Lordstown Motors Appeals Court Ruling
LORDSTOWN, Ohio – Lordstown Motors Corp. has appealed a Trumbull County Common Pleas Court decision that ruled the electric vehicle startup must pay more than $2.5 million to a Michigan-based utility-service provider for breaching a contract signed two years ago.
Lordstown Motors filed a notice to the Eleventh District Court of Appeals Monday, more than three weeks after the court issued a judgment in favor of Ann Arbor-based DTE Lordstown, awarding that company $2,512,214.51 plus interest.
DTE sued Lordstown Motors on Oct. 30, 2020, alleging that the company breached a utility services-agreement when the EV startup failed to make payments on several invoices, forcing DTE to terminate the contract in August of that year, according to court papers.
The summary judgment issued by Judge Wyatt McKay stipulates that Lordstown Motors pay DTE Lordstown a balance of $181,613.42 for services and another $2,330,609.09 in termination fees.
However, Lordstown Motors asserted through points of law that its inability to pay was because of “unforeseen events,” in particular the COVID-19 pandemic, according to court papers. The company also argued that the termination payment clause is “unconscionable and unenforceable,” according to documents.
Common Pleas Judge Wyatt McKay, however, on Jan. 12 found that “no genuine issues of material fact remain, and plaintiff DTE Lordstown is entitled to judgment on claims for breach of contract.”
Lordstown Motors has requested the court stay the judgment pending an appeal. DTE responded with a filing asking the court to deny Lordstown Motors’ request, or require the company put up a bond to secure DTE’s interest, court papers say.
The EV company requests that the appeals court review the summary judgment and consider whether “genuine issues of material facts existed on breach of contract claim,” the notice said.
Lordstown Motors has also requested an oral argument be scheduled in Trumbull County, but has left the door open for possible pre-trial hearings and mediation to resolve the matter, the appeal filing said.
DTE Lordstown’s complaint states when Lordstown Motors acquired the former General Motors Lordstown plant in November 2019, it lacked the personnel or expertise to manage the facility’s wastewater treatment operation and utilities complex.
In February 2020, Lordstown Motors entered into a contract with DTE Lordstown, which would provide these services for a six-year term, according to court papers.
The work involved taking equipment readings, making rounds, scheduling and overseeing any contract maintenance work, court documents say.
But Lordstown Motors “quickly fell behind on its payments,” accruing an unpaid balance of $904,192.09 — $722,578.67 of which was past due — by June 15, 2020 the lawsuit says.
Although Lordstown Motors made subsequent partial payments, DTE sent a notice of termination to Lordstown Motors on June 1, indicating that it would take effect Aug. 14, triggering the hefty termination fee, court documents say.
Lordstown Motors is in the process of manufacturing pre-production models of the all-electric Endurance pickup at its plant in Lordstown, the former General Motors assembly complex.
In November, Lordstown Motors signed a purchase agreement with Taiwanese tech giant Foxconn that calls for the company to purchase the plant for $230 million and another $50 million equity investment. The deal is expected to close in April.
Copyright 2022 The Business Journal, Youngstown, Ohio.