Frosch Travel last week filed a motion to add Tzell Travel Group and its CEO, Barry Liben, as defendants in a lawsuit against Your Travel Center Inc. (YTC) and its CEO, Colin Weatherhead, over YTC’s alleged breach of contract with Frosch.

Among other things, the suit alleges that Liben bullied Weatherhead after learning of YTC’s intention to stop reporting ARC airline sales through Tzell and instead enter into a binding agreement with Frosch.

Tzell dismissed those claims Monday in a statement, declaring: “We believe those allegations are completely without merit and have no further comment.”

Similarly, Weatherhead said, “No merit, no comment.”

The initial lawsuit, filed in U.S. District Court in California in February, alleges a breach of contract between Frosch, a Delaware limited liability corporation (LLC) headquartered in New York City and Houston with 2014 annual sales of $1.2 billion, and YTC, a California corporation based in Santa Barbara. YTC’s website bills it as a host agency with more than $100 million in sales.

The contract between YTC and Frosch would have resulted in YTC reporting its airline sales to ARC through Frosch. It also would have stipulated Frosch as the eventual buyer of YTC, according to the lawsuit. At the time the contract was signed, YTC was operating under an agreement with Tzell, a Travel Leaders Group brand whose website states it had annual sales of $2 billion in 2013, to report airline sales through Tzell.

According to the lawsuit, YTC breached its contract with Frosch after Liben “engaged in a campaign to pressure, bully, and intimidate Mr. Weatherhead by threatening to take all of his travel agents, and warned that he would destroy Mr. Weatherhead personally and professionally if he joined Frosch.”

The lawsuit claims that Frosch’s president and CEO, Bryan Leibman, met Weatherhead in 2009, whereupon the two developed a relationship and had discussed business for the past five years. Those discussions included the possibility of a “contractual arrangement” for YTC to report its airline sales through a Frosch ARC branch office until such time as Weatherhead should decide that he wanted to leave the business, at which time Frosch would acquire YTC.

The lawsuit states that YTC would get access to Frosch’s preferred suppliers and network of service providers, as well as to commissions and overrides from airlines, as a result of reporting sales through Frosch.

“The parties were very close to entering an agreement on these terms,” the lawsuit states.

However, YTC entered into an agreement with Tzell Travel in August 2009, under which Tzell established a joint branch ARC office of YTC, through which YTC would report its airline and other sales, according to the lawsuit.

The lawsuit claims that Liebman and Weatherhead resumed discussions about YTC transferring its business to a Frosch ARC branch office in November 2014, and it was again made clear that Frosch would acquire YTC whenever Weatherhead decided to sell it. The lawsuit asserts that the two men entered into a “valid, binding, and fully enforceable agreement” in late November 2014 that stipulated a succession plan, with Frosch ultimately acquiring YTC.

According to the lawsuit, the agreement could be terminated “only upon the occurrence of a specifically defined event” — i.e., if Leibman were no longer Frosch’s CEO and president, or if Frosch were to change ownership, “YTC will have an option to continue with this agreement or to terminate at any time thereafter merely by providing 30 days written notice.” The lawsuit states that was “the only termination provision in the Frosch agreement, which the parties specifically negotiated.”

The day after the agreement with Frosch was signed, YTC notified Tzell that it was terminating its 2009 agreement with the company, according to the lawsuit. That was acknowledged by Tzell, but “soon thereafter,” Liben allegedly “bullied" Weatherhead into remaining with Tzell.

According to the motion filed this week, “as a direct result of Mr. Liben’s threats, YTC refused to move forward with its agreement with Frosch, leading to this action.”

After his alleged interaction with Liben, Weatherhead attempted to terminate the Frosch agreement via an email to Leibman in which he “admitted signing the agreement, but cited ‘certain issues from both a legal and business perspective which have come to light over the past 48 hours’ as the reason for his unilateral termination,” the lawsuit states. The lawsuit asserts that the unilateral termination constituted a breach of Frosch's and YTC’s agreement.

The lawsuit seeks YTC’s compliance with its agreement with Frosch plus damages. It also seeks a ruling that Weatherhead is personally liable for failing to execute the Frosch agreement and seeks damages from him, including all costs associated with the litigation.

While the lawsuit names “Your Travel Center Inc.” and Weatherhead as defendants, it also names “YTC Travel LLC.” According to the lawsuit, YTC was assisted in developing its agreement with Frosch by YTC COO Robin Sanchez, who, it asserts, “made an error” in the document and filled in the space for Frosch’s counterparty as “YTC Travel LLC.”

While the address of YTC Travel LLC is listed as the same Tempe, Ariz., address that YTC uses, there is no entity called YTC Travel LLC referenced on YTC’s website, nor is it listed as a business on the Arizona secretary of state's website, which lists the state’s businesses (that website does list Your Travel Center Inc.). 

The lawsuit claims Weatherhead “fraudulently induced” Frosch to enter into the agreement that had the incorrect legal name for YTC listed as a counterparty, and said he “knew — or should have known — that the incorrect YTC-related entity’s name was included in the agreement.”

The lawsuit seeks to have the agreement reformed to reflect the correct business name for YTC if the court finds that YTC Travel LLC is not a legal entity. Or, if the court rules that YTC Travel LLC is a legal entity, that it be named liable for breaching the agreement with Frosch. It also seeks to have Weatherhead ruled personally liable for the breach of contract if YTC Travel LLC is found to be a legal entity.

In its motion to add Liben and Tzell as defendants, Frosch said it has “since obtained additional evidence” backing up the allegations against Liben and Tzell. The motion also states that “Tzell and Mr. Liben cannot claim any surprise, as they have actively participated in this litigation to date and were fully aware of the likelihood that they would be named as additional defendants.”

It charges that Liben is personally liable for interfering with the agreement between Frosch and YTC.

A hearing is scheduled for Feb. 22 in Los Angeles.


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