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Local attorneys head to mediation for $2M after contract dispute
BASTROP — A local construction team recently terminated from Elon Musk’s Tesla Giga Texas is taking legal action against the electric car manufacturer.
Bastrop-based Arrowhead Construction Services is seeking $2 million in money owed and damages from the Central Texas giant after a “very technical” breach of contract, according to representatives James Ringel and Jimmy Brymer of the city’s Ringel & Brymer, PLLC. The team is forcing Tesla into arbitration over a dispute regarding an assignment of contract.
“It’s a standard practice in construction,” Ringel said. “In this case, I don’t see that it really hurts Tesla, I don’t know why they care. And Tesla, instead of negotiating a better deal, they just fired them. They said, ‘you have a week to fix this,’ I fixed the issue, and they still fired my client anyway.”
Arrowhead was initially contracted to work on the gigafactory through its completion, set to make around $6 million. Upon being prematurely terminated, the workers requested that the $2.1 million of invoices already owed be fulfilled, but after several months only $900,000 was paid out, according to the team.
According to the attorneys, this is commonplace for Tesla. The company currently has 63 other liens out on its various project properties.
The duo stated this may be a sign of financial issues and an attempt to save on damages.
“Clearly they have a habit of not wanting to pay their contractors,” Brymer said. “Our theory is that Tesla may be having its own cash flow struggles. They’re trying to sort of string it along and delay paying as much as possible. They keep cut-ting a bunch of stuff, you know, delay, don’t pay.”
Tesla’s team has refused to come to any sort of meaningful solution to pay the remaining balance, according to Brymer, and the contractor is now looking for an additional $1.1 million for damages sustained after losing its biggest client.
“They’ve kind of nickel and dimed and fought with our clients about paying that out,” Brymer added. “Every time we send them something they say ‘no, that’s not right.’ There are damages at this point, they’ve caused a measurable harm to our client.”
Ringel & Brymer also mentioned several mistakes found within the contract with Tesla. The documents reference sections that aren’t present and Tesla’s team has mentioned mandatory mediation before arbitration, but no such stipulation is found in the contract.
The document also states that a lawsuit must be filed in Houston, but arbitration is conducted in Austin.
“I think it’s just the attorneys making another oopsie,” Ringel said. “It doesn’t make sense to have court filings in Houston but then arbitration in Austin. I think at some point, one of their contracts had everything in Houston and then they decided they preferred Austin and then just didn’t catch it.”
Despite the back and forth, the Bastrop team stated they are hoping to come to an agreement.
“We’re hoping to be able to settle it, but on the other hand, I mean, you can’t just not pay people for the work that they do,” Brymer said.
Mediation is scheduled for the middle of September, according to the local attorneys, aiming for a resolution by October.
