Lordstown Motors Pays $2.5M Judgment in DTE Lawsuit
LORDSTOWN, Ohio – Electric-vehicle producer Lordstown Motors Corp. has paid a Michigan-based utility firm more than $2.5 million to satisfy a court judgment handed down in January.
According to a filing April 4 in Trumbull County Common Pleas Court, DTE Lordstown LLC has acknowledged payment in full from Lordstown Motors, ending a legal fight between the parties that began in 2020 over a contract dispute.
DTE Lordstown, based in Ann Arbor, Mich., filed a complaint Oct. 30, 2020, alleging that Lordstown Motors breached a utility services-contract when the EV startup failed to make payments on several invoices, forcing DTE to terminate the agreement in August 2020.
Common Pleas Court Judge Wyatt McKay filed a summary judgment against Lordstown Motors on Jan. 12, 2022, stating that the company owed DTE $2,512,214.51 for breach of contract.
Lordstown Motors appealed the decision to the 11th District Court of Appeals in early February. The company moved to dismiss the action on April 5. The court granted the motion and dismissed the appeal April 11.
Emails to Lordstown Motors and DTE’s attorneys seeking comment were not returned as of this posting.
Court papers say that Lordstown Motors owed DTE Lordstown $181,613.42 toward services and another $2,330,609.09 in contract termination fees.
DTE Lordstown’s complaint states that when Lordstown Motors acquired the former General Motors Lordstown plant in November 2019, the electric-vehicle startup 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 to provide these services for a six-year term, according to documents.
The work involved taking equipment readings, making rounds, scheduling and overseeing any contract maintenance work, court documents say.
Under the terms of the agreement, Lordstown Motors was to pay DTE monthly invoices within 30 days of receipt, the complaint said.
But Lordstown Motors “quickly fell behind on its payments,” according to the complaint. Court papers say Lordstown Motors failed to abide by a revised payment schedule, despite making partial payments. DTE cancelled the contract in August 2020, triggering the hefty termination fees, documents show.
Lordstown Motors asserted in court filings that its inability to pay was because of “unforeseen events,” in particular the COVID-19 pandemic. The company also argued that the termination payment clause was “unconscionable and unenforceable,” according to documents.
Judge McKay, in his Jan. 12 ruling, 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 is in the process of manufacturing pre-production models of the all-electric Endurance pickup at its plant.
The company expects to produce 500 commercial-ready trucks by the end of this year and plans to manufacture another 2,500 in 2023.
In November, Lordstown Motors signed a purchase agreement with Taiwanese tech giant Foxconn that calls for the company to purchase Lordstown’s plant for $230 million and infuse another $50 of million equity investment into the company.
The deal is also contingent on Lordstown Motors securing a contract manufacturing agreement with Foxconn, whereas Foxconn would produce the Endurance and future Lordstown Motors products.
The deadline for the deal to close is April 30.
Copyright 2024 The Business Journal, Youngstown, Ohio.
