Employment & Business Attorneys Campbell CA

Rousso & Jackel successfully defend local contract manufacturer from breach of contract claim

Our client, Mac Cal Company, Inc. is a local contract manufacturer, making anything from parts used in Army drones to laser tattoo removal machines to medical diagnostic equipment.  Mac Cal contracted with Epicor Corp. to buy ERP (Enterprise Resource Planning) software.  The hope was to streamline and consolidate Mac Cal’s quote processes and to allow it to track every aspect of a job on one screen, from inquiry to design, production, inventory, shipment, and payment.

Epicor persuaded Mac Cal to purchase a particular “SaaS” (software as a service) system and when it didn’t seem like it would work, convinced Mac Cal that it needed an optional “configurator,” which is essentially what you see when you order, say, a laptop from Dell and make certain choices from limited options, like how much memory, the type of sound card, etc.

The problem was that Mac Cal’s customers dictate what it makes and so choices could not be limited.  Epicor never explained this to Mac Cal before the sale.  When Epicor tried to install the software, it didn’t work.  Mac Cal said “OK, we’re done” and tried to walk away, but Epicor sued Mac Cal for the entire contractual amount, even the “services” that never had been delivered.  Worse yet, Epicor sued Mac Cal in Southern California, where its headquarters are located.  It seemed apparent that Epicor assumed Mac Cal would choose to settle because defending itself would be more costly.  Epicor assumed wrongly.

We first had venue moved to Northern California and persuaded Epicor that the matter was suited for binding arbitration at JAMS.  We then did targeted discovery, including flying to Minnesota where some key witnesses were located.  After two days of depositions it became clear that Epicor had no case; the salespeople had been rash in their promises and could not have reasonably believed that their product was right for Mac Cal, given what they knew about its business.

We tried to resolve the matter informally but Epicor (and its attorney) simply would not listen.  Epicor took the position that we simply didn’t understand the software. Incredibly, Epicor claimed that it was “misled” by Mac Cal about its business.

We participated in a three-day arbitration in December and were delighted to prevail on all claims, including our own cross-complaint for negligent misrepresentation (a form of fraud), which we filed after our client was sued.  It was gratifying to read the judge’s repeated finding that Epicor’s position on various factual and legal issues was “unpersuasive,” especially because we felt that we were somewhat underestimated by Epicor’s attorney.

There was one wrinkle in the judge’s preliminary decision.  He found that our client was entitled to rescind the contract (the “walk away”) but said because the contract was rescinded, it was as though it never existed and therefore, our client was not entitled to rely on the attorney’s fee clause in the contract.

Since one of my operating principles is “never take no for an answer,” we promptly filed a request for reconsideration, even though the JAMS rules didn’t specifically provide for such a motion.  At the risk of sounding immodest, we employed creative lawyering skills and provided a sound legal basis for our request.  This was a delicate matter, because after all we were essentially telling our judge that he had made a mistake, something we never do lightly. But we were so convinced that there had been an error that, as Jonathan said, we could not have looked ourselves in the mirror if we didn’t try.  So, we filed our request.  The other side was very upset but we took that in stride.  In our business, you have to have a thick skin.

Today we were delighted to receive an email from our judge, with an amended order and a separate order granting our motion for reconsideration.  He said that our client is the prevailing party and  is entitled to an award of attorney’s fees and costs (and hopefully expert witness fees) and invited us to file our request for fees within 15 days.

This is not the first time that we have persuaded a judge to turn him or herself around.  We don’t do it often but when we do, we generally win.  Our best trait as lawyers is our good judgment.  When our clients’ positions are unsound, we tell them.  But when we think they are right, we are relentless in our focus until we get what we want.  The bottom line:  We love to win and we won big today!

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