State of North Carolina of Wake Allscripts Healthcare v. Etransmedia Technology, Inc., 031716 NCSUP, 14 CVS 11860

Docket Nº:14 CVS 11860
Opinion Judge:Gregory P. McGuire Special Superior Court Judge
Party Name:STATE OF NORTH CAROLINA COUNTY OF WAKE ALLSCRIPTS HEALTHCARE, LLC Movant, v. ETRANSMEDIA TECHNOLOGY, INC., Respondent.
Attorney:Morningstar Law Group by W. Swain Wood, Esq., J. Christopher Jackson, Esq., and John T. Kivus, Esq., and Barnes & Thornburg, LLP by Mark L. Durbin, Esq. for Plaintiff/Movant Allscripts Healthcare, LLC. Ellis & Winters LLP by Thomas H. Segars, Esq. and Jeremy Falcone, Esq., and Salazar and Erikson...
Case Date:March 17, 2016
Court:Superior Courts of Law and Equity of North Carolina
 
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2016 NCBC 23

STATE OF NORTH CAROLINA COUNTY OF WAKE ALLSCRIPTS HEALTHCARE, LLC Movant,

v.

ETRANSMEDIA TECHNOLOGY, INC., Respondent.

No. 14 CVS 11860

Superior Court of North Carolina

March 17, 2016

THIS CAUSE, designated a mandatory complex business case by Order of the Chief Justice of the North Carolina Supreme Court, pursuant to N.C. Gen. Stat. § 7A-45.4(b) (hereinafter, references to the North Carolina General Statutes will be to "G.S."), and assigned to the undersigned Special Superior Court Judge for Complex Business Cases, comes before the Court upon Plaintiff/Movant Allscripts Healthcare, LLC's ("Allscripts") Motion for Declaratory and Injunctive Relief ("Allscripts Motion") and Defendant/Respondent Etransmedia Technology, Inc.'s Motion to Dismiss or Stay and Compel Arbitration ("Etransmedia Motion, " together with Allscripts Motion, "Motions"). On January 28, 2016, the Court held a hearing on the Motions.

THE COURT, after reviewing the Motions, briefs in support of and in opposition to the Motions, the record evidence filed by the parties, the arguments of counsel, and other appropriate matters of record, CONCLUDES that the Etransmedia Motion should be GRANTED, and the Allscripts Motion should be DENIED for the reasons discussed below.

Morningstar Law Group by W. Swain Wood, Esq., J. Christopher Jackson, Esq., and John T. Kivus, Esq., and Barnes & Thornburg, LLP by Mark L. Durbin, Esq. for Plaintiff/Movant Allscripts Healthcare, LLC.

Ellis & Winters LLP by Thomas H. Segars, Esq. and Jeremy Falcone, Esq., and Salazar and Erikson, LLP by Dana L. Salazar, Esq. for Defendant/Respondent Etransmedia Technology, Inc.

OPINION AND ORDER

Gregory P. McGuire Special Superior Court Judge

PROCEDURAL HISTORY

1. The procedural history of the matter before the Court is long and somewhat complex. These parties, as will be discussed more thoroughly below, submitted a previous dispute to arbitration, which resulted in an award in Etransmedia's favor ("First Arbitration"). This civil action was initiated, and the parties filed cross-motions regarding that award; Allscripts moved to modify the award, and Etransmedia moved to confirm the award. Ultimately, on October 27, 2014, the Honorable Robert H. Hobgood confirmed the award in the First Arbitration, and judgment was subsequently entered in Etransmedia's favor.

2. On or about May 18, 2015, Etransmedia initiated a second arbitration proceeding ("Second Arbitration")1 against Allscripts under the arbitration agreement in the Partner Agreement.2 On June 9, 2015, Allscripts filed the Allscripts Motion. The Allscripts Motion seeks a declaration that claims set forth in by Etransmedia in the Second Arbitration are not subject to compulsory arbitration and are barred by the doctrine of res judicata.

3. On June 25, 2015, Etransmedia responded to the Allscripts Motion, and filed the Etransmedia Motion. The relief sought in the Etransmedia Motion is, essentially, the converse of that sought in the Allscripts Motion; namely, that this Court dismiss or stay any pending civil action and compel Allscripts to participate in the Second Arbitration.

4. The Motions have been fully briefed and argued, and are ripe for determination.

FACTUAL BACKGROUND

5. The factual background of this case was recited in the Court's Order on Motion for Temporary Restraining Order and Preliminary Injunction entered on December 22, 2015 ("Preliminary Injunction Order"), and that background, to the extent it is not recited below, is incorporated herein by reference.3 a. The Parties.

6. Allscripts is a healthcare-related software provider with its primary offices in Raleigh, and in Chicago, Illinois. Allscripts develops practice management and electronic health record software systems for physician practices. These software systems included the MyWay and Professional software products. Allscripts' software offerings enable healthcare providers to comply with federal meaningful use requirements.

7. Etransmedia delivers electronic health record, practice management, connectivity and revenue cycle management services to medical practices and health systems.4 Etransmedia resold certain Allscripts software products, including Allscripts' MyWay and Professional products, together with additional Etransmedia services related to the products. Etransmedia purchased product licenses from Allscripts and then resold them to end users.

b. The Partner Agreement and the First Arbitration.

8. On April 10, 2008, Etransmedia entered into an agreement with Misys Healthcare Systems, LLC ("Misys") regarding the purchase, promotion, resale, and hosting of "Products and/or Services" ("Partner Agreement"). The Partner Agreement provided the terms under which Etransmedia would sell and service Misys products, specifically including MyWay and several other products offered by Misys at that time. The Partner Agreement contained an arbitration clause, through which the parties agreed that any dispute "in connection with the negotiation, execution, interpretation, performance or non-performance" of the Partner Agreement would be subject to arbitration "in accordance with the law of the state of North Carolina and the rules of the American Arbitration Association."5

9. On or about October 10, 2008, Allscripts merged with Misys and succeeded to its rights and obligations in the Partner Agreement.6 Allscripts and Etransmedia subsequently agreed that Etransmedia would also sell an Allscripts' product called "Professional", along with other services related to Professional, but the parties never entered into a separate written agreement for the sale of Professional.

10. Etransmedia sold MyWay licenses and services from 2008 through 2012, and sold Professional licenses and services from 2009 through 2015.7 At Allscripts' request, Etransmedia pre-purchased the MyWay and Professional licenses in bulk for resale to end users. Allscripts required a reseller order form each time Etransmedia pre-purchased the licenses. The same form was used for the pre-purchase of both the MyWay and Professional products.8

11. On October 5, 2012, Allscripts announced that it would phase out and discontinue the MyWay product. At the time of the announcement...

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