Muskegon County to pay damages to IT firm

After a 3.5-year legal battle, a Lansing circuit court judge has ordered Muskegon County to pay $3.25 million in damages, plus another 12% in annual interest and attorney fees for breaching its contractual obligations to the owner of Information Systems Intelligence, LLC (ISI).

On Oct. 28, Judge Joyce Draganchuk entered findings of fact and conclusions of law that damages that must be paid to Ryan Leestma and ISI by Muskegon County for terminating a five-year contract with ISI without cause. The County is also responsible for its own legal fees, over $350,000.

“To this day, the County has never produced any evidence that would support the allegation that ISI was billing for work not performed,” wrote the judge. “The [contract] was terminated without cause, without notice, and without the opportunity to cure.

“The (contract) was terminated because of all the work that ISI had done for the County over the years had added up to just too much, and the County wanted to... save a lot of money.”

The 25-page decision ruled that Leestma and ISI had met the burden of proof and were entitled to: $2.08 million in lost profit damages after the County unfairly terminated the contract, which was calculated at 42 months of lost labor plus an agreed-upon 1% annual contract price increase; $345,216 in additional contract damages for the County’s failure to pay for increased staffing during the contract period; $500,000 in lost profits from equipment and software sales to the County; 12% contract interest plus judgment interest on the entire judgement, yet to be calculated; and yet-to-be calculated attorney’s fees after more than three and a half years of fighting false allegations in court. These are in addition to an award of damages incurred for the pre-breach period, an amount that exceeds $275,000.

A final judgment will be entered in late November.

“This has never been about the money,” said Leestma, who was forced to close ISI after the County’s breach of contract. “I would rather have kept the company I had built and preserve my reputation rather than going through the most harrowing and terrible experience of my entire life.

“While the court rulings are vindication and the money is helpful, I would much rather have the last four years of my life back...”

Leestma and his legal counsel worked for another nine months to secure payment for services it had delivered, as well as for the remainder of the five-year contract, before filing a breach of contract lawsuit the following year.

Muskegon County counter-sued, making personal and professional allegations about the character of Leestma and ISI that were amplified in media reports. Leestma said the allegations cost him multiple clients, forcing him in 2016 to close the doors of the $8.25 million IT consulting business he founded in 2002.

On Dec. 19, 2018, Judge Draganchuk granted a motion for summary disposition to ISI for its breach of contract. In her ruling, the judge noted that after two years of discovery, Muskegon County presented “no evidence” to support its claim that ISI had breached the contract or had engaged in civil conspiracy, “fraudulent billing or fraudulent anything” in its dealings with the County.

“And most important,” Judge Draganchuk said during the hearing, “there’s no evidence that ISI ever received payment for work not performed or that ISI received any double payments.”

Two months later, she dismissed a lawsuit against Heath Kaplan, a former Muskegon County finance director, who was accused of wrongdoing by Muskegon County officials in awarding and paying IT contracts on behalf of the County. In that ruling, the Lansing circuit court judge noted that Muskegon County presented “no evidence” to support its claim that Kaplan had a breached his fiduciary duty to the County or that the County suffered any damages because of his actions.

During the February hearing, Judge Draganchuk stated: “...I have on many occasions given the benefit of the doubt to the County and thought that they could not possibly be putting forth something that’s just not true and there had to be some twist. There had to be something there that they would show me and we would all have that ‘Ah-ha’ moment....

“I held onto that belief over and over again that there had to be something. And over and over again, I was proven wrong. There wasn’t. And it took a couple of years, but we finally got there....”

––––––––––––––––––––

Subscribe to the Legal News!

http://legalnews.com/subscriptions

Full access to public notices, articles, columns, archives, statistics, calendar and more

Day Pass Only $4.95!

One-County $80/year

Three-County & Full Pass also available

 

Comments

  1. No comments
Sign in to post a comment »