In the face of an approximate $2.7 million principal and punitive damages demand and ask following a week-long arbitration hearing, Gordon & Rees partner Craig J. Mariam and associate Kathryn A. Lafferty defended the allegations and instead obtained a six-figure award for the firm's client, an established high-end web development firm.
Gordon & Rees's client was hired to consult, prepare a business and technology strategy plan and ultimately build a large scale complex social media/artistic/commercial website by providing development, hosting, and maintenance services. The site was intended to promote the goals of the opposing party, a non-profit educational organization dedicated to inspiring creativity. The non-profit’s sole donor, a real estate mogul and entrepreneur, was delegated responsibility to conceive and manage the website project; however, his unrealistic expectations caused the website to continuously evolve, which added extra time and expense to the parties’ original projections. After the opposing party indicated it wanted to move the project to off-shore consultants to lower the cost, it paused the project and failed to pay invoices for work accomplished and for ongoing maintenance and hosting services pursuant to the contract terms.
After careful examination of the submissions, proofs, and allegations of the parties, an award was issued finding that the firm's client fulfilled its performance of the agreement and was excused from allowing its client full access to the website due to non-payment of sums owed. The opposing party lost all of its claims, including its fraud claim.
The firm's client also successfully enforced certain contractual provisions governing acceptance by payment, disclaimers of all warranties, limitation of liability, and an integration clause to defeat all of the opposing party’s allegations. Consequently, it was held that the opposing party is liable for payment of all outstanding invoices and continuation fees, including statutory interest, totaling approximately $200,000.
In addition, the parties conducted extensive discovery which resulted in the firm's client asserting claims that the other side had failed to comply with its obligations to produce all responsive, non-privileged documents and intentionally withheld material evidence. Based on findings of the opposing party’s misconduct supported by the record, including a sparse search of electronic records, failure to obtain any documents from its own board members, and improper objections at deposition, it was held that the opposing party’s ongoing discovery failures and negligent attention to discovery obligations impeded the ability of the firm’s client to develop a factual record supporting its case. Therefore, monetary sanctions were awarded to the firm’s client, totaling approximately $31,000, in addition to the foregoing.