United States District Court, D. Oregon
OPINION AND ORDER
M. COFFIN United States Magistrate Judge.
Netsmart Technologies, Inc. (Netsmart), and Sequest
Technologies, Inc. (Sequest), move for summary judgment or in
the alternative, for partial summary judgment. (Doc. 85).
Having considered the motions and related materials,
defendants' motion for summary judgment is denied and
defendants' motion in the alternative for partial summary
judgment is granted.
underlying dispute in this case arose out of an agreement
between plaintiff and Sequest, whereby Sequest agreed to
provide plaintiff with totally integrated electronic medical
record (TIER) software customized for plaintiffs use.
Pl's First Am. Compl., 2-3. Sequest was then acquired by
Netsmart in October 2011. Id. at 2. Plaintiff
alleges that it paid defendants $518, 308.41 for the
development, licenses, and customization of the TIER software
and that defendants breached the agreement by failing to
deliver the TIER software. Id. On January 8, 2014,
plaintiff filed a Complaint with this court stating that
defendants now owe it the obligations of Sequest under the
agreement. Pl's Compl. 2. Plaintiffs Complaint made four
claims for relief.
first claim for relief sought damages of $518, 308.41 for the
TIER software it claims was never delivered, $654, 242 for
time it spent performing its obligations under the agreement,
$147, 937.61 for computer hardware purchases that became
obsolete or unusable as the result of defendants' alleged
failure to deliver the software, and prejudgment interest.
Id. at 3. Plaintiffs second claim asserted that
defendants violated the Uniform Commercial Code (UCC).
Id. Plaintiffs third claim sought a declaration from
this court stating that it was not bound to the 2006 contract
because the TIER software was never delivered or received.
Id. at 4. Plaintiffs fourth claim asserted that in
the alternative, if the court declared that it was bound to
the contract, pursuant to the terms of the contract, the TIER
software was not subject to repair or replacement and
defendants were, therefore, obligated to refund the amount
plaintiff paid them for the TIER software in the sum of $518,
308.41, plus prejudgment interest. Id. at 5.
filed a Motion to Dismiss (Doc. 32) on May 15, 2014, followed
by a Renewed Motion to Dismiss (Doc. 44) on January 15, 2015,
to which this court entered its Findings and Recommendation
on May 15, 2015, recommending that defendants' motion be
granted in part and denied in part. Doc. 59 at 1.
Specifically, this court found that: (1) because
"defendants delivered at least some Sequest computer
software that plaintiff installed, tested, and accessed
through defendants' FTP site, there is no question of
fact regarding whether the TIER software product was
delivered and received" and, therefore, pursuant to
Article I, Section 1.5 of the 2006 contract, the contract is
binding on both parties; (2) the UCC does not apply; (3)
Illinois law governs all questions regarding the validity and
operation of the contract; and (4) plaintiffs claims for
incidental and consequential damages, as well as prejudgment
interest, should be dismissed. Id. at 8, 19-20. In
sum, this court concluded that plaintiffs first, second, and
third claims, as well as its demand for prejudgment interest
in its fourth claim, should be dismissed. Id. at
19-20. On June 22, 2015, District Judge Michael McShane
adopted this court's Findings and Recommendation in full.
filed its First Amended Complaint (Doc. 68) on September 1,
2015, asserting two claims against defendants. Plaintiffs
first claim sought rescission of the contract and damages of
$518, 308.41 for money it paid defendants for the
development, licenses, and customization of the TIER
software, $654, 242 for the time it spent performing its
obligations under the contract, $147, 937.61 for computer
hardware purchases that became obsolete or unusable as the
result of the "frustration of the contract's primary
purpose, " and interest of $129.58 per day. Pl's
First Am. Compl. 3. Plaintiffs second claim, which was
brought in the alternative, was for breach of contract and
sought $518, 308.41 in damages for money it paid defendants
for the development, licenses, and customization of the TIER
software, plus costs and disbursements. Id. at
¶ 8. On September 18, 2015, defendants moved to dismiss
the first claim from plaintiffs First Amended Complaint.
Defs.' Mot. to Dismiss Pl's First. Am. Compl. 2.
court entered its Findings and Recommendation on March 20,
2016, recommending that defendants' Motion to Dismiss the
first claim from plaintiffs First Amended Complaint should be
granted. Doc. 81. On April 13, 2016, this court's Finding
and Recommendation was adopted by District Judge Michael
McShane and plaintiffs first claim for rescission in its
First Amended Complaint was dismissed. Doc. 83. Accordingly,
a single claim for breach of contract seeking a refund of the
$518, 308.41 plaintiff paid to defendants for the
development, licenses, and customization of the TIER software
remained in plaintiffs First Amended Complaint. Pl's
First Am. Compl. 4. On October 13, 2016, defendants filed the
instant Motion for Summary Judgment that is presently before
this court. Doc. 85.
judgment is appropriate if "the movant shows there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." Fed.R.Civ.P.
56(a). Summary judgment is not proper if material factual
issues exist for trial. Warren v. City of Carlsbad,
58 F.3d 439, 441 (9th Cir. 1995).
moving party bears the initial burden of establishing the
absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986);
Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir.
2001). An issue of fact is genuine "if the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). If the moving party
fulfills its burden, the burden shifts to the nonmoving party
who must go beyond the pleadings to identify genuine issues
of fact. Celotex Corp., 477 U.S. at 324. Conclusory
allegations, unsupported by factual material, are
insufficient to defeat a motion for summary judgment.
Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).
Instead, the opposing party must, by affidavit or as
otherwise provided by Fed.R.Civ.P. 56, designate specific
facts that show there is a genuine issue for trial.
Devereaux, 263 F.3d at 1076.
court must view the evidence in the light most favorable to
the nonmoving party. Szajer v. City of Los Angeles,
632 F.3d 607, 610 (9th Cir. 2011). All reasonable doubt as to
the existence of a genuine dispute of material fact should be
resolved against the moving party. Hector v. Wiens,
533 F.2d 429, 432 (9th Cir. 1976). Where different ultimate
inferences may be drawn, summary judgment is inappropriate.
Sankovich v. Life Ins. Co. of North America, 638
F.2d 136, 140 (9th Cir. 1981). However, facts must be
"viewed in the light most favorable to the nonmoving
party only if there is a 'genuine' dispute as to
those facts." Scott v. Harris, 550 U.S. 372,
380 (2007). "Where the record taken as a whole could not
lead a rational trier of fact to find for the nonmoving
party, there is no 'genuine issue for trial."'
Matsushita Elec. Industrial Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986).
argue that summary judgment should be entered in their favor
because plaintiff is not entitled to a refund of any of the
fees it paid for the development, licenses, and customization
of the TIER software because plaintiff prematurely terminated
the contract and refused to accept the remedies offered to it
in accordance with the Limited Warranty provision of the
contract. Defs.' Mot. for Summary J. 2, 10. Defendants
specifically argue that pursuant to the Limited Warranty
provisions at Article I, Sections 4.5 and 6 of the contract,
the $135, 000 license fee plaintiff paid for the TIER
software is ...