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Hello, I hired a small engineering company in Kentucky to

Hello, I hired a small...
Hello,
I hired a small engineering company in Kentucky to help me manage the design and fabrication of a prototype on a product that I have a patent on so I can launch it into the marketplace. I hired them on 9/23/2011. The project manager from the company gave me a timeline for development of 4 to 6 months with an estimated budget of $40k. To date I have paid them over $120k.

This entire project has been consistently over budget and delayed. What originally was estimated to be completed in 4-6 months with a total of 418 Engineering hours has more than doubled to 840 Engineering hours and is not even complete 18 months later due to delays on their side. Over the course of the project, I’ve requested copies of the updated CAD files and was told I cannot have them until the project is complete.
To date nothing has been delivered, the prototype is not delivered and no CAD files have been delivered at any point in the project. None of the promised testing was ever complete and errors leading to the remake of many of the prototype pieces added to the cost.

Typically, responses from my project manager would take 2 to 3 days and then there have been times when responses took 5 to 7 days. This project was supposed move fast and I needed to get to market as soon as possible due to competition, these delays have cost me considerably. I’ve mentioned several times that I was extremely concerned with the ways things were proceeding and asked for better communications. I’ve consistently had to track the project manager down on various things that he missed. He would claim he was sick, out of town or he lost his email.
During the course of the project there were weekly update meetings. I would continually have to follow-up on the day of the meeting to remind everyone of the call. The project manager was supposed to manage these calls but I ended up doing it. There were calls where the project manager didn’t call in while the rest of the engineering and design team was on.

I told this company that I needed the prototype by an investment presentation on November 19th, 2012. That deadline was not met and the prototype was not delivered. I then told the company I would need the prototype for a meeting on December 18th with investors and that deadline passed as well. At that point in December, I told the company that I wanted everything complete by December 31st and that deadline passed as well. These investment meetings were paid events where I would present to qualified venture capital groups.

Getting in front of investors is extremely difficult and follow-up with each of the investors that were initially interested showed they lost interest since I could not produce a prototype. These are several examples of lost opportunity that cost me dearly and I will not get those opportunities back.

I held the last invoice I received from them and did not pay it. I stated my reasons why I was holding the payments and even found discrepancies in the past invoices. I asked for detailed breakdowns of the billings but they have not provided them. I told them that I do not want to do business with them anymore and that they need to lower the amount of the last invoice to compensate me for the errors on previous invoices. They said no and are now holding my stuff hostage and will not give me the prototype, CAD files or all the samples I originally sent them.

Facts:
1. There is no contract between us. The only agreement we have between us is my non-disclosure agreement which heavily favors and protects me. This has been work at will and everything has been verbal.
2. On larger invoices there would be a line item saying “discount” and it would show a 10% discount of the Project Management Total, not the engineering total.
3. To date all suppliers for materials and engineering time has been paid by me. The only outstanding invoice is for project management time only as that is what I have the discrepancy with. They have been clearly over-billing me and cannot provide detailed breakdowns of used time.
Questions:
1. They are now telling me that in addition to the last invoice amount I owe them all the discounts they applied to past (Paid) invoices since I am not continuing the project with them. is that legal?
2. They also are keeping all my stuff not giving me anything. Even the samples I sent them. Until I pay them everything.
3. Do I have a case to sue them for my stuff? Aren’t they illegally holding it? Can I pursue damages? All I want is my property. Please Advise. I am located in New Jersey.

Thank You.
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Answered in 10 minutes by:
5/10/2013
Law Pro
Law Pro, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 24,870
Experience: 20 years experience in consumer advocacy, debt collection violations, contracts, construction
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Welcome to JustAnswer! My goal is to do my very best to understand your situation and to provide a full and complete excellent answer for you.

My name is XXXXX XXXXX I'm going to assist you with your question.

Please bear with me if you believe my answer isn’t coming fast enough because I’m also working with other customers too. I apologize for any seemingly late response.


Sorry for your situation.

Although you don't have an executed formal written agreement as to their costs, estimates, etc. - do you have any communications (emails or text messages or notes, letter, etc.) with them that would validate your position?
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Customer reply replied 4 years ago

Hi Fred,


 


Yes I do have a lot of supporting documentation. Initially when I hired them the Project Manager delivered a project timeline. That document is an Excell spreadsheet I received in email and it shows a definitive time line for each stage of the project.


 


I also have every email that we've exchanged. Just through emails alone I can show supporting evidence to validate all my claims against them.


 


Regards,


 


Frank


 

Great!!

Verbal agreements are valid and binding in a case like yours.

Although contracts that can't be performed within a year are violative of the Statute of Frauds if there isn't a writing - by the terms of your agreement they were to have completed the project pursuant to their estimate of 4 to 6 months.


So, you need to gather all your evidence - everything - that the evidence will show what the agreement was, they made admissions in the evidence, and they are clearly in breach of your agreement.

In fact, I would go so far as to state they have been fraudulent with you. That they have intentionally and fraudulently misrepresented and are now extorting monies from you (although not doing such to a criminal liability extent - but that's what I would argue).

Questions:
1. They are now telling me that in addition to the last invoice amount I owe them all the discounts they applied to past (Paid) invoices since I am not continuing the project with them. is that legal?

No, because they themselves are in breach of the original contract and have been fraudulent with you.


2. They also are keeping all my stuff not giving me anything. Even the samples I sent them. Until I pay them everything.


I would be filing a replevin action (recovery of property action), a breach of contract, and fraud action against them given the facts and circumstances you stated.


3. Do I have a case to sue them for my stuff? Aren’t they illegally holding it? Can I pursue damages? All I want is my property. Please Advise. I am located in New Jersey.

Yes, clearly you have a case against them. Although you don't have a formal executed written contract - the documentation and other evidence is admissible to show they are in breach of their agreement with you and have been fraudulent.


So, I would take all your information to a local attorney and file suit in NJ against them. They will argue that KY should have juridiction but I think you have a strong case for NJ having jurisdiction because you reside there and contracted with them from there.


If you have any further questions, please feel free to let me know…

You can always ask for me in your question, “This question is for Law Pro . . (then on with your question) . . . .

Please press the Accept Button(and the Smiley Face if prompted :) if I have helped you today so I am credited for my time assisting you.






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Customer reply replied 4 years ago
Thank you for the information. What type of lawyer should I hire? Do I need a specialist?

Regards,

Frank
I would think one that specializes in commercial litigation or business would be the best for you.

But the reality is - that your facts are fairly clear and with the documentation and other evidence you have - you have a great case against them.



If you have any further questions, please feel free to let me know…

You can always ask for me in your question, “This question is for Law Pro . . (then on with your question) . . . .

Please press the Accept Button(and the Smiley Face if prompted :) if I have helped you today so I am credited for my time assisting you.

Law Pro
Law Pro, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 24,870
Experience: 20 years experience in consumer advocacy, debt collection violations, contracts, construction
Verified
Law Pro and 87 other Consumer Protection Law Specialists are ready to help you
Ask your own question now
You could go to a small local bank (they would use outside counsel) and ask them who handles their transactional matters and then contact them to assist you.



If you have any further questions, please feel free to let me know…

You can always ask for me in your question, “This question is for Law Pro . . (then on with your question) . . . .

Please press the Accept Button(and the Smiley Face if prompted :) if I have helped you today so I am credited for my time assisting you.
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Law Pro
Law Pro
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Category: Consumer Protection Law
Satisfied Customers: 24,870
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