Serenity Lane v Netsmart Technologies, Inc., et al.

Filing 63

ORDER: Adopting Judge Coffin's Findings and Recommendation 59 in Full. Accordingly, defendant's Motion to Dismiss for Failure to State a Claim 44 is Granted in Part and Denied in Part, and Defendant's Motion to Determine the Sufficiency of Plaintiff's answers to requests for admissions 51 is Denied. Plaintiff's first, second, and third claims for relief are dismissed with prejudice. Plaintiff's claim for prejudgment interest in its fourth claim for relief is stricken. Signed on 6/22/2015 by Judge Michael J. McShane. (cp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
SERENITY LANE, an Oregon corporation,
Plaintiff,
v.

Civ. No. 6:14-cv-00038-TC
OPINION AND ORDER

NETSMART TECHNOLOGIES, INC., a
Delaware corporation, and SEQUEST
TECHNOLOGIES, INC., an Illinois
corporation,
Defendants.
_____________________________
MCSHANE, Judge:
Plaintiff Serenity Lane (Serenity) brings this action seeking damages for an alleged
breach of an agreement between Serenity and Sequest Technologies, Inc. (Sequest),1 in which
Sequest agreed to provide Serenity with customized Totally Integrated Electronic Medical
Record (TIER) software. Defendants filed a motion to dismiss under FRCP 12(b)(6), which was
treated as motion for summary judgment under Rule 56. See FRCP 12(d). 2 Defendants also filed
a motion to determine the sufficiency of plaintiff’s answers to requests for admissions.
Magistrate Judge Thomas M. Coffin issued a Findings and Recommendation (F&R) on May 5,
2015, in which he recommended that this Court grant in part and deny in part defendants’ motion
to dismiss, but deny defendants’ motion to determine sufficiency of plaintiff’s answers to

1

Sequest was subsequently acquired by Netsmart Technologies, Inc.
FRCP 12(d) provides, in relevant part: “[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the
pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment
under Rule 56.”

2

1 – OPINION AND ORDER

requests for admissions. The matter is now before this Court. 28 U.S.C. § 636(b)(1)(B); Fed. R.
Civ. P. 72(b).
This Court reviews all portions of the F&R subject to objection de novo. 28 U.S.C. §
636(b)(1); McDonnell Douglas Corp. v. Commodore Bus. Machs. Inc., 656 F.2d 1309, 1313 (9th
Cir. 1981). Plaintiff timely filed an objection. Upon review, this Court finds no error in Judge
Coffin’s F&R, ECF No. 59.
As indicated in the F&R, the threshold issue is whether “delivery and receipt” of “TIER®
Software Product” occurred under the Software License Contract (Contract). Interpretation of a
contract is a question of law, and this Court’s task is to ascertain the intention of the parties to the
contract. See James v. Clackamas Cnty., 353 Or. 431, 441 (2013) (citing Anderson v. Jensen
Racing, Inc., 324 Or. 570, 575–76 (1997)). This Court first considers “the text of the contractual
provision at issue, in the context of the contract as a whole.” Id. (citing Yogman v. Parrott, 325
Or. 358, 361 (1997) (en banc)). If the provision is clear, the analysis ends. Yogman, 325 Or. at
361. If the provision is ambiguous, then this Court next examines extrinsic evidence of the
contracting parties’ intent. Id. at 363. If ambiguity remains after such examination, this Court
relies on “appropriate maxims of construction.” Id. at 364.
The contract provides, in relevant part:
1.2 TIER® Software Product. The TIER® Software Product includes
any and all Sequest computer software, the associated media, any printed
materials and any “online” or electronic documentation.
...
1.5 Acceptance. Upon delivery and receipt of the TIER® Software
Product, Client agrees to be bound by this Contract and accept the TIER®
Software Product subject to the Limited Warranty provisions.
...
2 – OPINION AND ORDER

2.2 Upon Delivery. Upon delivery Client is provided 60 days for
acceptance testing. Following this period final invoice will be submitted
and subsequent work may be billed at a Time and Material rate.
Decl. of Andrea D. Coit 2, 14, ECF No. 45-4 (emphasis in original). Plaintiff disputes whether
“delivery and receipt” of “TIER® Software Product” occurred under § 1.5. This Court turns first
to the text and context of the disputed provision. See Yogman, 325 Or. at 361.
The contract does not define either “delivery” or “receipt.” The noun “delivery” is
defined as “[t]he act of transferring to another.” The American Heritage Dictionary of the
English Language 481 (4th ed. 2000); see also The Oxford English Dictionary vol. IV, 424 (2d
ed. 2001) (“The formal . . . handing over of anything to another; esp. the putting of property into
the legal possession of another person.”). The noun “receipt” is defined as “[t]he act of
receiving.” The American Heritage Dictionary of the English Language 1458 (4th ed.2000); see
also The Oxford English Dictionary vol. XIII, 313 (2d ed. 2001) (“The act of receiving
something given or handed to one. . . .”). The verb “receive” is defined as “[t]o take or acquire
(something given, offered, or transmitted).” The American Heritage Dictionary of the English
Language 1458 (4th ed. 2000); The Oxford English Dictionary vol. XIII, 314 (2d ed. 2001) (“To
take . . . into one’s possession. . . .”). Combined, these definitions invoke contractual coverage if
“TIER® Software Product” is transferred to and taken into possession by Serenity.
“TIER® Software Product,” as defined in § 1.2, is broad and includes “any and all
Sequest computer software, the associated media, any printed materials and any ‘online’ or
electronic documentation.” Decl. of Andrea D. Coit 2, ECF No. 45-4 (emphasis added). As noted
by Judge Coffin, “the record reveals that defendant delivered at least some version of TIER
software product to plaintiff and that plaintiff installed that version of TIER software on over 75
3 – OPINION AND ORDER

machines it owned, controlled, or leased.” F&R 7, ECF No. 59 (citation omitted); see also Decl.
of Andrea D. Coit 5, ECF No. 45-3 (“identified employees . . . imported, downloaded, or
installed the ‘base demonstration product’ or components of the TIER software” on “any
computer equipment or device owned, leased or controlled by Serenity Lane.”); Supplemental
Decl. Andrea D. Coit 4, ECF No. 54-3 (“Admit that a ‘base demonstration product’ was installed
on computer equipment owned by Serenity Lane during 2007.”). As a result, there is no question
of fact regarding whether “TIER® Software Product” was transferred to and taken into
possession by Serenity. See F&R 7–8, ECF No. 59. 3
CONCLUSION
This Court ADOPTS Judge Coffin’s F&R, ECF No. 59, in full. Accordingly, defendant’s
motion to dismiss, ECF No. 44, is GRANTED IN PART and DENIED IN PART, and
defendant’s motion to determine the sufficiency of plaintiff’s answers to requests for admissions,
ECF No. 51, is DENIED. It is hereby ordered:
1. Plaintiff’s first, second, and third claims for relief are dismissed with
prejudice, and
2. Plaintiff’s claim for prejudgment interest in its fourth claim for relief is
stricken.

IT IS SO ORDERED.

3

Plaintiff’s reliance on § 2.2 is neither persuasive nor reasonable. See Pl.’s Resp. Mot. Dismiss 11, ECF No. 48
(“[T]his section makes clear that acceptance is contingent upon the client being satisfied with the testing of the
Product.”); Pl.’s Objections to F&R 8, ECF No. 61 (“[W]hen the contract is read as a whole, the term ‘accepted’ is
expanded upon in other sections.”). § 2.2, which is included under “IV. Pricing and Payment Schedule,” and
subsection “Estimate for Services Days,” has little bearing on this Court’s interpretation of “delivery and receipt”
under § 1.5. To the extent that § 2.2 provides Serenity with a sixty day period for “acceptance testing,” such a period
falls after delivery has taken place and the contract has taken effect. See The Oxford English Dictionary vol. XIX,
301 (2d ed. 2001) (defining the preposition “upon” as “[i]immediately after; following on”).

4 – OPINION AND ORDER

DATED this 22nd day of June, 2015.

_________________
__________
Michael J. McShane
United States District Judge

5 – OPINION AND ORDER