A Miami judge declined to rehear a contract dispute that resulted in a $53 million judgment against the Miami-Dade Expressway Authority over the development and implementation of a toll collection system.

The March 29 order is sending the transportation agency, known as MDX, into an appellate battle in a case that has already lasted several years and gone to trial twice. Electronic Transaction Consultants Corp. won favorable findings both times.

“It was a big-deal case, very expensive on both sides,” said ETC attorney Michael Piscitelli of Vezina, Lawrence & Piscitelli in Fort Lauderdale. “ETC is not the biggest company on Earth, although they're owned by a substantial company as a result of this matter. They had to get additional financing to carry it.”

MDX attorney Joseph Serota of Weiss Serota Helfman Cole & Bierman in Coral Gables said the notice of appeal will be filed shortly. Holland & Knight partner Rodolfo Sorondo will handle the appellate work.

“We believe that there are some substantial legal issues that will be part of the appeal, including the fact that the plaintiffs never complied with the mandatory and exclusive dispute resolution procedures,” Serota said.

The county contracted with ETC in 2009 to provide a toll collection and accounting system for the five major Miami-Dade expressways. Most drivers on those toll roads use a SunPass transponder but, for those who don't, the electronic system needed to photograph license plates and interact with state vehicle registries to mail car owners a bill.

MDX materially breached the contract by missing deadlines to approve requirements, not freezing the design so ETC could develop the software without changes and compressing the schedule to test the system, according to findings made by Miami-Dade Circuit Judge William Thomas after a three-week bench trial.

The expressway authority's actions put the project about seven weeks behind schedule at one point, the judge found. Then the system went live without proper testing, and problems had to be fixed after launch — an expensive and labor-intensive process.

“MDX's reasons for not following the schedule are simply not credible,” Thomas ruled. “There is very little presented by the defense witnesses as to the issue of delay, hindrance or prevention of performance that this court can trust and believe.”

Ultimately, the county terminated the contract, shut off the system and replaced it with a new one.  ETC sued in 2012 for breach of contract and wrongful termination.

The trial before Thomas was the second go-round for the attorneys. The case first went to Miami-Dade Circuit Judge John Thornton.

Early on, he issued a partial summary judgment finding ETC was not entitled to operations payments because MDX never provided provisional acceptance as discussed in the contract. The case went to a bench trial in 2015.

After hearing the evidence at trial, the judge decided to reverse his 2013 summary judgment, concluding MDX had interfered with ETC's performance and prevented the company's submitted materials from getting provisional acceptance.

Thornton never signed a final order awarding damages to ETC, but he issued proposed findings of fact and conclusions of law in favor of the company for purposes of mediation. His findings said defense witnesses were not credible.

MDX asked to take more discovery based on that reversal, and it also moved to recuse Thornton, arguing he could not be unbiased about any additional evidence because he had already questioned the credibility of MDX's witnesses. Thornton declined to recuse himself, but the Third District Court of Appeal ruled the case would have to go before a new judge.

In the retrial before Thomas, MDX argued the system never completely worked and therefore was not in compliance with the contract. The defense also argued ETC did not comply with two sections of the contract that require compliance with a dispute resolution procedure before any claims can be made.

The company conceded the system was imperfect when it went live but argued MDX thwarted the software development process at every turn.

To ETC's relief, Thomas accepted the arguments and found MDX's actions “were not reasonable, were not necessary and were not contract compliant.” His Jan. 25 final judgment awarded $43 million plus $10.3 million in interest.

“It's always hard to try something twice,” Piscitelli said. “You use all of the arrows in your quiver the first time. The second time around, their witnesses were prepared to respond to the arguments we made the first time. It was quite a bit more contentious. Apparently, Judge Thomas got it that it was kind of responsive contention rather than any change in what the factual circumstances were.”

 

Case: Electronic Transaction Consultants v. Miami-Dade County Expressway Authority
Case No.: 2012-046272-CA-01
Description: Breach of contract
Filing date: Nov. 28, 2012
Final judgment date: Jan. 25, 2018
Judge: Miami-Dade Circuit Judge William Thomas
Plaintiffs attorneys: Mike Piscitelli, Fort Lauderdale; Bradley Copenhaver, Tallahassee, Vezina, Lawrence & Piscitelli
Defense attorneys: Joseph Serota and Eric Hockman, Weiss Serota Helfman Cole & Bierman, Coral Gables; Michael Ehrenstein, Ehrenstein Sager, Miami
Judgment amount: $53.3 million