W. Dermatology Consultants, P.C. v. VitalWorks, Inc.
| Decision Date | 01 October 2013 |
| Docket Number | AC 32052,AC 32051,AC 34121 |
| Court | Connecticut Court of Appeals |
| Parties | WESTERN DERMATOLOGY CONSULTANTS, P.C. v. VITALWORKS, INC., ET AL. |
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All opinions are subject to modification and technical correction prior to official publication in the Connecticut Reports and Connecticut Appellate Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the Connecticut Law Journal and subsequently in the Connecticut Reports or Connecticut Appellate Reports, the latest print version is to be considered authoritative.
The syllabus and procedural history accompanying the opinion as it appears on the Commission on Official Legal Publications Electronic Bulletin Board Service and in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be reproduced and distributed without the express written permission of the Commission on Official Legal Publications, Judicial Branch, State of Connecticut.Robinson, Sheldon and Flynn, Js.
(Appeal from Superior Court, judicial district of
Kimberly A. Knox, with whom were Wesley W. Horton, and, on the brief, Dana M. Hrelic, Kenneth J. Bartschi, and Edward T. Krumeich, for the appellant-appellee (named defendant).
Steven R. Smart, for the appellant-appellee (defendant Cerner Physician Associates, Inc.).
Phyllis S. Lynn, pro hac vice, with whom were Bradford S. Babbitt, and, on the brief, Michael S. Jahner, pro hac vice, and Jeffrey J. White, for the appellee-appellant (plaintiff).
The defendants, VitalWorks, Inc. (VitalWorks), and Cerner Physician Associates, Inc. (Cerner), appeal from the judgments of the trial court awarding damages, costs and attorney's fees to the plaintiff, Western Dermatology Consultants, P.C. The plaintiff appeals from the court's refusal to award punitive damages, prejudgment interest and certain costs, as well as from the court's refusal to award all of the attorney's fees to which it claimed entitlement. All appeals were consolidated for argument before this court. We reverse the judgment of the trial court, and dismiss the plaintiff's appeal.
The following facts, as found by the court or undisputed by the parties, and procedural history are relevant to this appeal. The plaintiff corporation operates a der-matological practice in Albuquerque, New Mexico. The practice was founded in 1997. The defendant, VitalWorks, a Delaware corporation, had its corporate headquarters in Ridgefield, Connecticut, and was engaged in the sale of computer software that was based on a Windows operating system. VitalWorks demonstrated its software at a San Francisco medical conference of the American Academy of Dermatology in March, 2003, where Dr. Leslie Glass, a principal of the plaintiff, first saw it demonstrated. VitalWorks demonstrated its software at one of the plaintiff's offices in September, 2003.
Ultimately, on December 19, 2003, the plaintiff signed a contract in New Mexico with VitalWorks to purchase Intuition Practice Management and Electronic Medical Records software (software), as well as concomitant hardware and services, including training, for the plaintiff's practice. The actual software and hardware was located in New Mexico at the plaintiff's offices. VitalWorks' software operation was located in Alabama.
In January, 2005, Cerner purchased certain assets of VitalWorks. Cerner is a Delaware corporation with its principal place of business in Kansas City, Missouri. Cerner also had an office in Birmingham, Alabama. Cerner took over VitalWorks' Alabama location.
VitalWorks installed version 5.1 of the software on the plaintiff's server. VitalWorks also configured the server at its office and installed additional hardware at the plaintiff's location. The plaintiff's staff encountered numerous issues with the software and its installation, the hardware and its installation, and the concomitant training for both. The plaintiff's staff felt that they never were able to get the software to work as represented to them prior to entering into the contract with VitalWorks.
The plaintiff commenced the present action against VitalWorks and Cerner and filed a second amended complaint dated April 26, 2007, alleging six counts: (1)breach of contract, (2) breach of warranty, (3) fraud in the inducement, (4) negligent misrepresentation, (5) unjust enrichment, and (6) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. Following a bench trial, the court, in a memorandum of decision dated September 1, 2009, found in favor of the plaintiff on its breach of contract, breach of warranty, negligent misrepresentation and CUTPA counts. The court awarded $863,240.82 in damages for the breach of warranty, negligent misrepresentation, and CUTPA counts. The court did not find for the plaintiff on its fraud and unjust enrichment counts. The court's original damage award was broken down as follows: breach of warranty $83,399.82, negligent misrepresentation $5100, and CUTPA $774,741. The court found that Cerner was liable on the CUTPAcount. Thereafter, VitalWorks and Cerner filed their respective motions to reargue.
The plaintiff moved for costs, attorney's fees, and prejudgment interest on November 23, 2009, and for punitive damages on November 18, 2009. On February 23, 2010,1 the court issued its memorandum of decision regarding the defendants' motions to reargue. The court reduced the CUTPA award by $617,299.42 to $157,441.58. After a hearing, the court denied the plaintiff's request for punitive damages, attorney's fees, and prejudgment interest. The court taxed costs in favor of the plaintiff in the amount of $2340.16. The plaintiff moved to reargue that ruling on April 30, 2010. By memorandum of decision filed November 28, 2011, the court let its rulings on punitive damages and prejudgment interest stand, but awarded the plaintiff $496,051.95 in attorney's fees and an additional $45,000 in costs for the plaintiff's expert witness, Dr. Steven Kursh. To sum up the effect of these series of judgments, the court awarded no damages on the breach of contract count, despite finding for the plaintiff. The court awarded the plaintiff breach of warranty damages of $83,399.82, negligent misrepresentation damages of $5100, and CUTPA damages of $157,441.58, for a total of $245,941.40.2 The court also awarded the plaintiff $496,051.95 in attorney's fees and $47,340.16 in costs. These appeals then followed.
On appeal, VitalWorks claims that the court erred in concluding that the commercial contract provisions governing warranty, the limitation of warranties, and remedies were unenforceable and that various statements preceding the execution of the contract made by salespersons created an express warranty between the plaintiff and VitalWorks. VitalWorks also claims that the court erred in finding misrepresentation and concluding that Connecticut law applies, namely, CUTPA. VitalWorks further claims that there was error in the court's award of $45,000 in expert witness costs and excluding evidence from two defense witnesses regarding their opinions based upon their review of a back-up copy of the software, that the software was functional and most problems encountered were due to the plaintiff's user error.
On appeal, Cerner claims that the court erred by imposing successor liability on it where no party made such an argument before, during, or after trial, the plaintiff failed to plead or prove that Cerner was liable under successor liability principles, and there was insufficient evidence before the court regarding the continuity of enterprise exception to establish successor liability. Cerner also claims that the court erred in concluding that Cerner engaged in trade or commerce in Connecticut within the meaning of CUTPA. Additionally, Cerner claims that the court erred in finding it liable for violating CUTPA where Cerner had no contractual relationship with the plaintiff and the plaintiff failed to establish the nexus between Cerner and Connecticut. Cerner further claims that the court erred by awarding damages to the plaintiff because the plaintiff failed to prove the damages within a reasonable degree of certainty and that the damages were caused by Cerner. Cerner's final claim on appeal is that the court erred in awarding the plaintiff attorney's fees and in its allocation of these fees between Cerner and VitalWorks.
The plaintiff also filed a separate, but related appeal on December 16, 2011. On appeal the plaintiff claims that the court abused its discretion in denying the plaintiff punitive damages, reducing the amount of attorney's fees and refusing to award it certain costs. The plaintiff also claims that the court erred in declining to award it prejudgment interest.
As a preliminary matter we must first address whether the Uniform Commercial Code (UCC), General Statutes §§ 42a-2-101 et seq., applies to the transaction encapsulated in the contract. General Statutes § 42a-2-102 states in relevant part that the UCC ''applies to transactions in goods . . . ." ''Goods'' are defined in General Statutes § 42a-2-105 (1) as ''all things, including specially manufactured goods, which are movable at the time of identification to the contract for sale . . . .'' The contract at the center of this dispute is for the purchase of software licenses, hardware,...
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