Sprint Nextel ordered to pay collection company $17M

by Mike Bevel, CollectionIndustry.com

In the annals of “turn around is fair play,” Penncro Associates Inc., a Pennsylvania-based collection agency, sued Sprint Nextel Corp. and won: $17.1 million dollars in a breach-of-contract suit.

Sprint Nextel had signed a contract with Penncro in 2002, agreeing to a 3-year term with the collection agency on accounts collection for wireless bills. In 2003, Sprint Nextel cancelled the contract, claiming poor performance on Penncro’s part.

However, as wireless providers are fond of reminding their customers, a contract is a contract – and backing out of the contract a year later is not necessarily fulfilling the 3-year contract agreed to by both parties. Penncro sued.

Presiding Judge John Lungstrum partially blamed Penncro for not living up to the letter of the contract, and also reduced the amount Penncro was asking for from $53.1 million down to the eventual $17.1 million. Still, breach of contract is breach of contract – even if the award is 60 per cent less than was asked for.

Sprint Nextel spokesman David Gunasegaram has said that the company is still deciding whether an appeal of the judge’s decision is in order or not. Sprint Nextel has 30 days to make up its mind.

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