State undecided over filing appeal in tech firm case

The Department of Finance and Administration has not yet decided whether to appeal a $250,000 Arkansas State Claims Commission award to a technology company that offered to help collect tax revenue for the state, the agency's chief counsel said Wednesday.

The commission unanimously ruled after a hearing last week in favor of Texarkana-based Lien Technologies Inc., which argued that it began building the technology to help collect the tax revenue after signing an agreement with the department.

The department's decision to back out of the agreement financially harmed Lien Technologies, company officials said.

In the ruling, the commission found that the agency had entered into a contract with the company and then terminated the contract without a reason and without any advance notice in an Aug. 9, 2013, letter.

"Without such a signed document the [company] would not have begun raising the funds to create and implement the new program. ... Within the contract were very limited grounds upon which the [department] could cancel or terminate the contract. None of those grounds were a part of [the Aug. 9 letter]," the commission wrote.

Commissioners Richard Mays, Bill Lancaster and Jim Baker served on the three-member panel that heard the case.

Lien Technologies entered into an agreement with the department on Nov. 10, 2010. The company said it planned to offer a service "that would assist the [state] in the collection of tax revenue coming from the sale of motor vehicles to Arkansas citizens and for expediting the filing of motor vehicles titles and liens," according to the commission order.

The company said it would provide the service at no cost to the state and would instead charge a subscription fee to its customers, including banks and car dealers, to access it.

In the Aug. 9 letter, David Foster, the assistant commissioner of operations and administration, wrote that the department "will cease to be able to perform according to the terms of the [agreement] by and between the [company] and the [department]."

Foster wrote that the department was launching a new motor vehicle system, which had been in the works for about a year. Advance notice of changes could not be provided "because no changes to the [motor vehicle system] were contemplated," he wrote.

"DFA is required as an agency of state government to make decisions concerning its administration of the laws concerning motor vehicle titling and registration, as well as other issues concerning the operation of motor vehicles. The decision that was made was that an entirely new system, rather than changes or upgrades to the [motor vehicle system], was in the best interests of the state and the citizens that DFA serves," Foster wrote.

The company responded by filing a claim for $750,000, arguing that it had worked on developing the technology for nearly three years and had spent thousands of hours on the project.

The department argued in filings with the commission that there was no valid contract between the parties and that it became impossible for the agency to give the company access to the system after it was replaced.

Martha Hunt, chief counsel at the Finance and Administration Department, said in an interview that the agency canceled the agreement because it was "no longer feasible and workable" for Lien Technologies to provide the tax-collection service. She said the technology the company was working on was made obsolete by the new system.

Hunt said the agency is still deciding whether to file an appeal.

Mark Burgess, a Texarkana attorney who represented the company, said he was pleased with the commission's decision and that it "recognized that this was a valid contract."

"It was a hardworking venture for over three years just to get it up and going, and then it was pulled out from under them," Burgess said.

Metro on 08/21/2014

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