Local Law Firms Home > Real Estate Law News >Tesla Sued by Developer For Breach of Real Estate Law Contract Back in 2008, electric car manufacturer Tesla was looking for a facility to build its model S-sedans. They apparently contracted with New Mexico-based developer Rio Real Estate Investment Opportunities, LLC for 150,000 sq. ft space. The arrangement was that the developer would build the facility and then lease it to Tesla for 10 years at 1.35 million per year plus an annual 2 percent hike. After Tesla entered into an agreement for this deal on Feb 19, 2007, the project was hailed as a victory for New Mexico by then Governor Bill Richardson, who issued a statement proclaiming that Tesla's S-model would be built in New Mexico. The developer then started putting together the building design and initiated soil tests, environment reports, obtained government funding approvals and engaged with third parties who would be working on the project. After a year of such feverish activity and multiple meetings between both parties, Tesla backed out of the deal because they found a much better alternative in Fremont, CA where they purchased the building for the plant at a fire-sale price of $59 million. The State of California also helped by providing some incentives, and CA Gov. Arnold Schwarzenegger held a press conference and regarding New Mexico and its failed bid to get the Tesla plant. Now the developer has filed suit against Tesla, asking for damages and attorneys' fees. The suit was filed in New Mexico's Second Judicial District Court in Bernalillo County. As per the court documents, the developer alleges a breach of the development agreement by Tesla, along with negligent misrepresentation, fraud and breach of good faith dealing. Tesla refutes the charges, and considering that the dispute involves parties in two states and there is an inter-state rivalry aspect, they want the suit to be moved from the New Mexico state court to a federal court.
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