Former business partners are at odds over the spoils of a Chicago Transit Authority account.
In a complaint filed Nov. 16 in Cook County Circuit Court, Northbrook-based HCK Group, doing business as Informity Systems, brought 10 counts against Informity Network, of Chicago, and its president Edita Arambulo, as well as former HCK employee Cynthia Chappell.
HCK is a telecommunication consultant that provides telephone hardware and software, as well as voice carrier, data carrier, design and audit services. It used to be known as Metroline, as it was in May 2003 when it hired Chappell as a commissioned saleswoman.
Metroline and Informity Network began partnering in 2006, splitting profits on projects 50-50. According to its complaint, HCK introduced Telecommunications Expense Management in 2010, “a niche service designed to help customers reduce risk and cost by addressing assets and inefficiencies" in landline phone networks and other telecommunications systems. According to HCK, the information it gave to Informity Network was to be confidential.
Around the same time, HCK put Chappell on the task of selling existing client Johnson Publishing Company on the TEM services. Because it was to be such a labor-intensive contract, HCK contacted Arambulo about collaborating with Informity Network, agreeing to the same 50-50 profit terms.
The companies agreed to partner again on a TEM contract for the CTA in May 2013. According to the CTA’s website, that contract is now worth $940,000.
The partnership for the CTA project was similar to the Johnson deal. Arambulo emailed Chappell on May 15, 2013, detailing the contract terms and the “50 percent gross split between our companies.” From November 2013 to August 2014, Informity Network paid HCK half is gross commissions; HCK paid to Chappell half its take as her commission.
However, according to the complaint, in October 2014, “Chappell and Arambulo secretly determined to attempt to cut HCK out of its participation in the CTA project.” Commission payments to HCK allegedly stopped, and HCK alleged in its complaint that Arambulo simply gave the 50 percent portion directly to Chappell.
As of Nov. 6, 2014, while planning to leave employment with HCK, the complaint alleged “Chappell commenced transferring HCK confidential information to a personal email account she maintained.” She also allegedly deleted from her HCK email account select information “in an effort to hinder HCK’s ability to continue to serve those customers.” According to the complaint, Chappell quit HCK on Dec. 31, 2014, becoming an independent contractor for Informity Network and continues working on the CTA account.
HCK maintains Arambulo has paid it only $87,205 and still owes $229,868, as well as half of future gross commissions for the length of the contract. As Arambulo and her company have refused to provide HCK with accounting information, HCK said it cannot determine if the CTA is being billed properly. Further, HCK alleged Chappell’s independent contractor status with Arambulo’s firm is intended to insulate the defendants from liability.
The complaint’s formal allegations include conspiracy, breach of contract and tortious interference, tortious interference with prospective economic advantage, violation of the Consumer Fraud and Deceptive Trade Practices Act, breach of fiduciary duties, unjust enrichment and conversion.
HCK has asked the court to order a complete accounting of the CTA account, injunctions preventing Informity Network from withholding commission income and from using confidential information to solicit HCK’s customers. It also asked the court to force the defendants to pay HCK the money owed, as well as unspecified punitive and exemplary damages.
HCK’s attorney is Kevin M. Flynn, of Kevin M. Flynn & Associates, Chicago.
The Cook County Circuit Court case number is 2015-CH-16750.