On April 12, 2013, the domain name MD.org sold at a record setting NameJet.com auction for $555,650.00 to the high bidder ID of ‘Winters”
Today the seller of the domain name, Privacy LLC, (Privacy) filed a lawsuit along with NameJet, LLC (“NameJet”) against Scott Ross and “Does defendants 1-3” which “may include Ari Goldberger, Esq. and Larry Fischer”, for breach of contract, in refusing to pay for the domain name.
The suit was filed in the Circuit Court of Fairfax County Virgina.
Here are the relevant allegations as stated in the complaint:
“”Defendant Scott Ross (“Ross”) is a citizen of the United States who upon information and belief resides in the State of Florida.
Although Ross was the buyer who agreed to purchase the domain name at issue, Plaintiffs believe Ross was a straw man acting as a proxy, agent, and co-conspirator with and for other undisclosed parties who are named as Does in this complaint.
Defendants Does 1-3 are the agents, principals, and/or co-conspirators of Ross who directed Ross, or acted in common control and concert with Ross, to enter into and breach the contract discussed in this complaint.
Plaintiffs believe Does 1-3 may include Ari Goldberger and Larry Fisher, but without discovery Plaintiffs have not confirmed their involvement.
After Plaintiffs confirm the identities of the Does, Plaintiffs will seek leave to amend this complaint to name them properly.
On or about July 26, 2008, Ross created an account with Internet domain auction platform Namejet.com. Upon doing so, Ross agreed to the NameJet Terms.
Based upon information and belief, Plaintiffs understand that Ross created the account with NameJet in concert with agents and principals, who by their active conspiracy and partnership with Ross are equally liable as the domain name buyer
The NameJet Terms state that the highest bidder at the end of an auction held on NameJet.com is obligated to complete the transaction with the seller for the amount of the highest bidder’s bid.
The NameJet Terms also state that all payments associated with using the Namejet.com service are due immediately upon demand.
From April 10, 2013 to April 12, 2013, an auction was held on NameJet.com for MD.ORG and Ross—together with his co-conspirators, partners, and principals—placed the highest bid, $555,650.00, at the time the auction ended.
NameJet, as the sales venue for transactions conducted through its website, receives a portion of the sales price as a commission for each transaction completed through its service.
On April 24, 2013, NameJet sent a letter to Ross demanding payment of the full amount owed by April 26, 2013.
On April 26, 2013, Ross’ counsel sent a letter to NameJet indicating that Ross did not intend to pay the agreed upon amount.
At the time of the filing of this Complaint, Ross has not paid the amount of the highest bid or further indicated a willingness to pay the full amount of the highest bid.
Ross, upon accepting the NameJet Terms while creating an account on NameJet’s website, entered into a valid agreement to tender payment to Privacy LLC upon placing the highest bid in a NameJet auction.
The NameJet Terms constitute a legally enforceable obligation between Ross and NameJet.
NameJet has performed all acts required of it under the NameJet Terms, but has been rebuffed by Defendant.
Ross breached his contractual obligations to NameJet by failing to pay the amount of the highest bid at the auction upon demand and also by clearly indicating an unwillingness to pay that amount.
As a direct and proximate result of Ross’s breach of the NameJet Terms, NameJet has been damaged in the amount of its commission due, and its reputation has and will continue to be damaged.
Section 3.4 of the NameJet Terms provides, in pertinent part, Should you fail to substantially prevail in any lawsuit brought against NameJet, NameJet will be entitled to recover its reasonable attorneys’ fees and costs from you.”
As a direct and proximate result of Ross’s breach of the Terms Agreement, Privacy LLC has been damaged in an amount of at least $555,650.00.
As a direct and proximate result of Ross’s breach of the Auction Agreement, NameJet has been damaged in the amount of its commission, and its reputation has and will continue to be damaged.
The Plaintiffs asked the court to award General compensatory damages of “not less than $300,000″, the $555,650 representing the winning bid placed under Scott Ross’ NameJet Account, Attorneys fees and costs of the suit, and Pre- and post-judgment interest.””””
I obviously don’t know if the allegations contained in the complaint are true or not and we remind everyone that allegations are just that at this point.
However the allegations are shocking especially considering the parties allegedly involved.
We do know that the domain name MD.org sold at the April auction for $555,650 and the bidding came down to two bidders.
We have reached out to Scott Ross and each of the named Does Defendants to see if they have any statement and we will update this story when and if we get any such statements.
This is only the second lawsuit I’m aware against an allegedly non-paying bidder arising out of a domain name auction.
In 2009 Ad.com sold at a Moniker.com auction for $1.4 Million.
The seller of the domain name ad.com and Moniker.com sued the non-paying bidder and the case was resolved last year.
I do think its good for the industry for sellers and auction house to enforce bidding and sales agreements against sellers and buyers as we have seem way too many instances of non-paying buyers and non-transferring sellers with the parties getting little to no support from the auction houses.