A federal judge has concluded it is a jury’s responsibility to decide who is liable for breaching a contract to supply comprehensive billing software to Fort Collins – the city itself or the vendor it hired in 2018.

After Fort Collins voters approved the creation of municipal broadband in 2017, the city sought a provider to develop a utility billing system that would incorporate the new Internet service – ultimately choosing Open International, LLC. Over the next few years, Fort Collins and Open would disagree who was responsible for the missed deadlines, with Open blaming the city for failing to provide the staff and Fort Collins insisting Open misrepresented its ability to deliver the product.

Both sides sued after the contract’s eventual termination, asserting multimillion-dollar damages against the other party.

Last week, U.S. District Court Judge Charlotte N. Sweeney largely concluded the conflicting evidence in the case precluded her from resolving the multiple claims without a trial.

“This determination appears to involve questions of disputed fact – namely, when did the City discover the misrepresentations tied to (the product’s) flaws, and did it continue with the contract with full knowledge of Open’s misrepresentations,” Sweeney wrote in a May 22 order.

By the same token, she continued, if Open could prove the city terminated the agreement prior to giving it the chance to fix any problems, “the jury could award damages for the value of Open’s services.”

Open’s president, Hernando Parrott, told Colorado Politics he was still assessing Sweeney’s ruling, but “we’re pleased the Court rejected Fort Collins’s attempt to avoid paying for $3.3 million in services it received from Open.”

“Open was fully committed to this project, but the City unilaterally terminated years of joint investment with Open, and the City’s lawsuit kicked off a long, expensive, and wasteful fight,” Parrott added. 

Attorneys for Fort Collins did not respond to a request for comment.

Fort Collins solicited proposals for a new billing system and selected Open, which was new to the North American market. The city had 2,000 functions it required for the software, with an anticipated “go-live” date in July 2019. The city believed Open would provide a $7.3 million, “off-the-shelf” system, and blamed the delays, defects and changes on Open.

Open countered that the city’s own lack of staffing and coordination made its job harder. It cited an internal memorandum from January 2020, in which the project manager warned Fort Collins had “undertaken a project of this scope without providing the resources needed.”

In May 2021, Open gave the city notice that Fort Collins had not held up its end of the deal, to which the city responded that it was ending the contract. Fort Collins then initiated a lawsuit, with the software still not complete, The Coloradoan reported at the time. The city alleged more than $28 million in damages. Open, in return, sought $3.8 million from the city, claiming its optimistic statements about its product were “puffery,” whose development Fort Collins knew it needed to support.

In evaluating each side’s claims about the other, Sweeney concluded it was unclear whether Open misrepresented its offerings to the city and when the city was aware of discrepancies. She agreed Fort Collins’ termination of the contract did not comply with the parties’ procedures, but there was a question of whether Open could have even fixed the problems by that point.

A jury would need to decide those claims, Sweeney wrote. On the other hand, she determined the city did not have to pay $551,000 in damages to Open stemming from an amended agreement between the parties in which Open took on a greater share of the costs.

The two-week jury trial is scheduled to begin in late October.

The case is City of Fort Collins v. Open International, LLC et al.