You absolutely need to know who you are dealing with when you register a domain name. GoDaddy is very good, as mentioned, and very reasonable. I have received excellent customer service from them. On the otherhand, I had a customer who registered through another service and had the same thing happen. The name expired even tho he tried to pay for it. Then he was told he would have to bid on it to get it back with a starting bid of $1000. We traced the company to Africa so there was little we could do.
However, as I recommend to all small business owners and especially freelancers, get legal advice. This may sound like a sales pitch but seriously, you MUST have a lawyer. I use
Prepaid Legal and it has served me well. Inexpensive and excellent service.
I run every contract through them and when I get a deadbeat customer they send letters and give me advice on how to best pursue the matter.
Unfortunately, they sometimes tell me "nothing you can do". This will probably be the case with your situation. However you CAN register a complaint with the BBB and Attorney General for the state they are registered in. Also be sure to get the company name out to as many people as you can so others will be warned. Stick to facts tho. If you spread rumors or lies about them you could be in trouble. Once again, check with a lawyer.
If you have the lawyer send a letter, this will usually get some response because they know you are not fooling around. Once again, not to send like an advertisement, but I really believe in this, get
Prepaid Legal (unless you can afford megabucks for regular lawyer fees)