Facts

Plaintiff Alliance Payment Systems Inc. (APS), a credit card reporting company, entered into a settlement agreement with competitor Reliable Processing Solutions (RPS) in June 2002. The underlying dispute involved RPS’ claim that it had a 50% ownership interest in APS’ individual sales accounts. Per the settlement agreement, the two companies agreed not to solicit the other’s retail merchant accounts for a period of five years. The agreement also provided for a residual-payment-promise provision. In the event either
APS or RPS were to obtain a merchant account of the others through nonsolicitation, the
company was required to fully disgorge any commissions received. By November 2002,
APS learned that RPS was violating the settlement agreement by moving and transferring APS’ retail merchant accounts. APS filed suit for breach of the settlement agreement against RPS and its owner, Lisbeth Walczer.

PLAINTIFFS CONTENTIONS:
APS contended that it was owed a substantial amount
in commissions that RPS illegally retained in violation of the settlement agreement.

DEFENDANTS CONTENTIONS:
RPS denied soliciting the accounts at issue. RPS also
claimed that it did not knowingly agree to the residual-payment-promise provision set
forth in the agreement. RPS further contended that the settlement agreement should be
reformed on the ground that the disgorgement provision was illegal under California law
prohibiting contract agreements that restrict competition.

Damages

APS sought $334,716 in commissions owed under the settlement agreement.

Result

The jury returned a verdict for APS and awarded APS $270,316 in commissions.

Other Information

Per defense counsel, Judge Kopp granted defendants' motion for a new trial; plaintiff has filed an appeal with the First District Court of Appeal.