Premier, Inc. v. Peterson, No. COA16-1139

Docket NºNo. COA16-1139
Citation255 N.C.App. 347, 804 S.E.2d 599
Case DateSeptember 05, 2017

255 N.C.App. 347
804 S.E.2d 599

PREMIER, INC., Plaintiff,
v.
Dan PETERSON; Optum Computing Solutions, Inc.; Hitschler-Cera, LLC; Donald Bauman; Michael Held ; The Held Family Limited Partnership; Robert Wagner; Alek Beynenson; I-Grant Investments, LLC; James Munter; Gail Shenk; Steven E. Davis; Charles W. Leonard, III; and John Does 1-10, Defendants.

No. COA16-1139

Court of Appeals of North Carolina.

Filed: September 5, 2017


Moore & Van Allen PLLC, Charlotte, by J. Mark Wilson and Kathryn G. Cole, for Plaintiff-Appellee.

The Spence Law Firm, LLC, by Mel C. Orchard, III, and Tin, Fulton, Walker & Owen, PLLC, Charlotte, by Sam McGee, for Defendants-Appellants.

MURPHY, Judge.

255 N.C.App. 347

Dr. Dan Peterson ("Dr. Peterson"); Optum Computing Solutions, Inc.; Hitschler-Cera, LLC; Donald Bauman; Michael Held; The Held Family Limited Partnership; Robert Wagner; Alek Beynenson; I-Grant Investments, LLC; James Munter; Gail Shenk; Steven E. Davis; Charles

255 N.C.App. 348

W. Leonard, III; and John Does 1-101 (collectively "Defendants") appeal from an Order and Opinion granting Premier, Inc.’s ("Premier") motion for summary judgment; dismissing with prejudice Defendants' counterclaims for breach of contract, attorneys' fees, and recovery of audit expenses; and entering judgment for Premier on its claim for declaratory judgment upon determining that Premier had not violated Defendants' rights to receive annual earnout payments (the "Earnout Amount") under their Stock Purchase Agreement (the

804 S.E.2d 601

"Agreement"). After careful review, we affirm the trial court’s decision.

Background

This is Defendants' second appeal in this case. Although a full recitation of the first appeal’s facts and procedural history may be found in Premier, Inc. v. Peterson , 232 N.C. App. 601, 755 S.E.2d 56 (2014) (" Premier, Inc. I "), we limit our discussion in this opinion to the facts and procedural history relevant to the issues currently before us.

On 29 September 2006, Premier acquired stock in Cereplex, Inc. ("Cereplex") by entering into a Stock Purchase Agreement with Defendants, former shareholders and stakeholders of Cereplex, under which Defendants were entitled to receive an annual Earnout Amount from Premier for five years after the date of the Agreement. Cereplex had developed software products, Setnet and PharmWatch, that provided web-based surveillance and analytic services for healthcare providers. After acquiring shares of Cereplex, Premier developed SafetySurveillor, a successor product that combined the functionalities of Setnet and PharmWatch into one software program which generates automated alerts to notify its users of health-related problems that require attention.

Pursuant to the Agreement, the annual Earnout Amount to which Defendants are entitled is calculated as "$12,500 for each Hospital Site where a Product Implementation occurs during the applicable 12-month period; excluding the first fifty (50) Hospital Sites where a Product Implementation occurs[.]" There has been "Product Implementation" when:

a Hospital Site ... has (A) subscribed to or licensed the Company’s Setnet or PharmWatch product (or any derivative thereof, successor product, or new product that substantially replaces the functionality of either product),
255 N.C.App. 349
whether such product is provided, sold, or licensed (for a charge or at no charge, or provided on a stand-alone basis or bundled with other products and/or services) to the applicable Hospital Site by Company (or its successor in interest), any affiliate of the Company or any reseller authorized by the Company, and (B) completed any applicable implementation, configuration and testing of the product so that the product is ready for production use by the Hospital Site.

(Emphasis added and omitted).

Following an audit of Premier’s records, Defendants accused Premier of failing to report or include in the Earnout Amount certain Hospital Sites where there was Product Implementation. Specifically, Defendants alleged that single-event alerts2 that were reported in the audit were indicative of Product Implementation. Ultimately, the audit indicated that SafetySurveillor software was utilized by over 1,000 Hospital Sites. However, Premier only recognized 263 Hospital Sites for purposes of the Product Implementation provision of the Agreement. Accordingly, Defendants informed Premier that they intended to sue for miscalculating the Earnout Amount to which Defendants were entitled and violating the terms of the Agreement.

On 19 January 2011, Premier preemptively filed an action in Mecklenburg County Superior Court seeking declaratory judgment that it had not breached the Agreement.3 On 27 April 2011, Defendants filed an answer and counterclaims, alleging breach of contract and seeking recovery of damages, audit expenses, and attorneys' fees. On 30 August 2011, Premier filed a motion for judgment on the pleadings pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure, or, alternatively, a motion for summary judgment pursuant to Rule 56. On 11 December 2012, the trial court entered an Order and Opinion granting summary judgment in favor

804 S.E.2d 602

of Premier on its declaratory judgment claim as well as Defendants' counterclaims.

255 N.C.App. 350

i. Premier, Inc. I

Defendants timely appealed the 11 December 2012 Order and Opinion. In the original appeal, Premier claimed that "for Product Implementation to occur, a Hospital Site must affirmatively take steps to subscribe to or license the SafetySurveillor" software, and that mere receipt of the product was not enough. Premier, Inc. I , 232 N.C. App. at 606, 755 S.E.2d at 60. Based on this assertion, Premier argued it had fully satisfied its obligations under the Agreement as it had made Earnout Amount payments for all of the Hospital Sites with which it had formal written subscription agreements, not including the first 50 Hospital Sites where Product Implementation occurred as allowed under the Agreement. Id. at 606, 755 S.E.2d at 60.

Conversely, Defendants asserted that the "subscribed to or licensed" component of Product Implementation is satisfied when Premier simply provides SafetySurveillor to a facility, a fact which would be evinced by the alerts fired from those facilities. Id. at 606, 755 S.E.2d at 60. Therefore, Defendants maintained "that Premier was not entitled to summary judgment because the ... audit ... indicated that Premier ... ‘provided’ the SafetySurveillor program to over 1,000" Hospital Sites, which necessarily constitutes Product Implementation. Id. at 606, 755 S.E.2d at 60.

On 4 March 2014, we vacated the trial court’s 11 December 2012 Order and Opinion and remanded the case for further proceedings. Id. at 610, 755 S.E.2d at 62. In doing so, we agreed with Premier and held that "the unmistakable meaning of the language the parties agreed upon in drafting the Agreement is that some affirmative act on the part of the Hospital Site is required" to show Product Implementation, and that mere provision of the software to Hospital Sites without more is insufficient. Id. at 607, 755 S.E.2d at 60. To conclude otherwise would be to read out of the Agreement the phrase "subscribed to or licensed." Id. at 607, 755 S.E.2d at 60.

However, we also recognized that the Agreement does not specifically require a formal written agreement. Id. at 609-10, 755 S.E.2d at 62. In that respect, although the firing of an alert is not dispositive, it is probative of the issue of Product Implementation. Id. at 609, 755 S.E.2d at 61. Simply put, we held that "the Agreement contemplates a mutual arrangement between Premier and the Hospital Site whereby Premier agrees to provide the SafetySurveillor product and the Hospital Site agrees to accept it and utilize its services." Id. at 608, 755 S.E.2d at 61 (emphasis added).

255 N.C.App. 351

Pertinent to the instant appeal, we also concluded that interpreting the Agreement in this way did not resolve the case. Id. at 608, 755 S.E.2d at 60-61. Specifically, we held that "[w]hile we do not foreclose the possibility that summary judgment may ultimately be appropriate in this matter, we believe that such a determination cannot properly be made at the present time in light of the incomplete factual record that currently exists[,]" and therefore we remanded the case to the trial court for a fuller development of the factual record. Id. at 610, 755 S.E.2d at 62 (citation omitted). Further factual development was necessary to explore what affirmative acts, if any, were taken by the disputed Hospital Sites to obtain the SafetySurveillor product so that any such acts could be evaluated in accordance with our interpretation of the "subscribed to or licensed" language in the Agreement. Id. at 610, 755 S.E.2d at 62. Mandate issued on 24 March 2014.

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  • Slok, LLC v. Courtside Condo. Owners Ass'n, COA20-606
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • September 21, 2021
    ...we include a recitation of "the facts and procedural history relevant to the issues currently before us." Premier, Inc. v. Peterson, 255 N.C.App. 347, 348, 804 S.E.2d 599, 601 (2017). ¶ 6 Plaintiff purchased a condominium's single commercial unit ("the Property") in July 2014; the Property ......
  • Williams v. Marchelle Isyk Allen, P.A., COA20-724
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • August 3, 2021
    ...N.C.App. 448, 453 n.7, 846 S.E.2d 830, 833 n.7 (2020) ("This Court has reviewed the records under seal[.]"); Premier, Inc. v. Peterson, 255 N.C.App. 347, 352, 804 S.E.2d 599, 603 (2017) (noting "we considered all of the documents and testimony under seal"). [2] Rule 41(b) of the North Carol......
  • Williams v. Allen, COA20-724
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • August 3, 2021
    ...App. 448, 453 n.7, 846 S.E.2d 830, 833 n.7 (2020) ("This Court has reviewed the records under seal[.]"); Premier, Inc. v. Peterson , 255 N.C. App. 347, 352, 804 S.E.2d 599, 603 (2017) (noting "we considered all of the documents and testimony under seal").2 Rule 41(b) of the North Carolina R......
  • Slok, LLC v. Courtside Condo. Owners Ass'n, Inc., COA20-606
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • September 21, 2021
    ...we include a recitation of "the facts and procedural history relevant to the issues currently before us." Premier, Inc. v. Peterson , 255 N.C. App. 347, 348, 804 S.E.2d 599, 601 (2017).¶ 6 Plaintiff purchased a condominium's single commercial unit ("the Property") in July 2014; the Property......
  • Request a trial to view additional results
7 cases
  • Slok, LLC v. Courtside Condo. Owners Ass'n, COA20-606
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • September 21, 2021
    ...we include a recitation of "the facts and procedural history relevant to the issues currently before us." Premier, Inc. v. Peterson, 255 N.C.App. 347, 348, 804 S.E.2d 599, 601 (2017). ¶ 6 Plaintiff purchased a condominium's single commercial unit ("the Property") in July 2014; the Property ......
  • Williams v. Marchelle Isyk Allen, P.A., COA20-724
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • August 3, 2021
    ...N.C.App. 448, 453 n.7, 846 S.E.2d 830, 833 n.7 (2020) ("This Court has reviewed the records under seal[.]"); Premier, Inc. v. Peterson, 255 N.C.App. 347, 352, 804 S.E.2d 599, 603 (2017) (noting "we considered all of the documents and testimony under seal"). [2] Rule 41(b) of the North Carol......
  • Williams v. Allen, COA20-724
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • August 3, 2021
    ...App. 448, 453 n.7, 846 S.E.2d 830, 833 n.7 (2020) ("This Court has reviewed the records under seal[.]"); Premier, Inc. v. Peterson , 255 N.C. App. 347, 352, 804 S.E.2d 599, 603 (2017) (noting "we considered all of the documents and testimony under seal").2 Rule 41(b) of the North Carolina R......
  • Slok, LLC v. Courtside Condo. Owners Ass'n, Inc., COA20-606
    • United States
    • North Carolina Court of Appeal of North Carolina (US)
    • September 21, 2021
    ...we include a recitation of "the facts and procedural history relevant to the issues currently before us." Premier, Inc. v. Peterson , 255 N.C. App. 347, 348, 804 S.E.2d 599, 601 (2017).¶ 6 Plaintiff purchased a condominium's single commercial unit ("the Property") in July 2014; the Property......
  • Request a trial to view additional results

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