Crystal Clear Computer Solutions, LLC v. City of Helena-West Helena

Decision Date15 September 2021
Docket NumberCase No.: 2:20-cv-00017-LPR
Citation559 F.Supp.3d 837
Parties CRYSTAL CLEAR COMPUTER SOLUTIONS, LLC and Trever Simes, Plaintiffs v. CITY OF HELENA-WEST HELENA, Kevin Smith, in his official capacity as Mayor and Chief Executive of the City of Helena-West Helena, and Kevin Smith, in his individual capacity, Defendants
CourtU.S. District Court — Eastern District of Arkansas

Sarah Howard Jenkins, Sarah Howard Jenkins, PLLC, Little Rock, AR, for Plaintiffs.

William C. Mann, III, Arkansas Municipal League, North Little Rock, AR, for Defendants.

ORDER

LEE P. RUDOFSKY, UNITED STATES DISTRICT JUDGE

Crystal Clear Computer Solutions, LLC ("Crystal Clear") and its President, Trever Simes, brought this lawsuit against the City of Helena-West Helena ("the City") for breach of contract and against Mayor Kevin Smith for tortious interference with an existing contractual relationship.1 Before the Court today are cross-motions for summary judgment on the breach of contract claim and Mayor Smith's Motion for Summary Judgment on the tortious interference claim.2 For the reasons explained in this Order, Crystal Clear's Motion for Summary Judgment on the breach of contract claim is GRANTED in part and DENIED in part. Crystal Clear is owed payment for the time the contract was still in effect (i.e., up to July 15, 2019). The City's Motion for Summary Judgement is GRANTED as to the remainder of the breach of contract claim. Mayor Smith's Motion for Summary Judgment is GRANTED as to the tortious interference claim.

I. BACKGROUND

Crystal Clear is a Mississippi LLC that provides information technology ("IT") support and services.3 On November 7, 2017, the City Council selected Crystal Clear to provide the City with IT services.4 The City Council approved a contract ("the Agreement") with Crystal Clear for "a period of five years at a rate of $5,795.00 per month."5 On November 8, 2017, the Agreement was signed by then-Mayor Jay Hollowell (on behalf of the City) and Mr. Simes (on behalf of Crystal Clear).6

The Agreement stated that it would become effective on "January 1, 2018, [and] shall remain in force for a period of five years."7 Crystal Clear was given the power to terminate the Agreement "upon ninety (90) days written notice."8 The City's power to terminate the Agreement, on the other hand, was more limited. The City also had to provide ninety-days’ written notice to terminate, but it could only do so in certain circumstances: (1) if Crystal Clear failed "in any material respect" to satisfy its obligations and did not cure the failure within ninety days of written notice; (2) if Crystal Clear breached "any material term or condition" and did not remedy the breach within ninety days of written notice; or (3) if Crystal Clear terminated or suspended its business operations "unless it is succeeded by a permitted assignee under this Agreement."9 The Agreement further stated:

Fees will be $5,975.00 per month, invoiced to [the City] on a monthly basis and will become due and payable on the first day of each month. The first month will include an additional one-time setup fee of $50. Services will be suspended if payment is not received within 5 days following date due.10

The first year of the contract was largely uneventful, and City employees provided Crystal Clear with positive feedback.11 Perhaps the only noteworthy thing about the first year was the City's relatively routine late payments. In his deposition testimony, Mr. Simes noted that late payments from the City were not unusual.12 The City's "Vendor Ledger" certainly indicates that late payments (sometimes days late, sometimes weeks late, and sometimes months late) were the norm.13 Despite the inconsistent frequency of payment, there is no indication that Crystal Clear suspended services in 2018.

Mayor Hollowell was defeated in the 2018 election, and Mayor Kevin Smith was chosen as the next Mayor of Helena-West Helena.14 It is at this point the relationship between Crystal Clear and the City began to sour. Around the start of his term, Mayor Smith began discussing the legality of the contract with the Arkansas Municipal League. Mayor Smith also sought an "apples to apples" quote from Sophicity, an IT services provider that works with the Arkansas Municipal League and various municipalities.15 These discussions with the Arkansas Municipal League and Sophicity began, at the latest, on December 31, 2018.16

In January 2019, Mr. Simes met with Mayor Smith (at Mayor Smith's request) to discuss the Agreement. Mayor Smith asked Mr. Simes to rebid the contract after learning "there were less costly options available to the City."17 Mr. Simes did not agree to rebid.18 There is no suggestion that, at this time, the Mayor told Mr. Simes that the City would not honor the Agreement.

The City was late paying its January and February 2019 bills. These months were not paid until the end of March 2019 at the earliest.19 The City did not pay its March 2019 bill on time. It is unclear whether the City paid its March 2019 bill late or did not pay this bill at all.20 The City has not paid its April, May, and June 2019 invoices.21

While Crystal Clear went unpaid, Mayor Smith caused the City to pay $3,410.00 to Global Technology Service Providers ("Global") for IT services on May 8, 2019.22 Global is owned by John Dalencourt, a friend and political supporter of Mayor Smith.23 While the exact nature of the relationship between Global and the City is disputed, Mayor Smith's Chief of Staff told Sophicity (the other IT service provider that submitted a bid to Mayor Smith) that "[t]he mayor has decided for the time being to go with an IT proposal from a local vendor on a month to month basis."24

The IT situation soon came to a head, as evidenced by a series of e-mails exchanged on May 14, 2019. Mayor Smith's Chief of Staff e-mailed Mr. Simes requesting that he "connect with John Dalencourt about IT transition."25 The word "transition" is something of a buzzword in this context, because the Agreement between Crystal Clear and the City says that if the contract is terminated, Crystal Clear would "assist [the City] in the orderly termination of services, including timely transfer of the services to another designated provider."26

Mr. Simes protested, noting that he was still under contract for four years, and refused to coordinate with Mr. Dalencourt "until I get an official letter from the City."27 Mayor Smith then reached out to Mr. Simes directly, demanding that within twenty-four hours Mr. Simes "turn over all passwords and usernames, any other security and access permissions regarding all work you have done with the City of Helena-West Helena to the Office of Mayor."28 At this time, Mr. Simes did not turn over the data, Crystal Clear did not suspend services, and Mayor Smith did not take further action on May 14.29 It appears instead that Mr. Simes or his allies went to the City Council for assistance.

During a heated City Council meeting on May 21, 2019, members of the City Council and City Attorney Andre Valley confronted Mayor Smith about the payment made to Mr. Dalencourt and the payments due to Crystal Clear.30 Mr. Valley advised Mayor Smith that paying Mr. Dalencourt was unauthorized spending and that the City's primary focus should be to "pay the people we owe."31 Mr. Valley and members of the City Council forcefully and repeatedly reminded Mayor Smith that the City was under contract with Crystal Clear and cautioned Mayor Smith against attempts to terminate the Agreement due to the potential of litigation against the City.32

Mayor Smith justified his solicitation of bids from Mr. Dalencourt and Sophicity by saying he was given legal advice that doing so was necessary to determine if the contract with Crystal Clear violated the Arkansas Constitution.33 Mayor Smith maintained that he had a constitutional duty to not make payments to Crystal Clear given the City's financial condition and the cheaper options available.34 Mayor Smith also said that the payments to Crystal Clear were being "held up until he turns over this information we requested," not because the City had terminated the contract but because the City owns the information.35

During this meeting, Mr. Dalencourt addressed the City Council to explain that the May 2019 payment to his company was primarily to conduct an audit of the City's IT needs, as well as to address some telephone outages.36 Mr. Dalencourt also informed the City Council that neither he nor his company would submit a bid to provide IT services if the City were to terminate the contract with Crystal Clear because he did not want to become involved in a dispute between the City and Crystal Clear.37

On May 30, 2019, Mr. Simes sent a letter to City Clerk Sandi Ramsey and members of the City Council notifying them that services would be suspended if the City did not become current on payments.38 The letter stated:

If payments are not received by June 3rd we will have to suspend all services per the agreement. We truly hope that we can continue our long relationship with the city.
However, if we received [sic] full payments by June 7th we will continue with our support. If not we will have to take further actions. We will have to completely delete all of your data backups and will not be able to get them back. We will remove all of your systems from our tools, and all of our usernames from all of your systems.39

Mr. Simes made good on his threat to suspend services on June 3, 2019—Crystal Clear suspended its services to the City after not receiving either a payment for June 2019 or the back payments for the months of April and May 2019.40 No payments were made by June 7, the second deadline Mr. Simes gave the City.41 It is not clear whether Mr. Simes took all, part, or none of the "further" actions threatened in his letter.

An eighteen-day long silence between the parties was broken on June 21, 2019, when City Treasurer Derrick Turner contacted Mr. Simes in an...

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