LORDSTOWN — A lawsuit against Lordstown Motors Corp. that claims it owes a Michigan-based company $2.5 million in unpaid bills is proceeding after a failed attempt at mediation.
DTE Lordstown LLC argues in the case it brought in November 2020 that the electric-vehicle startup broke an industrial services contract for utility-related work at its factory — the former General Motors assembly plant.
Wednesday’s mediation session was held without a resolution, and no future mediation hearings are scheduled, Anthony Cornicelli, chief magistrate and administrator for Trumbull County Common Pleas Court, said.
He could not reveal details of the session for confidentiality reasons.
The lawsuit states Lordstown Motors quickly fell behind on payments, largely due to trouble raising funds. When DTE Lordstown ended the contract in August 2020, it claimed Lordstown Motors still owed $181,613 for services and a contract termination fee of $2.3 million.
Before that, the sides agreed on a repayment schedule, but after making two payments, the company began to miss, the lawsuit states. Lordstown Motors later paid more than $650,000 to DTE Lordstown, but conditioned a proposed payment after on DTE Lordstown “foregoing all rights” under the agreement, including the more than $2 million contract termination fee, the lawsuit states.
Lordstown Motors in a statement after the lawsuit was filed said it believes DTE Lordstown was made whole and is not entitled to the termination fee.
The next event in the case is a conference call Monday, court records show.
The company reported earlier this month it’s on track to start limited production of its all-electric truck, the Endurance, at the end of September with validation and regulatory approval complete in December and January. The truck will be deployed to select early customers in the first quarter of 2022 ahead of commercial deliveries in the second quarter of the year.
It also warned for the second time in a regulatory filing it might not survive the next year without additional financing.
Lordstown Motors has come under scrutiny over the past several months, starting with a short-sellers report in March that claimed the company misled investors regarding preorders. The report spawned several federal lawsuits.
In June, the company found itself walking back statements that it had firm orders after saying days before there was enough demand to last through 2022. Also in June, the company’s co-founder and CEO and its chief financial officer resigned. It also remains the subject of federal regulatory and law enforcement probes.
The company has been working to secure new financing. It announced in July an equity-purchase agreement with a hedge fund that has the potential to invest $400 million into the company over three years.
Lordstown Motors also is trying to arouse interest in the truck among potential buyers by attending conferences for fleet operators.
Earlier this month, the company exhibited the truck at the Northeast Chapter of the American Association of Airport Executives conference in Vermont and plans later this month to attend the the NAFA Institute & Expo in Pittsburgh. The expo is for fleet professionals in several segments, including corporate, government, public safety and utility.
rselak@tribtoday.com
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August 26, 2021 at 11:51AM
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