[thelist] Domain Transfer Legalities...Need opinions

[Scott W.]

I have a customer who had his domain purchase back in July 2005 by
another service which he paid & then left...he then picked up one of
my competitors to design his site.  my competitor then dropped the
ball & never got the site up within a reasonable amount of time...so,
my customer switched to me...

In the process, 3 different companies have managed the domain.  My
customer paid the original service for the domain, requested the
domain to be switched to my competitor (which, I'm assuming he paid
the $10-15 to transfer it to dotster), and then it was switched to me.

Now here's the fun part.

Yesterday morning, my customer noticed that their site's down and he can't
get his email  So, of course I spend a bunch of time trying to figure
out why my server wasn't working...when I did a tracert, that's when I
noticed it ended back up on my competitors server.  He contacted
Dotster, had it transferred over, and put a note on the domain that
I'm not to touch it.

So, now to transfer it back over, I was told that I have to file an
ICANN dispute and go through all that.

The tricky part is this.  Since my competitor was dropped and did very
little work (an interface that sucked and a minimal backend to a db
that displayed a few products...something that would take most
developer no more than 5 hours to put together), he's charging the
full price ($1200).  My customer has decided not to pay for that work
at this time because the setback has cost him his money flow (I'm
biased, so I do believe it's a good reason).

So, since my customer hasn't paid him $1200, he has now taken back the
domain and is telling my customer that he has to pay $1200 to get back
the domain.  To me, this sounds like extortion.

The twist is that I think the only hook that the competitor has is
that he paid $10-15 to transfer the domain over from Yahoo to Dotster
(I didn't have to pay to transfer it from Dotster to my domain
manager, 000Domains, because they're both through registerapi).

Is that enough of a catch to make it legal for him to take back the
domain?  It was originally my customers, and per his request
transferred over...the year that my customer paid for does expire
until 7-20-06, but by the competitor transferring it, he extended it
by a year.

What's everyone's take on this?  I'm trying to advise my customer,
plus get an idea of what actions I can take since he snagged the
domain from my account & flagged me from it through his registrat.

Thank you in advance.