App Developer Sued for Breach of Contract, Allegedly Refused to Arbitrate

Sopris Systems has filed a complaint against Folio3 Software for breach of contract. The case alleged that Folio3 did not deliver the app it was supposed to deliver to Sopris, and sold said app without Sopris’ authorization. Folio3 also allegedly refused to arbitrate via video to teleconference as a result of COVID-19. Sopris filed the suit to ensure it meets the statute of limitations, which Folio3 states bars their claim. The suit is filed in the Colorado District Court. Sopris is represented by Gordon Rees Scully Mansukhani.

The parties entered an agreement in March 2014 for Folio3 to “provide services relating to creating an application for [iOS], Android and Windows devices referred to as Mobile App for GeoSpec…including but not limited to creating source code, programs, systems, data and instructions to operate the app.” In July 2014, the companies “agreed to integrate Folio3’s ‘Dynamics’ into the App and further agreed to add ‘Edit functionality’ to the App. The companies also agreed to share app revenue. Sopris made multiple payments to Folio3 for the work being done, however, “[a] dispute arose between parties whereby Sopris demanded receipt of the Work before continuing to make payments, and Folio3 demanded payment before providing the Work.” The groups arbitrated, “which resulted in an award against Sopris for failure to Folio3.” Sopris paid the ordered $98,567.25 to Folio in October 2019 after it was ordered in June.

Folio3 also failed to deliver the work. The iOS app requested was never deleived to Sopris, but was present on Folio3’s servers, not Sopris’ servers. Additionally, Sopris states that “without Sopris’ authorization Folio3 offered for sale and upon information and belief sold Sopris’ App. Also without Sopris’ authorization, Folio3 allegedly solicited at least one of Sopris’ customers, Beacon Rail Leasing.” This conduct, the plaintiff said, violatd the agreement between Sopris and Folio3, which prevents them from “engaging in unfair competition” through, for example, the “sale or unauthorized use or disclosure of [Sopris’] Confidential Information…including information concerning customer lists, marketing plans, and prospective customer lists…”

In line with their agreement, the parties agreed to arbitrate in April, but the arbitration meeting did not occur. A rescheduled conference in May also did not occur. The cancelation and rescheduling resulted from the COVID-19 pandemic, and Folio3’s alleged refusal to hold the meeting via video conferencing.

Folio3 states that Sopris’ claims are barred by the statute of limitations, but provided no further explanation. Folio3 also failed to submit the required mediation statement. Sopris states that Folio3’s demands in light of the pandemic are “in bad faith and a delay tactic to avoid delivering the Work to Sopris so Folio3 can continue selling Sopris’ App for its own profit.” Sopris states that it is willing to mediate via video conference or teleconference until it can arbitrate in person.

Sopris has sought to require Folio3 to immediately deliver all of the Work to Sopris, including the iOS version of the app; an award for actual damages; an award for attorneys’ fees and costs; the cost of this action; pre- and post-judgment interest; and other relief as determined by the court.