Failed data center venture loses legal battle

Delaware court orders TDC to cough up unpaid fees

27 January 2015 by Drew Amorosi - Datacenter Dynamics

Failed data center venture loses legal battle
Gene Kern, CEO of TDC (DCD Converged)

The Delaware Superior Court issued default judgment against The Data Centers LLC (TDC) late last week, and has ruled in favor of three consultants that did not receive payments related to a failed data center project in Newark, Delaware.

West Chester, Pa.-based TDC did not respond to the complaints nor was it represented in court during either case, and as a result, the Superior Court issued default judgments totaling $1.41 million in unpaid fees and interest be re-claimed by the three plaintiffs.

As previously reported by DatacenterDynamics, in September of last year, engineering firm Duffield Associates and site project manager Constructure Management Inc filed a breach-of-contract suit against TDC in Delaware Superior Court over unpaid fees associated with a failed data center complex and 279-megawatt power plant project. The planned data center and co-generation power plant were originally planned on 43 acres of the former Chrysler automobile plant site, now the University of Delaware's Science Technology & Advanced Research Campus, and were intended to serve the university’s sub-campus in Newark.

Automatic victory
Another case in the judgment involved Econosult Solutions Inc., which filed a suit claiming TDC owed it $18,619 in billings, plus interest and costs. “The default judgments are an automatic victory for the firms who had sued over the debts, but it's unclear if they'll recover any of the money they're owed by The Data Centers LLC”, according to a report by The News Journal of Wilmington. “In debt-collection lawsuits, judgments would typically become a lien against any real property owned by TDC in New Castle County. The firms could also go after any TDC assets by having the sheriff seize and sell them at auction.”

As recently as last month, Earl Eugene "Gene" Kern, chief executive of TDC, told The News Journal that the company had not yet generated any revenue. This was in response to questions about another legal suit filed by his one-time business partner, Robert Krizman.

In December of last year, Krizman, who previously served as TDC’s president and COO, claimed that Kern made serious mistakes during the University of Delaware fiasco – the company’s first project. The joint data center and power generation facility project was cancelled in July of last year after it faced stiff resistance from local residents concerned that the economic benefits of the facility would not outweigh the environmental impacts.

According to the legal complaint, Krizman claimed Kern unfairly dismissed him as president and tried to ‘freeze him out of the business’ after running up millions of dollars in debt the company had no ability to pay. 

At the time, Kern denied any wrongdoing when questioned by The News Journal.

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