DIRTT Seeks Summary Judgment Against Falkbuilt, Smed and Loberg

Rhea-AI Summary

DIRTT Environmental Solutions has filed a summary judgment application in the Court of Queen's Bench of Alberta against Falkbuilt Ltd. and its founders, alleging breach of fiduciary duties and competition following the departure of Mogens Smed. DIRTT claims to have gathered over 1,200 pages of evidence, including testimonies implicating Smed and others in the formation of a covert group aimed at creating a rival company. The application seeks to prevent the defendants from competing, along with damages and restitution for DIRTT's losses.

Positive

• DIRTT filed a summary judgment application, potentially expediting resolution of its claims.
• More than 1,200 pages of evidence were submitted, strengthening DIRTT's position.
• The lawsuit may deter further competitive actions from Falkbuilt and its affiliates.

Negative

• Allegations of breach of fiduciary duty could harm DIRTT's reputation.
• The ongoing legal battle may divert resources and focus from core business operations.

DIRTT files extensive evidence, including formation of covert group after Smed’s departure

CALGARY, Alberta, March 04, 2022 (GLOBE NEWSWIRE) -- DIRTT Environmental Solutions Ltd. (DIRTT or the Company) (Nasdaq: DRTT, TSX: DRT), an interior construction company that uses proprietary software to design, manufacture and install fully customizable environments, today announces that it has filed a summary judgment application in the Court of Queen's Bench of Alberta, Action No. 1901-06550 (the Action), seeking an expedited, pre-trial, final determination of its liability claims against Falkbuilt Ltd., Falkbuilt, Inc., Mogens Smed (Smed), Barrie Loberg (Loberg), and others.

In the Action, DIRTT seeks, among other things, an order restraining the defendants from competing with DIRTT, a judgment for its losses and damages, and an accounting and disgorgement of the defendants' gains from their wrongful misconduct.

In the summary judgment application DIRTT filed an affidavit tendering over 1,200 pages of evidence supporting its liability claims in the Action. This includes excerpts of Questioning transcripts that document admissions made under oath by Smed, Loberg and other witnesses, and related documents. DIRTT believes that the affidavit evidence establishes that:

• Smed, Loberg, and others breached the duties they owed to DIRTT, including their contractual and fiduciary duties;
  
  
• Smed, Loberg, and others began developing the new competing company immediately after Smed's departure from DIRTT, in breach of contractual restrictive covenants and fiduciary duties owed to DIRTT;
  
  
• before it was called Falkbuilt, the new competing company operated through a covert group comprised of then-current DIRTT employees and distribution partners known as the TTIMit Group (which stands for "This Time I Mean It");
  
  
• members of the TTIMit Group took steps to conceal their communications by using private and personal email addresses and phone numbers, and holding secret meetings and gatherings;
  
  
• the TTIMit Group also used then-current DIRTT employees to name the new company, build the Falkbuilt warehouse and offices, source and purchase equipment for Falkbuilt, assist with market research, develop Falkbuilt's products, build vignettes and drawings, and address Falkbuilt's software and computer needs;
  
  
• members of the TTIMit Group conspired together to solicit DIRTT employees and distribution partners, design and sell competing products using DIRTT's confidential information, including DIRTT's pricing lists, DIRTT's product designs, DIRTT's personnel information, and revenue forecast information for DIRTT's distribution partners;
  
  
• Smed, Loberg, and other members of the TTIMit Group solicited and encouraged DIRTT employees and distribution partners to cease their relationships with DIRTT, and induced them to enter into employment or other contractual relationships with Falkbuilt; and
  
  
• Falkbuilt competes with DIRTT in the international interior construction market.
  

Special Note Regarding Forward-Looking Statements

Certain statements contained in this news release are “forward-looking information” and “forward-looking statements” (collectively, “Forward-Looking Information”) as defined under applicable provisions of the United States Private Securities Litigation Reform Act of 1995, and Section 21E of the Exchange Act and within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact included in this news release, regarding the Action, including the potential outcome of the lawsuit, the effect of previous actions by the defendants on DIRTT's financial performance and the plans and objectives of management is Forward-Looking Information. When used in this news release, the words “anticipate,” “believe,” “expect,” “intend,” “plan,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and other similar expressions are intended to identify Forward-Looking Information, although not all Forward-Looking Information contains such identifying words. Forward-Looking Information, by its nature, is based on assumptions, and is subject to important risks and uncertainties. You should not rely on any Forward-Looking Information, which represents our beliefs, assumptions and estimates only as of the dates on which it was made, as predictions of future events. We undertake no obligation to update this Forward-Looking Information, even though circumstances may change in the future, except as required under applicable securities laws. We qualify all of our Forward-Looking Information with these cautionary statements.

About DIRTT

DIRTT is a building process powered by technology. The Company uses its proprietary ICE^® software to design, manufacture and install fully customized interior environments. The technology drives DIRTT’s advanced manufacturing and provides certainty on cost, schedule, and the final result. Complete interior spaces are constructed faster, cleaner, and more sustainably. DIRTT has manufacturing facilities in Phoenix, AZ, Savannah, GA, Rock Hill, SC, and Calgary, AB. The Company works with construction partners throughout North America. DIRTT trades on the Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT”.

FAQ

What legal action has DIRTT Environmental Solutions taken against Falkbuilt?

DIRTT has filed a summary judgment application in the Court of Queen's Bench of Alberta seeking to restrain Falkbuilt and its founders from competing, along with damages for losses incurred.

What evidence has DIRTT provided in its lawsuit against Smed and Falkbuilt?

DIRTT submitted over 1,200 pages of evidence, including transcripts documenting admissions from Smed and others regarding their alleged misconduct.

What are the main claims made by DIRTT in the lawsuit against Falkbuilt?

DIRTT claims that Falkbuilt and its founders breached fiduciary duties and engaged in unfair competition by secretly forming a competing company after Smed's departure.

How does this legal action impact DIRTT's stock symbol DRTT?

The legal proceedings may affect investor confidence and stock performance depending on the outcome and public perception of the ongoing issues.

What might be the consequences for DIRTT if it loses the lawsuit against Falkbuilt?

A loss could lead to financial damages and allow Falkbuilt to continue competing, potentially impacting DIRTT's market share in the interior construction sector.