Lawsuit alleges contractor tried to bill SpaceXAI for raceway renovation project
MEMPHIS, Tenn. (WMC) - The CEO of an Ohio-based contracting company claims SpaceXAI owes his company north of $600 million for work to establish Elon Musk’s data center footprint in the Memphis metro area.
But a newly filed lawsuit alleges that he was defrauding SpaceXAI in part to fund side projects, including his local raceway renovation project.
Darana Hybrid recently filed numerous liens against xAI’s subsidiaries CTC Property and MZX Tech, alleging unpaid labor, services, equipment and materials used to build SpaceXAI’s two facilities in Memphis and two facilities in Southaven, Mississippi.
Darana’s CEO, Darryl Cuttell, said his company is owed around $431 million for his company’s work in Southaven, and $136 million for his company’s work in Memphis.
SpaceXAI is a product of xAI merging with SpaceX earlier this year. Cuttell said his company’s working relationship with xAI was solid until the merger. After that, he said, his invoices stopped getting paid.
SpaceXAI and its two subsidiaries filed suit against Cuttell’s company on August 4, one day after he spoke publicly about the liens.
The suit alleges that Cuttell overbilled and defrauded SpaceXAI of hundreds of millions of dollars, partially to fund “out-of-scope work on hot rod projects.”
Cuttell purchased the International Hot Rod Association last year. He had planned a major renovation of the long-shuttered Memphis Motorsports Park in Millington, now called the Darana Motorsports Park.
A groundbreaking was held in January. But now, Cuttell told Action News 5 the project is on “indefinite hold” and that he is considering selling off IHRA properties to pay his own bills.
SpaceXAI’s suit claims that Cuttell breached their contract agreement by secretly marking up subcontracted labor and then manipulating invoices to bill SpaceXAI for the Darana Motorsports Park project.
SpaceXAI’s subsidiaries reportedly fired Darana after discovering the “rampant overcharging.”
SpaceXAI claims that Darana tried to gain leverage on its billing dispute by withholding tens of millions of dollars in payments to its vendors and suppliers, forcing the tech giant to fulfill Darana’s promise to pay them.
SpaceXAI wants to take the matter to trial.
The company also wants Darana to pay at least $500 million in compensatory damages, plus mitigation costs, punitive and statutory damages, and court costs.
When asked for a statement on the pending litigation, Cuttell simply replied to Action News 5 with the message: “Did not over bill.”
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