In-Fusio is suing Microsoft for allegedly backing out of a contract to develop a mobile version of the popular Halo game. In-Fusio, which signed a $2 million contract with Microsoft, has been withholding a $500,000 payment after Microsoft rejected the design work the company did. Microsoft responded by ending the contract, citing refusal of payment as a reason.

“Indeed, in the last 11 months, Microsoft has approved no fully developed In-Fusio game designs; ignoring and then refusing to accept In-Fusio’s game design concepts with little or no explanation and leaving In-Fusio little basis to revise its concepts to obtain Microsoft’s approval,” reads the suit.

“Under the agreement, In-Fusio’s Halo programming designs are subject to Microsoft’s approval, which cannot be unreasonably withheld,” the suit says.

It adds: “Microsoft has thwarted In-Fusio’s efforts to develop Halo under the agreement. Indeed, in the last 11 months, Microsoft has approved no fully developed In-Fusio Halo game designs; ignoring and then refusing to accept In-Fusio’s game design concepts with little or no explanation and leaving In-Fusio little basis to revise its concepts to obtain Microsoft’s approval.”

In October, In-Fusio and Verizon Wireless announced a portal for “Halo” wallpapers and ringtones on mobile phones.

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