We don't even really know that this is what happened. Even if it were, we don't know the context or the tone of the e-mails leading up to this. You are jumping to a ton of conclusions from a post whose goal is just to induce a lynch mob... even the specific quotations, were they actually 100% accurate, are not things I can easily see having been totally reasonable if (and I personally find this much more likely) the contractor was being belligerent and was doing little more than threatening lawsuits and ownership claims in their side of the correspondence (possibly even /before/ there was the alleged billing dispute).

I would think the written contract becomes a new agreement that supersedes the verbal one. What if there's a dispute in the terms of the written contract that was never brought up verbally?

I actually am looking for clarification b/c I would be interested in knowing if the prior verbal agreement trumps all future written discussions. It just isn't what I guess would be the case, and I can certainly see how someone would interpret being asked to sign a contract a renegotiation of terms, which is what I think happened in this case.

There's a lot of grey in the details that were left out. Unless you write it down and come to a crystal-clear agreement, this stuff happens.

Doesn't matter. The founder hired the designer verbally. I imagine that the judge will first determine if there was a verbal agreement, and then, if there is disagreement about the terms, use common sense and vague standards to determine the correct remuneration. It's not actually that complicated.

A judge? Over $1,500 or so? Possibly across state lines? Not gonna happen.

Golly, how dysfunctional do you think our justice system is? Do you think that people have absolutely no recourse to address small disputes like this one? It's true that when you need something other than money and/or money over $10k (in CA) you need a general lawsuit, but small claims court exists for handling stuff like this.

Regarding venue, the rule is that you have to file in the location the offense occurred. Stuff on the internet genrally favors the plaintiff, because they can claim it happened near them, forcing the defendant to travel. Travel costs alone can eclipse the amounts in these cases, so deciding venue is important.