to update his argument, or the suit could be dismissed with prejudice, according to the order.

DeWitt said he plans to file an amendment with financial disclosures included.

Johns praised the ruling as fair.

“The whole time I’ve just played the high road, and I’ve done nothing wrong in this situation whatsoever,” Johns said.

DeWitt’s case, initially filed in September, described agreements in July and August 2018 in which Johns purchased a house and several acres of land along North East Wawasee Drive from DeWitt for $4 million. The deal called for Johns to pay half the cost with $1.9 million in cash and earnest money, and cover the other half by transferring 3.5 shares of stock in Travel Lite, a recreational vehicle manufacturer, valued at $2.1 million.

But DeWitt claimed Johns misrepresented the value of the stock by providing fraudulent company financial information, and then breached the contract by transferring stock that wasn’t worth what they agreed on. DeWitt’s suit cited $2.1 million in damages from the stock, and he sought compensation, including the return of the house in exchange for cash that was already paid.

Johns responded with a motion to dismiss the case on Oct. 30. His attorney argued DeWitt didn’t back up the claims with enough specific details of the alleged fraud to meet state trial rule standards for such case. As a result, the lawsuit allegedly failed to state a claim for relief, according to the document.

“There are no allegations concerning the who, what, when, where, or how of any alleged fraudulent misrepresentations made to the plaintiff or how there might be any falsity involved,” the motion states.

DeWitt fired back with an objection to the dismissal request on Nov. 7. The document reiterated points made in the initial complaint as an argument showing details were provided to meet specificity standards for fraud cases.

“Count 1 of plaintiff’s amended complaint clearly contains the information necessary to comply with Indiana trial rule,” the objection states.

Kehler disagreed with the order to partially uphold Johns’ dismissal motion.

Johns defended his role in the real estate transaction, saying he didn’t mislead anybody. He described the decline in the value of the stock that was put up for the house sale as a risk in investing in businesses.

“In real life you can’t say I want my money back. In real life, as an investor, you try to invest as best as you can. Sometimes you get a home run and sometimes you don’t,” Johns said.

PRODUCTION RESUMING

The stock value apparently dropped as Travel Lite lost momentum amid a slowing in the RV industry.

Johns said the company grew “super fast,” fueled by a new line of Evoke travel trailers, and represented by construction on the new headquarters and facility at the Syracuse 6 & 13 Technology and Industrial Park off U.S. 6 in 2018.

But some “missteps” were taken on the fast track, and the manufacturer faltered.

“I take responsibility for that,” Johns said. “We definitely could have learned to pace ourselves.”

Production ceased at Travel Lite over the summer while the company underwent a restructuring, and workers were dismissed.

An RVBusiness.com report in September indicated Travel Lite’s employment topped out at 163 people.

Johns described the losses as heartbreaking, and said he was forced to learn some hard lessons while working to slowly rebuild the company.

“You learn a lot more during tough times than you do during the good times,” he said.

Limited production has resumed at the main facility in Syracuse, he said. Plans in September had called for reopening the plant in late October.

Approximately 30 people are working there now on a first-shift line five days a week, he said. Cost-cutting and continuous improvement measures are being implemented to maximize profitability.

Travel Lite is also in the process of phasing out its older facility in New Paris, according to Johns.

He said the company is working to finish two new prototype brands of travel trailers and truck campers, called PEAK 9, this month. Travel Lite has also landed accounts a couple big RV dealers.

Johns’ goal is to feature the new products at the Florida 2020 RV Supershow in Tampa during the third week of January.

Aimee Ambrose can be reached at aimee.ambrose@goshennews.com or 574-533-2151, ext. 316. Follow her on Twitter at @aambrose_TGN.

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