Battery Manufacturer Sues JLL To Avoid Paying $5M Site Selection Fee
A Turkish lithium-ion battery manufacturer is suing JLL to get out of paying the brokerage giant $5M as part of a development incentive deal to develop a new plant in South Carolina.
Kontrolmatik Technologies, through its Pomega Energy Storage Technologies subsidiary, is suing the global commercial real estate services firm, claiming that a memorandum of understanding signed in 2022 wasn't binding and the fees laid out in the document violate South Carolina law.
The battery-maker said in the lawsuit, initially filed in Colleton County before it was transferred to the U.S. District Court for the District of South Carolina at JLL's request, that JLL is entitled to only $750K in fees for its work in helping with site selection.
Kontrolmatik struck a deal with the state for a $127.5M incentive package, and the memorandum of understanding entitled JLL to 10% of awarded economic incentives up to $5M, according to the suit.
JLL has demanded payment of $5M, but Kontrolmatik argues that because a large chunk of the incentives it received was based on a predetermined economic development formula, the brokerage didn't identify or negotiate them, so it isn't entitled to its slice of the incentive.
Kontrolmatik acknowledged that it chose Colleton County “acting under the advice of JLL,” but its attorneys wrote in the suit that state law “prohibits representatives of taxpayers from charging a contingency fee for the procurement of economic incentives.”
Kontrolmatik also claims the contingency fees called on by JLL in the memorandum violate South Carolina law, which prohibits companies from having to pay contingency fees in exchange for some state incentives.
“Most of the incentives included in the incentive package, however, were not identified or negotiated by JLL. For example, [Kontrolmatik was] awarded corporate income tax credits and sales tax exemptions based solely upon statutory formulas, not JLL’s efforts,” the company’s attorneys wrote.
In its answer, JLL denied Kontrolmatik's allegations, adding that the initial memorandum of understanding wasn't subject to South Carolina law and that the Turkish firm failed to state any basis for a dispute.
A JLL spokesperson said the company doesn't comment on pending litigation.
Kontrolmatik in late 2022 selected the county for its $300M, 500K SF lithium-ion plant with 3 gigawatt-hours of capacity, a plant that promised to bring nearly 600 new jobs to the region. The batteries were to be used to store solar energy on domestic power grids. The plant was expected to be open by 2024, the Charleston Regional Business Journal previously reported.
Kontrolmatik alleges in court documents that the dispute has led to construction delays and other “lost business opportunities,” Smith Robinson Managing Partner Jonathan Robinson and associate attorney Frederick Hanna said in the court filings.
“In light of JLL’s limited efforts in identifying and negotiating incentives, JLL’s claimed fee is plainly excessive and unconscionable,” the attorneys wrote. “Although Plaintiffs are willing to pay JLL a fair amount to compensate it for the incentives it did identify or negotiate, that amount may not include impermissible fees and is far less than $5M.”
