Page 1 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

Darin D. Honn, OSB No. 882279 

dhonn@sussmanshank.com 

Kristen G. Hilton, OSB No. 151950 

khilton@sussmanshank.com 

SUSSMAN SHANK LLP 

1000 SW Broadway, Suite 1400 

Portland, OR 97205-3089 

Telephone: (503) 227-1111 

Facsimile: (503) 248-0130 

Attorneys for Webatory, Inc. 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

PORTLAND DIVISION 

WEBATORY, INC., an Oregon corporation, 

Plaintiff, 

v. 

MILLER MENDEL, INC., a Washington 

corporation, 

Defendant.

Case No. 

COMPLAINT FOR 

(1) Breach of Contract 

(2) Quantum Meruit 

(3) Unjust Enrichment 

DEMAND FOR JURY TRIAL 

PARTIES 

1. At all relevant times, Plaintiff Webatory, Inc. (“Plaintiff” or “Webatory”) was 

and is a corporation organized and existing under the laws of the State of Oregon. 

2. At all relevant times, Defendant Miller Mendel, Inc. (“Defendant” or “Miller 

Mendel”) was and is a corporation organized and existing under the laws of the State of 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 1 of 8
Page 2 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

Washington, with its principal place of business at 1425 Broadway, #430, Seattle, 

Washington 98122. 

3. Miller Mendel creates, sells and supports software technology solutions for 

city, county, state and federal public agencies, including the eSOPH application. 

Webatory is informed and believes, and thereon alleges, that Miller Mendel’s clients 

include the Clackamas County Sheriff’s Office, in Clackamas County, Oregon, and the 

Oregon Department of Corrections. 

JURISDICTION AND VENUE 

4. This Court has jurisdiction over this matter based on diversity of citizenship, 

28 U.S.C. § 1332, in that Webatory and Miller Mendel are citizens of different states and 

the amount in controversy exceeds $75,000. 

5. Venue is proper in this Court under 28 U.S.C. § 1391(b) because Webatory 

resides in this District and because a substantial part of the events or omissions giving 

rise to the claims occurred in this District. 

6. This Complaint has been filed in the Portland Division pursuant to Local 

Rule 3-2, because a substantial part of the events or omissions giving rise to the claims 

occurred in Multnomah County, Oregon. 

FACTUAL BACKGROUND 

7. On or about April 5, 2012, Webatory and Miller Mendel entered into a 

Services Agreement (the “Agreement”) pursuant to which Webatory (identified as the 

“Developer”) agreed to provide and Miller Mendel (identified as the “Client”) agreed to pay 

for consulting, web application support, and application maintenance services. A true 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 2 of 8
Page 3 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

and correct copy of the Agreement and Exhibit A thereto is attached as Exhibit 1, and 

incorporated by reference herein. 

8. The Agreement provides that “Customer shall pay Developer the rates set 

forth in the Developer’s 2012 Billing Rates (See Exhibit A) for the performance of the 

Services, together with reimbursement for any of Developer’s direct costs.” The 

Agreement further states that “[s]ervices will be billed on a bi-monthly basis and sent to 

an email address designed by Client, and charged to the Client’s account, subject to the 

terms thereof.” In addition, the parties agreed that “[a]ny outstanding balance is subject 

to 1.5% monthly interest (18% APR), compounded monthly.” See Exhibit 1. 

9. At the time that the parties entered into the Agreement, Miller Mendel’s 

eSOPH application existed and was used by a single, large-use client. Webatory took 

over management, programming, and maintenance duties for eSOPH from another 

developer. Webatory is informed and believes, and thereon alleges, that the developer 

for whom Webatory took over had designed and built the eSOPH application in 2011. 

10. On or about December 7, 2012, Webatory and Miller Mendel executed a 

First Amendment to Services Agreement (“First Amendment”). The First Amendment did 

not modify any of the payment or interest terms in the Agreement. However, the First 

Amendment did add a “Governing Law and Venue” provision, which states that “the 

amended and initial agreement shall be governed and construed in accordance with the 

laws of the United States and the State of Oregon, and the parties consent to the sole 

and exclusive jurisdiction of the state courts and U.S. federal courts having jurisdiction in 

Multnomah County, Oregon for any dispute arising out of either agreement.” 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 3 of 8
Page 4 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

11. The First Amendment also conditioned Developer’s (Webatory) delivery of 

requested work product on receipt of payment of any previously agreed to amount for the 

deliverable(s). 

12. In late 2013, the parties verbally agreed that Webatory would no longer 

provide services on a project basis, and that all future services provided by Webatory 

would be paid at the rate of $65 per hour instead of the rates listed in Exhibit A to the 

Agreement. The parties’ verbal agreement did not modify any other terms of the 

Agreement or the First Amendment. 

13. On or about May 8, 2014, Webatory and Miller Mendel executed a Second 

Amendment to Services Agreement (“Second Amendment”). The Second Amendment 

did not modify any of the payment or interest terms previously agreed to by the parties. 

14. Webatory performed services for Miller Mendel from approximately June 

2012 until October 2015. Those services include programming, consulting, managing the 

cloud environment for Miller Mendel’s eSOPH application, hosting the eSOPH application 

in Webatory’s own environment for a period of time, responding to customer technical 

issues, troubleshooting multiple network environments/platforms, and attempting to 

communicate requirements to offshore developers. All services were performed at the 

direction of or under the supervision of MMI. 

15. All work performed by Webatory after April 5, 2012 was under the 

Agreement or an amendment or agreed-to modification regarding the scope of the work 

to be performed under the Agreement. Webatory invoiced Miller Mendel for those 

services. During the course of the parties’ relationship, Miller Mendel never objected to 

the quality of Webatory’s work or Webatory’s hourly rate. 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 4 of 8
Page 5 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

16. Miller Mendel did not object to Webatory’s invoices or question any of the 

charges thereon until November 2014, when Miller Mendel commented that the hours 

invoiced for July 2014 seemed like a lot. The objection was resolved at that time following 

discussion between the parties. 

17. Since January 2014, Miller Mendel has made only partial payment to 

Webatory for the services performed and invoiced. 

18. In or around December 2014 and January 2015, Webatory and Miller 

Mendel agreed to modify the payment terms of their agreement. Webatory agreed to 

accept payment from Miller Mendel in the amount of $7,000 per month, to be received on 

or about the 1st of each month. In exchange, Webatory agreed to perform 35 hours of 

work per week for Miller Mendel, with the understanding that Miller Mendel would pay 

down the balance owed to Webatory when Miller Mendel signed up larger client accounts. 

Miller Mendel represented to Webatory that larger payments to reduce that balance would 

be imminent. The parties also implicitly agreed that Webatory would continue to bill Miller 

Mendel at Webatory’s hourly rate and that interest charges would continue to accrue on 

the unpaid balance. As of January 1, 2015, the outstanding balance owed to Webatory 

was approximately $70,964.30. 

19. On January 7, 2015, Miller Mendel made the first payment of $7,000 

pursuant to verbal agreement described in paragraph 18. 

20. Miller Mendel has not made any payment to Webatory since September 1, 

2015. 

21. Webatory has continued to send Miller Mendel monthly statements showing 

the amount of unpaid invoices and monthly accruing interest. As recently as October 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 5 of 8
Page 6 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

2015, Miller Mendel acknowledged the amounts owed and represented to Webatory that 

it was expecting to repay Webatory starting the following month. 

FIRST CLAIM FOR RELIEF 

(Breach of Contract) 

22. Webatory realleges and incorporates by reference paragraphs 1 through 21 

of the Complaint. 

23. Webatory has performed all of its obligations under the Agreement and all 

amendments thereto, and all conditions precedent to Webatory’s claim, if any, have been 

performed or discharged. 

24. Miller Mendel has failed to perform its obligations under the Agreement, and 

is in default by reason of its failure to pay Webatory’s invoices as each became due. 

25. The total principal amount due on Webatory’s invoices is $93,927.55, plus 

accrued interest at the rate of one and one-half percent (1.5%) in the amount of 

$15,920.90 through January 15, 2016, together with accruing interest at the rate of one 

and one-half percent (1.5%) per month from January 16, 2016, until paid. A true and 

correct copy of the most recent statement dated January 15, 2016, which reflects all 

invoiced amounts for the months at issue, is attached as Exhibit 2 and incorporated by 

reference herein. 

26. Despite demand, Miller Mendel has failed and refused to pay the balance 

due and owing to Webatory. 

27. As a result of the allegations above, there is now due and owing to Webatory 

on the Agreement by Miller Mendel, after credits for all payments made, the principal sum 

of $93,927.55, plus accrued interest in the amount of $15,920.90 through January 15, 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 6 of 8
Page 7 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

2016, together with accruing interest at the rate of one and one-half percent (1.5%) per 

month from January 16, 2016, until paid. 

SECOND CLAIM FOR RELIEF 

(Quantum Meruit) 

28. Webatory realleges and incorporates by reference paragraphs 1 through 21 

of the Complaint. 

29. Between December 2014 and October 2015, Miller Mendel received 

services provided by Webatory, including, but not limited to, programming and consulting. 

30. Miller Mendel received benefit from services performed by Webatory for the 

benefit of Miller Mendel. Miller Mendel requested said services and explicitly or implicitly 

agreed to pay for such services and costs incurred. 

31. Despite demand, Miller Mendel has failed and refused to pay Webatory in 

full for the services Webatory performed. 

32. Webatory is entitled to obtain recovery from Miller Mendel, the principal sum 

of $93,927.55, along with interest at the legal rate of nine percent (9%) per year from the 

time when each invoice stated in Exhibit 2 became due and owing until paid. 

THIRD CLAIM FOR RELIEF 

(Unjust Enrichment) 

33. Webatory realleges and incorporates by reference paragraphs 1 through 

20, and 27 through 31 of the Complaint. 

34. If Miller Mendel is allowed to receive benefit from the services provided by 

Webatory without paying for the same, Miller Mendel will be unjustly enriched at the 

expense of Webatory. As a result, there is now due and owing from Miller Mendel to 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 7 of 8
Page 8 –COMPLAINT

SUSSMAN SHANK LLP, ATTORNEYS AT LAW 

1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089 

TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130 

Webatory the principal sum of $93,927.55, plus interest thereon at the rate of nine percent 

(9%) per year from the date each invoice stated in Exhibit 2 became due and owing until 

paid. 

WHEREFORE, Plaintiff prays for relief as follows: 

1. On Plaintiff’s First Claim for Relief, for judgment against Miller Mendel in the 

principal amount of $93,927.55, plus accrued interest in the amount of $15,920.90 through 

January 15, 2016, together with accruing interest at the rate of one and one-half percent 

(1.5%) per month from January 16, 2016, until paid; 

2. On Plaintiff’s Second Claim for Relief, to the extent not satisfied in its First 

Claim for Relief, for judgment against Miller Mendel in the principal amount of $93,927.55, 

plus interest thereon at the rate of nine percent (9%) per year from the date each invoice 

became due and owing until paid; 

3. On Plaintiff’s Third Claim for Relief, to the extent not satisfied in its First or 

Second Claims for Relief, for judgment against Miller Mendel in the principal amount of 

$93,927.55, plus interest thereon at the rate of nine percent (9%) per year from the date 

each invoice became due and owing until paid; 

4. For Plaintiff’s costs and disbursements incurred herein; and 

5. For any other relief the court deems just and equitable. 

 DATED this 18th day of February, 2016. 

 SUSSMAN SHANK LLP 

 By: /s/ Kristen G. Hilton 

 Kristen G. Hilton, OSB No. 151950 

 Darin D. Honn, OSB 882279 

 Attorneys for Plaintiff 

Case 3:16-cv-00307-PK Document 1 Filed 02/18/16 Page 8 of 8