407 F.Supp.3d 98
D. Conn.2019Background
- ACM (Florida investment adviser) contracted with SS&C (Connecticut software provider) to implement SS&C’s CAMRA system; the Master Agreement was signed December 19, 2014 and terminated by ACM May 1, 2017 after implementation failures.
- The Master Agreement contained a merger clause, broad disclaimer of warranties, an exclusion of consequential damages, and a no-third-party-beneficiaries clause concerning ARMOUR Residential and Javelin.
- ACM paid SS&C implementation fees and contends it also incurred substantial employee labor costs (≈5,000+ hours, claimed ≈$1.4M) implementing CAMRA; ARR and Javelin reimbursed ACM for the fees.
- ACM sued for breach of contract, negligent misrepresentation, CUTPA violations, and rescission (intentional misrepresentation claim previously dismissed).
- SS&C moved for summary judgment on all remaining claims; the court evaluated the interplay of the merger clause, actionability of pre‑contract statements, the collateral‑source issue for contract damages, and the contract’s consequential‑damages exclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the merger clause bars a negligent‑misrepresentation claim | Merger clause does not bar negligent misrep induced contract; reliance was reasonable | Merger clause supersedes and precludes reliance on pre‑contract statements | Court: Merger clause does not categorically preclude negligent misrep; question for trial (deny SJ) |
| Whether the pre‑contract statements are actionable misrepresentations | Statements about CAMRA’s capabilities and implementation were false and induced ACM | Many statements were non‑actionable puffery, indefinite or true | Court: Actionability is factbound; deny SJ and leave to jury |
| Whether ACM may recover fees paid to SS&C given ARR/Javelin reimbursements (collateral source) | Collateral‑source rule should allow ACM to recover despite reimbursements | ACM was fully reimbursed; collateral‑source inapplicable to this contract context; no double recovery allowed | Court: Collateral‑source likely does not apply here; ACM made whole for fees; grant SJ on contract claim as to fees |
| Whether lost employee time is recoverable under contract given consequential‑damages exclusion | Lost employee time is direct reliance damages, recoverable | Lost employee time is consequential/indirect and expressly excluded by contract | Court: Lost employee time is consequential and barred by the exclusion; grant SJ as to those damages |
Key Cases Cited
- FIH, LLC v. Found. Capital Partners LLC, 920 F.3d 134 (2d Cir.) (merger‑clause effect on contractual obligations)
- Gibson v. Capano, 241 Conn. 725 (Conn. 1997) (merger clause does not automatically bar misrepresentation claims in some negligent contexts)
- Warman v. Delaney, 148 Conn. 469 (Conn. 1961) (seller misrepresentations can support damages despite written agreement in some circumstances)
- Hull v. Fonck, 122 Conn. App. 286 (Conn. App. 2010) (Appellate Court precedent declining to treat merger clause as categorical bar to negligent misrep)
- Western Dermatology Consultants, P.C. v. VitalWorks, Inc., 146 Conn. App. 169 (Conn. App. 2013) (Appellate Court held merger clause precluded negligent misrep claim; discussed but distinguished)
- St. Bernard Sch. of Montville, Inc. v. Bank of Am., 312 Conn. 811 (Conn. 2014) (discussion of collateral‑source rule application)
- Haynes v. Yale‑New Haven Hosp., 243 Conn. 17 (Conn. 1997) (policy considerations underpinning collateral‑source rule in torts)
- Ambrogio v. Beaver Road Assocs., 267 Conn. 148 (Conn. 2003) (direct vs. consequential damages framework in contract law)
- Chatlos Sys., Inc. v. Nat’l Cash Register Corp., 635 F.2d 1081 (3d Cir.) (lost employee time classified as consequential damages)
- Dominion Resources, Inc. v. Alstom Power, Inc., 825 S.E.2d 752 (Va. 2019) (discussion of collateral‑source and circumstances where it may apply)