Mogens Smed and Falkbuilt file $22-million lawsuit against DIRTT

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Calgary businessman Mogens Smed has filed a $22-million lawsuit against DIRTT Environmental Solutions, the latest legal volley in a bitter divorce from the Calgary company he helped found.

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Smed, now the CEO and chair of Calgary-based Falkbuilt, which is at the centre of much of the litigation, said he timed the filing for after DIRTT brought in a new board with hopes they will be willing to settle and end years of court actions.

“We just want it settled,” he said in an interview with Postmedia on Wednesday. “We’ve got all kinds of legal, independent (opinions) . . . that show there is no merit in their cases and this is a personal vendetta, especially, against me and a little bit against Barrie (Lowberg).”

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DIRTT alleges Smed and Loberg breached non-compete clauses in their contracts following their dismissal from the construction company in 2018, that they recruited DIRTT employees and stole intellectual property when they created Falkbuilt.

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Smed rejects the claims and alleges legal action taken by DIRTT in 2019 and media coverage of those actions impaired their ability to secure financing and investment. They have since secured funding, though he said the legal actions have diluted their shareholders and the value of the company. The counterclaim also alleges they have suffered damage to their reputations.

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Smed accepts that about 50 former DIRTT employees work for Falkbuilt, including his sons, but says they were not recruited. He says that while both companies are in the same interior construction sector, he said they have two different products — DIRTT has a modular construction product while Falkbuilt is non-modular. Smed also claims the software they use is built on a different platform for coding and delivery.

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Smed also said U.S. courts have rejected the allegations by DIRTT.

Of the total amount they are seeking, $2 million is for unpaid bonuses to Smed and Loberg, and the remainder is for damages.

Geoff Krause, interim co-CEO for DIRTT, said in a statement Tuesday that nothing was decided in the U.S. rulings, just that it was a matter for the Alberta courts to decide.

On March 4, DIRTT filed for a summary decision of its 2019 claim against Smed, Loberg, Falkbuilt and others. The company seeks an order restraining Falkbuilt and the defendants from competing with DIRTT, financial recovery of losses and damages, and disgorgement of the defendants’ gains from their wrongful misconduct.

A ruling is not expected until at least October.

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“This is all part and parcel of DIRTT’s ongoing claim against Falkbuilt, Mogens Smed, Barrie Loberg and many other alleged co-conspirators that was filed in May of 2019,” said Krause.

DIRTT board chair Ken Sanders, in a first-quarter earnings conference call on May 5, said that while it is usually best to come to a settlement, pursuing litigation is important in this case.

“We believe DIRTT has been damaged by the actions and conduct of Mogens and others that were contrary to their signed agreements,” he said. “That litigation will continue. Our board has a fiduciary responsibility to protect the interests of our shareholders as well as our partners and employees, and we will do so vigorously.”

None of the allegations or claims has been proven in court.

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Twitter: @JoshAldrich03