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Defunct San Diego Technology Firm's Slander Suit Is Reinstated

Wednesday, July 31, 2002 03:39ET

Jul 31, 2002 (The San Diego Union-Tribune - Knight Ridder/Tribune Business News via COMTEX) -- The state appeals court has reinstated a slander and defamation suit that XXsys Technologies, a now-defunct San Diego company, brought against the California Department of Transportation more than two years ago.

On Monday, the state Court of Appeal reversed a San Diego Superior Court dismissal of the company's suit against Caltrans. The action paves the way for a trial in the $2.2 million suit.

"I can't say that this means the company will come back to life, but it does give us hope," said Gloria Ma, chief executive of XXsys, which has been inactive for the past 2 years.

The suit stemmed from work XXsys did for Caltrans on the reinforcement of the scenic Arroyo Seco bridge in Pasadena. XXsys won the earthquake retrofit contract to use its proprietary carbon composite web process to reinforce the bridge.

But Caltrans balked at the work, contending it failed to meet established standards, and refused to pay XXsys, according to the suit. XXsys alleges that Caltrans employees made disparaging public comments about its technology, which hindered the company's ability to win additional work.

In its suit, XXsys also claims it was discriminated against because Ma is a woman of Chinese descent.

A Caltrans attorney declined to comment yesterday, saying he was unaware of the appeals court ruling.

Ma said XXsys spent more than $15 million in private and government funding to develop its carbon composite process, and the government spent $5 million more to validate the technology.

"Basically, Caltrans bankrupted us by what they did," Ma said. "Because they refused to pay us and made statements that our application didn't work, we suffered a black mark that effectively drove us out of business."

She contends the technology has been used successfully in other projects, but the company is more than $1 million in debt and unable to obtain new business. Only Ma and a part-time chief engineer remain employed by the company, which once had 30 workers.

"When the technology is young, you are vulnerable to what people say about it," Ma said. "We still believe our delivery probably is the best solution for cost-effectiveness, but we haven't been able to do business because of the actions that resulted from the Caltrans experience."

By Michael Kinsman
To see more of The San Diego Union-Tribune, or to subscribe to the newspaper,
go to http://www.uniontrib.com


(c) 2002, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune
Business News.

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STOCK SYMBOLS: [(xsys)]