EnGenius, Inc. Wins $24.8 Million Judgment Against Ford

On November 23, 2011, after over an eight year battle, the Michigan Supreme Court denied Ford Motor Co.'s last-ditch attempt to overturn a $24.8 million Judgment entered against it and in favor of its former software engineering suppliers, EnGenius, Inc. and EnGenius-EU, Ltd. ("EEU"). EnGenius and EEU were awarded the money in a January 2009 Wayne County Circuit Court Judgment, which confirmed an arbitration award rendered by a panel of three arbitrators after a nine week trial that determined that Ford had breached two separate contracts with EnGenius, and had tortiously interfered with the business of EEU.

In March 2011, the Michigan Supreme Court agreed to hear Ford's appeal; however, after reviewing the legal briefs filed by EnGenius and Ford, and conducting oral argument on November 8, 2011, the Michigan Supreme Court agreed with the legal argument made by Jeffrey B. Morganroth on behalf of the EnGenius Parties requesting that the Court vacate its order on the grounds that it was "no longer persuaded that the questions should be reviewed," thereby affirming in all respects the Judgment in favor of EnGenius and EEU. In December 2011, Ford paid the Judgment in full.

Starting in the 1990s, EnGenius led a team that supported Ford's sophisticated end-of-line test system that was used to test every component of every vehicle manufactured by Ford for quality, safety and environmental purposes before shipping to dealers worldwide. At issue in the case were Ford's breaches of two contracts between Ford and EnGenius involving comprehensive end-of-line test systems designed and implemented by EnGenius for Ford's assembly plants worldwide. Also at issue was Ford's tortious interference with the relationship between EnGenius' European affiliate and its employees.

EnGenius designed, developed and implemented a new state of the art test system for Ford which was launched at Ford's Wayne Assembly Plant in Wayne in 2001. Nevertheless, Ford failed to make payments due to EnGenius even though EnGenius had spent more than $12 million on project development and had devoted a team of 65 engineers to the project on a full time basis for years.

As a result, EnGenius sued Ford in 2003 alleging that Ford had reneged on its contracts for EnGenius to create the new test system and, although EnGenius spent millions of dollars creating the new state-of-the-art test system, Ford withheld vendor payments and took numerous other improper actions in an attempt to put EnGenius out of business so that Ford could gain ownership of the sophisticated new testing system.

EnGenius' attorney Jeffrey Morganroth said, "This has been a long and tough battle through every level of the justice system. My confidence in our system has been re-confirmed because the EnGenius Parties prevailed and were able to obtain full vindication at each and every step of the process. The EnGenius Parties are terrific companies made up of brilliant and exceptional software engineers who fully deserved the justice that they have now received." David Foxworthy, President of EnGenius, said, "We knew from the outset that we were right. EnGenius did everything possible to serve Ford, as it does for all its clients. Nevertheless, Ford's actions were improper, as ultimately determined by the arbitration panel. It was a long battle, but we are very pleased with the outcome, not only because of the dollar amount involved, but also because EnGenius' position that it complied with all its contractual duties and obligations to Ford, even though Ford did not do likewise, was fully vindicated."

EnGenius is represented by Jeffrey B. Morganroth, Mayer Morganroth and Jason R. Hirsch of Morganroth & Morganroth, PLLC in Birmingham, Michigan.

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