Judge won't bar path to continuing litigation over Rosemont parking garage gate system failure

Scott Holland Jun. 15, 2015, 11:10am

The operators of a prominent Rosemont parking garage and an equipment supplier they hired to design a new gated entry system for their garage and for other vendors to which they wished to market the new product will continue to wage their legal battle after a federal judge ruled the standoff needs further proceedings to be sorted out. 

On June 10, U.S. District Judge Jorge Alonso rejected an attempt by Stripe Parking, of Chicago, to dismiss a counterclaim brought against them by Colorado-based vendor Kiosk Information Systems in response to Stripe’s lawsuit, alleging Kiosk broke a contract to supply a Stripe parking garage with the new gated entry system technology. 

Stripe filed a million-dollar breach of contract complaint against Kiosk in federal court in Chicago in March. Kiosk then filed a counterclaim. 

The root issue is Stripe’s allegation that Kiosk failed to complete and deliver a Parking Access and Revenue Control System for its garage at Loews-Intercontinental Hotel in Rosemont. Stripe filed a million-dollar breach of contract lawsuit. 

Though Stripe is incorporated in Delaware, its two members, Kevin Dahm and Mark Fancher, are Illinois residents and the principal place of business is Chicago. The men operate the Loews parking facility, and according to their complaint intended to market Kiosk’s PARCS self-serve parking stations under the Stripe banner to other parking facility owners nationwide. To this end, they brought several such proprietors to Kiosk’s Colorado headquarters for sales presentations. Stripe had a deal with developers of a Miami condominium to install a PARCS system once the Rosemont equipment was functional. 

As part of its initial suit, Stripe alleges Kiosk pledged PARCS was an in-house endeavor, but actually contracted much of the job to another company, Norima Consulting. Stripe paid $418,000 to Kiosk, as per the contract, and an additional $110,000 for proposed PARCS add-ons. 

The PARCS system was supposed to be operational no later than Aug. 2, 2013, but Stripe says it was not installed until the next month. Stripe detailed several system failures, including customers being unable to get in and out of the garage, gates closing on top of vehicles, cars entering and leaving without payment and rust. Stripe said the hotel proprietors threatened to cancel their contract with Stripe and hire a new parking firm. 

Ultimately, Stripe removed PARCS and spent $125,000 to replace it with a different system. Stripe also pulled out of the deal with the Miami condo developer since PARCS continued to underperform, lost $9,600 for a canceled trade show appearance and claims losing more than $500,000 in connection with trying to develop PARCS. 

In its suit, Kiosk accused Stripe of unjust enrichment, saying it provided Stripe with services beyond the scope of their mutual contract, including development of additional PARCS functionality — for which Stripe paid nothing extra. 

While Alonso did not rule on the merits of either Stripe’s claim or Kiosk’s counterclaim, Alonso wrote Kiosk’s stated a plausible enough claim to allow it to survive Stripe’s move to dismiss. 

The Stripe lawsuit, Alonso reasoned, essentially said it received no benefit from Kiosk as a result of the failed PARCS system, but Alonso wrote “whether Stripe actually received a benefit is a merits issue that the Court does not resolve on a motion to dismiss.” The fact Kiosk did provide hardware and software allows “a reasonable inference that Stripe benefited from these services.” 

Alonso further upheld Kiosk’s argument by agreeing with the suggestion the facts of the case do not mean the existence of a Stripe-Kiosk contract invalidates Kiosk’s unjust enrichment claim. 

Stripe has until June 26 to file an answer to the counterclaim. 

Stripe Parking is represented by Lawrence C. Rubin and Richard Hu of Taft Stettinius & Hollister, of Chicago.

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