The Traverse City Film Festival (TCFF) is heading into mediation proceedings with a vendor that is suing the festival over a $159,055 unpaid bill from 2017's event.

Attorneys for Boston Light & Sound and TCFF met in Thirteenth Circuit Court Monday in front of Judge Kevin Elsenheimer to discuss next steps in the case. Boston Light & Sound is suing the festival for failing to fully cover a $256,500 contract the company had with TCFF to provide audio and visual equipment and systems, consulting services, and labor at last year's film festival. The long-time festival vendor says TCFF only paid a $100,000 deposit toward the contract and another small payment afterward, and failed to pay the outstanding $159,055 balance that was due by September 30.

"TCFF does not dispute the contract balance - TCFF has simply failed and refused to make payments," Boston Light & Sound alleges in the lawsuit. "Rather (than) paying the contract balance, or any part thereof, in response to demand letters, TCFF attempted to avoid fulfilling its contractual obligation and the debt incurred by threatening to distribute false and defamatory stories to harm Boston Light & Sound's good name and business relationships." The company says it does not wish "to malign the Traverse City Film Festival, with which it has worked and supported for 13 years," but says TCFF's "financial problems do not excuse it from the debt owed" to the vendor. TCFF Founder Michael Moore has publicly stated that 2017 was the first year the film festival operated at a loss.

Boston Light & Sound is seeking payment of its outstanding balance of $159,055, plus costs, attorney fees, interest, and finance charges at a rate of 1.5 percent per month as outlined in the company's contract terms. The vendor also extended TCFF an offer of judgment - or a flat settlement - of $159,000 "inclusive of all interest and costs accrued to the date of this offer." TCFF is required to respond to the offer within 21 days; if it rejects the offer and later fails to win the case or a better settlement, it will be subject to certain penalties, including paying Boston Light & Sound's legal fees.

TCFF's legal counsel, Dingeman & Dancer PLC, filed an emergency motion last week seeking to delay proceedings. The firm said TCFF had "legitimate defenses, questions of fact, and counterclaims regarding each of the allegations" made by Boston Light & Sound. Attorneys accused the vendor of trying "to bombard TCFF with litigation at its busiest time of the year when board members and other persons of knowledge of the issues in litigation are literally finishing the plans, construction, and installation of the festival."

Elsenheimer was set to rule Monday on whether to grant TCFF its emergency extension. However, attorneys for both parties instead met with the judge in private chambers at length before emerging to agree on a hearing adjournment. TCFF and Boston Light & Sound agreed to move into mediation, with further hearings in the lawsuit delayed until mediation can take place. According to the agreed-upon terms, Boston Light & Sound will still submit pre-trial statements to the court by next week. TCFF, meanwhile, will also submit the festival's response to the complaint and a decision on whether to accept Boston Light & Sound's offer of judgment. TCFF also agreed to maintain the festival's assets as "status quo" until the lawsuit can be resolved.

Attorneys for both TCFF and Boston Light & Sound declined comment following Monday's hearing.