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There are a few people in this thread offering you very sound advice, BP (Brad, Phil and a few others)....but there are still a few that think they know more than they really do and this is why you should seriously consult an attorney...not a criminal defense attorney but a corporate contract attorney.
My suggestion: Meet with an attorney and have them send a letter to NaviSite explaining that they have been retained to represent you in this matter and that any and all communication must now go through them. This will accomplish a few things...first, NaviSite will not be able to do ANYTHING in the court system without communicating with your attorney. Second, they will most likely stop harrasing you at all since they know that their scare tactics will not work on the attorney.
I think you are going to find that they look at your account and realize that it will not be worth taking to court over less than $10k and that will end your dealings with them. In addition, they have too many things that make this a bad case for them....first, the assumption of the contract by NaviSite is always questionable, secondly, most states do not allow for punitive damages, only liquidated damages, and they would be hard pressed to prove their liquidated damages in court for a contract that auto-renewed three times.
Probably the biggest downfall that they have right now is that they are hemorrhaging money and are probably going to lose a multi-million dollar judgment against a counter suit that started just like yours but for much, much, much more money. The entire company is only worth $10m, which is reportedly $5m LESS than they paid for Jupiter. These are the types of things that make you look at your situation and say "they probably have more important things to worry about than to come after a guy who has paid for the same server for 4 years"...but thats JMHO.
I would like to put one more thing out there for public consumption.....
Contracts are not as evil as some people would want you to believe. I dont do any business without a written contract. Contracts keep friends, friends. Where this gets into a bad area is when one friend assumes that since they are friends that they should not read the contract. I have contracts with MANY of my friends for projects that we are working on together...and every single time we would fight tooth and nail over every single point in the contract....but always with the same goal...to remain friends.
From a sheer hosting perspective, for years we never required agreements from our clients and we used the same reasoning that Brad used above...and I like doing business that way....but, as Brad eluded to in his post, once you reach a certain size that is simply not possible any longer. Once high end bankers, and credit facilities get involved then that all changes. That does not mean that the culture has to change...just the paperwork. I am happy to say that we have never, not once had a lawyer threaten anyone that signed a contract with us....and we dont plan to any time soon.
Good Luck, BP....and feel free to call me if I can be of any assistance to you.
--T
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