Recently I wrote about the suit filed by Amerix against CESI Debt Solutions (Consumer Education Services, Inc.) See the cleverly titled post Amerix Files Suit Against CESI Debt Solutions.
An insider just forward to me a copy of a new filing in this matter, this time in Maryland. CESI is asking the Maryland Office of the Attorney General, Consumer Protection Division, for help interpreting the consent order previously signed by Amerix on November 4, 2010.
The CESI position appears to be that the Final Judgment and Consent Decree between the State of Maryland and Amerix gives it the right to terminate it’s agreement with Amerix, who supplied approximately 58,000 clients to CESI for debt management services.
A new fact that has emerged is that Amerix is asking for nearly $15 million in damages under the unilaterally broken contract.
CESI Debt Solutions is an IRS 501(c)3 non-profit credit counseling agency and paid a fee or allegedly shared creditor contributions with Amerix during the term of their relationship. Amerix on the other hand is a for-profit company that offered, sold and performed debt management services either alone or through non-profit credit counseling partners like CESI Debt Solutions.
According to the filing, after providing a notice of termination to Amerix, CESI asked for a sampling of the database Amerix maintained so CESI could begin to transition the 58,000 or so clients out of the Amerix computer system and prepare a new system of their own.
Without a database platform that is compatible with the platform currently used by Amerix, at least as to the major fields and columns, it would be impossible to transition the data and client services function from Amerix to CESI.
CESI states that after their request for sample data they received “partial and incomplete data for the 200 clients in the sampling on October 21.”
The motion says that the parties engaged in settlement discussions “that were not productive due to Amerix’s intransigence. Amerix’s initial settlement demand consisted of three alternative proposals: (1) payment of “actual damages” of $14.9 million to Amerix, representing the gross amount Amerix would have received if it continued servicing all existing clients through the run-off period, less any direct or indirect costs of providing such services — in effect, Amerix’s net profit if it were to continue providing all client services through the run-off period; (2) Amerix would continue to provide services for the existing portfolio as of October 31 through the run-off period, with CESI paying standard servicing fees; and (3) essentially a division of the portfolio of CESI clients into two groups, with CESI assuming all servicing rights and duties for its group and Amerix retaining all servicing right and duties for its group.”
The way I read the action it appears CESI is asking the Maryland court to clarify that CESI is entitled to unilaterally terminate it’s service agreement with Amerix, keep all of the clients and pay no fee to Amerix.
You can read the entire motion here.
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