LMC ready to fight suit over contract
LORDSTOWN — Lordstown Motors Corp. looks forward to defending itself in court against claims it broke an industrial services contract with, and owes more than $2.5 million in unpaid bills to, a Michigan-based company.
The electric truck startup responded to the lawsuit Tuesday, one day after it was contacted for comment by this newspaper — the first to report that DTE Lordstown LLC took Lordstown Motors to court.
The parties signed the agreement in February for the utility-related work at Lordstown Motors’ plant — the former General Motors assembly complex– but DTE Lordstown claims Lordstown Motors quickly fell behind in payments, owing $722,578 by June.
The debt, according to the lawsuit, was caused by trouble Lordstown Motors was having raising funds.
DTE Lordstown claims Lordstown Motors still owes $181,613 for services and a contract termination fee of $2.3 million, according to the lawsuit. DTE Lordstown in June notified it would end the contract in August.
Before that, the lawsuit states, the parties arranged for Lordstown Motors to make $40,000 weekly payments to catch up to its debt, and the company committed to clear up the full arrearage by May 29. It had made payments in April and May, but missed two payments in May and a third in June, the lawsuit states.
Lordstown Motors on June 25 paid DTE Lordstown $642,578 as partial payment for four unpaid invoices, paid $10,141 for a sixth invoice Oct. 19 and tendered a check on Oct. 28 for invoice No. 5, but conditioned the proposed payment on DTE Lordstown “foregoing all rights” under the agreement, including the more than $2 million contract termination fee, the lawsuit states.
According to Lordstown Motors, it has paid DTE Lordstown “in full for all of the operational costs due through the date DTE terminated the agreement,” which ended Aug. 14, according the lawsuit.
Operational control of the plant’s central utility complex was turned over to a new provider.
“LMC believes it has made DTE Lordstown whole, and it is not entitled to the termination fee claimed due under the circumstances,” the company said in a statement. “Lordstown Motors looks forward to responding to and defending this matter in the Trumbull County courts.”
The work was at the plant’s central utility complex, wastewater treatment plant and project site, where utility services could be performed, the lawsuit states. It included making rounds, taking equipment readings, and scheduling and overseeing contractor maintenance work.
DTE Lordstown filed the lawsuit Oct. 30 in Trumbull County Common Pleas Court. Four days earlier, shares of Lordstown Motors started trading on the Nasdaq stock exchange as a public company following its merger with special purpose acquisition, or “blank check,” company DiamondPeak Holdings Corp.
The deal was expected to inject $675 million into the company to begin producing its all-electric Endurance pickup truck sometime in the second half of 2021.