Law and Technology

Two-year legal battle ends for shuttered IT company

Muskegon County ordered to pay $228K in damages after peremptory ending of contract.

January 11, 2019
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After a two-year legal battle, a Lansing circuit court judge cleared the name of Ryan Leestma and his IT consulting business, Information Systems Intelligence LLC, finding Muskegon County liable for breaching its contractual obligations.

Judge Joyce Draganchuk granted a motion for summary disposition to Leestma’s company on Dec. 19, 2018. She ordered Muskegon County to pay $228,792.96 in damages plus yet-to-be-tallied additional sums on four other claims resulting from the county’s peremptory ending of an IT contract with ISI.

ISI began working for Muskegon County in 2010 after an analysis by management consulting firm Plante Moran pointed out serious problems with the county’s IT system. Through ISI, Leestma bid on and secured an upgrade project to provide a new server room and firewall and to strengthen the county’s IT system.

ISI secured a second contract to replace more than 650 outdated computers, working to bring a virtual desktop infrastructure (VDI) to the county. The switch allowed the county to put all processing functions into a centralized data center, standardizing operations and ensuring all employees had access to current versions of popular software packages.

It took ISI approximately two years to migrate all 27 departments in Muskegon County to the VDI. The county received a national IT award for the new system, which persuaded municipalities to abandon their IT platforms and join Muskegon County’s new system.

In 2013, ISI bid on and was selected for a five-year managed service agreement (MSA) to provide ongoing support to Muskegon County. The initial contract was valued at $66,000 per month. During the second year of the contract, however, Muskegon County abruptly stopped paying ISI, according to court documents. Leestma and his team worked approximately six months without payment while trying to resolve the issue before county officials terminated the contract without cause in April 2015.

Leestma and his legal counsel worked for another nine months to secure payment for services it had delivered, as well as payment for the remainder of the five-year contract, before filing a breach of contract lawsuit the following year.

Muskegon County countersued, making personal and professional allegations about the character of Leestma and ISI. Leestma said the allegations cost him multiple clients, eventually forcing him to close the doors of his $8.25-million IT consulting business in 2016.

Two years later, Draganchuk ruled the contract between ISI and the county spoke for itself.

“The county has presented no advice to even create an issue of fact to show any of this was done fraudulently or intentionally or even that it happened,” she said. “ISI has shown unrefuted evidence that the MSA was terminated without cause, without notice and without an opportunity to cure.”

In her ruling, Draganchuk noted after two years of discovery, Muskegon County presented “no evidence” to support its claim ISI had breached the contract or had engaged in civil conspiracy, “fraudulent billing or fraudulent anything” in its dealings with the county.

“And most important,” Draganchuk said during the hearing, “there’s no evidence that ISI ever received payment for work not performed or that ISI received any double payments.”

Leestma said Draganchuk’s words mirrored what he has said from the beginning.

“The judge looked at both sides of this case and agreed with us: The county breached a contract that cost me my business,” Leestma said. “At the end of the day, I did nothing wrong. I did my job. Everything the county accused me of doing was false; I was being fair and accurate in my dealings with them.” 

Muskegon County officials did not respond to interview requests from the Business Journal.

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