A mechanical contractor involved in the rapid construction of Elon Musk’s Memphis-area data centers has launched a major legal battle against SpaceXAI, alleging hundreds of millions of dollars in unpaid contract work. According to court filings reported by WMC Action News 5, Darana Hybrid Inc. filed a lawsuit in Mississippi on August 6, seeking $432.5 million in outstanding payments for work conducted across four distinct sites.
The dispute centers on construction projects at 2400 Stateline Road, 2875 Stanton Road, and 3883 US-51 in Southaven, as well as 7700 Nail Road in Olive Branch. Darana Hybrid is seeking $136.8 million in immediate damages, claiming that the professional relationship soured following the merger of xAI and SpaceX earlier this year. CEO Darryl Cuttell stated that while the partnership was initially productive, invoices stopped being honored after the corporate consolidation.
SpaceXAI has responded with its own legal action, filed on August 4. The company alleges that Darana Hybrid breached its contract and engaged in fraudulent billing practices. SpaceXAI claims that Cuttell misappropriated funds to support personal side projects, specifically citing the renovation of the Memphis Motorsports Park—now rebranded as Darana Motorsports Park—and other hot rod racing ventures. SpaceXAI is seeking at least $500 million in compensatory and punitive damages, arguing that Darana withheld payments to its own vendors to create leverage in the billing dispute.
As the litigation proceeds, the impact on local infrastructure projects is already visible. Cuttell confirmed that the redevelopment of the Memphis Motorsports Park is currently on “indefinite hold,” and he is exploring the sale of International Hot Rod Association assets to cover outstanding liabilities.