November 1, 2004: Successful Binding Arbitration Defense Award


Practice Area: Business Litigation/Commercial Contracts
Arbitrator: Hon. Enrique Romero (Ret.) – ADR Services, Inc.
Plaintiff’s Demand: $112,659.28
Arbitration Award: $250.00
Counsel of Record: Frank T. Sabaitis, Esq., and Omar J. Yassin, Esq.

Case Matter Summary:

This lawsuit arose from the alleged breach of credit card processing and merchant agreements related to credit card reconciliation services provided by the Plaintiff, an independent service organization, and the Defendants, the owner and Management Company of two private golf courses located in Orange County, California. Defendants entered into a two-year merchant agreement with the Plaintiff to provide for credit card processing at both golf facilities. Plaintiff alleged that Defendants’ unilateral termination of their service agreement with Plaintiff during a one-year renewal term and the alleged transfer of service organizations, constituted a material breach of the merchant agreement.

The parties agreed to submit this matter to binding arbitration and to waive any contractual rights for recovery of prevailing party attorneys’ fees and litigation costs. During the course of discovery, Plaintiff produced a number of unexecuted, incomplete, and alleged versions of the purported merchant agreement executed by Defendants. The un-authenticated versions of the merchant agreements contained materially altered liquidated damages clauses and substantially changed the extent of the termination provisions. During the arbitration hearing, evidence was introduced ultimately demonstrating that the Plaintiff had in fact altered the original merchant agreement, such that the conflicting terms and conditions of each of the proposed “fake” agreements were stricken.

The Arbitrator determined that notice of termination of the merchant agreement had not be properly undertaken in writing as required by the agreement and therefore awarded Plaintiff their contractually bargained for maximum damages in the nominal amount of $250. Plaintiff’s liability theories and breach of contract claims were rejected as well as Plaintiff’s purported damages analysis, which was not in conformity with the contractual provisions of the merchant agreement. Pre-litigation payment demands by Plaintiff, pursuant to the forged merchant agreements totaled $274,626.61.