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Dragon 'suing Lotus for contractual fraud'

7 May 2012

Just when it seemed that the crisis situation surrounding Lotus' involvement in the IZOD IndyCar Series was calming down come reports that Dragon Racing is launching legal action against the engine manufacturer.

According to multiple reports in the media, Jay Penske's team has filed a lawsuit in California where Dragon Racing is headquartered. The case number BC484135 was filed with a the state superior court in Los Angeles, and according to SPEED.com it cites breach of contract and "contractual fraud".

The latest reports say that Dragon Racing has already returned all its Lotus engines and related equipment, and will no longer be using Lotus engines with immediate effect.

First reports of the suit suggest that Dragon is alleging that Lotus failed to deliver either of the two Dallara chassis that it was supposed to purchase for the team, leaving the team itself to pay out the "roughly $400,000" per DW12.

However, despite allegedly admitting that it owed the outstanding chassis purchase money to Dragon, Lotus is said to have threatened to withhold engines from the team if it didn't then pay the engine licensing fees that were due. Dragon also alleges defamation, saying that Lotus went on to make public "knowingly false statements" about Dragon not paying the fees.

The Associated Press quotes the lawsuit as adding: "Put simply, Dragon has had enough of Lotus' deceit and wrongdoing. Dragon has put an end to its ill-fated relationship with Lotus and now seeks recompense for the damages inflicted upon it."

There had been apparent disagreement between Dragon and Lotus ahead of the first race of the season. The engine for Sebastien Bourdais' car arrived only the night before track activity started for the 2012 Honda Grand Prix of St Petersburg, in a seeming disagreement over what contracts had been signed and when. Lotus' inability to manufacturer sufficient engines in time to allow any of its teams to participate in the sole series test at Indianapolis last month is another major factor affecting the company's relationship with all of its IndyCar partners.

Lotus announced at the end of last month that they had agreed to release two of their four full-time teams, Bryan Herta Autosport and Dreyer & Reinbold Racing, ahead of the Indianapolis 500. Both teams are yet to formally announce replacement engine deals with either of Lotus' rivals, Honda and Chevrolet, although deals are said to be close with BHA joining Honda and DRR set for Chevy engines. [Update: DRR has now secured a Chevrolet engine for Oriol Servia by partnering with Panther Racing.]

At the time, Lotus said that this would enable them to focus resources on supporting its remaining teams, Dragon and HVM Racing. The IndyCar Series also subsequently enacted a new rule to prevent any further changes in engine supply deals during a season with effect from April 30, except in extra-ordinary circumstances and with the series organisers' right of sign-off.

Presumably, a lawsuit would qualify as extra-ordinary circumstances; and the series organisers will be under pressure to allow Dragon to sign up with a new manufacturer, or they face falling well short of a full 33-car grid at the Indianapolis 500 on May 27 - which would be acutely embarrassing for the sport.

No one from Dragon, Lotus or IndyCar was available to make a comment to the media when the story broke.

Given the strong relationship between Jay Penske's father Roger and the Chevrolet marque, it's expected that Dragon could find a new slot as part of the bow tie brigade, but time is critically short for them to do so as Opening Day at Indianapolis Motor Speedway is just five days away on Saturday.

Roger Penske is quoted by SPEED.com as saying that he understands negotiations are underway between his son and General Motors, but that he himself has not been a party to them. "I want to see him in the race," the senior Penske is quoted as saying. "He's got a helluva driver in Bourdais."

Indeed, Bourdais' performances have been almost the only shining light for Lotus since their late entry into the IndyCar engine supply scene, with his ninth place at the Honda Indy Grand Prix of Alabama the best result of any Lotus-powered car in 2012.

Losing Dragon from their line-up will leave Lotus with only one car in the series - HVM Racing's car driven by Simona de Silvestro - and almost certainly no longer a commercially viable operation.

An announcement about Lotus fielding Jean Alesi in the Indy 500 through a one-off deal with a Firestone Indy Lights team is also said to be on the verge of being formally announced later today.


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