Mortgage technology vendors DocMagic and Ellie Mae have yet to settle their three-year-long legal dispute and the judge presiding over the lawsuit granted a two-month extension to his deadline for the two sides to come to terms before litigation will proceed.
The case has been on hold since August 2011, when the two sides participated in court-ordered mediation before a retired federal chief magistrate, Judge Edward Infante. According to court documents filed with the U.S. District Court for the Northern District of California, the mediation resulted in an agreement. But the “devil’s in the details,” as the saying goes, and the two sides haven’t been able to memorialize the terms in a final settlement document.
“The parties have not been able to agree on documentation of a settlement agreement that was reached during mediation,” lawyers for the two companies said in a July 31 joint filing.
Representatives from DocMagic and Ellie Mae both declined to comment.
In the same filing, each company proposed a timeline for their lawyers to submit discovery and expert report evidence, as well as deadlines for pretrial motions. Ellie Mae requested a schedule of deadlines that ran about a month earlier than DocMagic’s, but left more time at the end of the process for lawyers to make pretrial motions to dismiss, ending on Nov. 1, 2013.
In a case management conference on Tuesday, the court adopted DocMagic’s proposed schedule, which ends on Sept. 27, 2013. In addition, the two sides are scheduled to meet with the mediator next month in an attempt to finally reach a settlement.
Chen ordered the two sides to postpone formal discovery “until settlement talks and mediation before Judge Infante are exhausted” and ordered an update on the case in mid-October.
DocMagic’s claims stem from an agreement the two companies had to private label DocMagic’s technology as Ellie Mae Docs. After Ellie Mae acquired Online Documents Inc. from Stewart Lender Services in October 2008, it began working on creating its own technology for Ellie Mae Docs instead of using the private-labeled DocMagic technology.
But DocMagic claims that rather than using the Online Documents Inc. technology, Ellie Mae illegally used DocMagic’s intellectual property to build its own doc prep system.
The companies also had an agreement that allowed lenders to access DocMagic’s software through a direct integration with Ellie Mae’s Encompass LOS. In the throes of the Ellie Mae Docs dispute, DocMagic claims Ellie Mae terminated the agreement and would only allow DocMagic to integrate with Encompass if it paid an increased transaction fee of $6, which DocMagic said amounted to a 600% increase from the contract’s original fee.
In its initial August 2009 lawsuit and subsequent amended complaints, DocMagic alleges that Ellie Mae breached contracts and violated federal antitrust, copyright and trademark laws.
In its counterclaim, Ellie Mae denies that it illegally used DocMagic’s intellectual property to develop the new version of Ellie Mae Docs. Ellie Mae also claims that the $6 transaction fee is the standard rate that all doc prep vendors pay to integrate with Encompass and that DocMagic had been paying a heavily discounted rate.
