LORDSTOWN, Ohio (WKBN) – Embattled Lordstown Motors Corporation (LMC) has been fighting a $900 million lawsuit in a California court over the last three years but has now decided that it’s best to settle the case so the company can recover as best it can from bankruptcy.

LMC has reached an agreement with Karma Automotive over the lawsuit that alleged misappropriation of trade secrets and intellectual property and “unjust enrichment.” The $900 million lawsuit was filed Oct. 30, 2020, alleging that LMC stole technology and profited from it. CEO Steve Burns, other company leaders and employees identified as John or Jane Doe were included in the lawsuit.

LMC said the claims are without merit, but the cost of litigation would “erode any recovery” and jeopardize a sale and the retention of key personnel, according to court documents.

LMC has agreed to pay out 4.4% of the lawsuit for a total of $39,600,000, including a $5 million royalty for Karma’s intellectual property.

The deal will go before the bankruptcy court on Aug. 28. Any objection must be received by Aug. 24.