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Dragon Racing sues Lotus for $4.6-M

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Doug_G

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Apr 2, 2010
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Dragon Racing sues Lotus for $4.6-M - The Globe and Mail

Dragon Racing has sued Lotus for at least $4.6-million in damages, accusing the engine manufacturer of damaging its reputation by spreading “especially outrageous” falsehoods about the IndyCar team while failing to deliver two chassis and hurting its ability to be competitive.

“Put simply, Dragon has had enough of Lotus' deceit and wrongdoing,” the lawsuit says. “Dragon has put an end to its ill-fated relationship with Lotus and now seeks recompense for the damages inflicted upon it.”

The suit claims the problems began shortly after Dragon and Lotus reached an agreement on Jan. 8. Dragon claims Lotus was supposed to provide two chassis to the team free of charge, but couldn't afford to purchase them, forcing Penske to spend about $800,000 to get the cars.

Then, despite already being indebted to Dragon, Lotus refused to deliver engines unless Dragon paid Lotus “substantial sums of money.”

“Lotus even admitted it was indebted to Dragon. Lotus's demands for payment were outrageous in this context,” the suit says. “Ultimately, Dragon was forced to relent to Lotus' outrageous and improper demands.”

The suit claims Dragon paid Lotus $200,000 in March toward the engine lease, and paid $300,000 to a third party vendor at Lotus' request. Lotus continued to insist on further payments, but Penske refused.

Dragon also accused Lotus of defamation with “knowingly false statements to the effect that Dragon was not honouring financial and contractual commitments to Lotus.”

Dragon claims Lotus is in breach of its agreement because the manufacturer failed to disclose it was in the middle of a corporate reorganization at the time it partnered with Dragon. The restructuring meant Lotus lacked the financial ability to meet the obligations of the contract.

Ouch.