146 Conn. App. 169
Conn. App. Ct.2013Background
- Plaintiff Western Dermatology Consultants contracted with VitalWorks to purchase software, hardware, installation, training, and support for a dual-system practice management/EMR setup.
- The contract, signed December 19, 2003 in New Mexico, involved software licensed and hosted in Alabama, with installation and services at plaintiff's New Mexico locations.
- Cerner acquired VitalWorks in January 2006; the trial court found breaches of warranty, negligent misrepresentation, and CUTPA in favor of plaintiff, with damages awarded and other counts denied.
- Court determined the contract is governed by the UCC as a goods transaction and hybrid with services; it applied a merger clause; it limited warranties and limited remedies while addressing asserted express warranties.
- Plaintiff challenged punitive damages, prejudgment interest, and some costs/fees; appellate court ultimately reversed and remanded for judgments in favor of defendants on all counts, while dismissing the plaintiff’s appeal.
- CUTPA claims were determined not to apply due to choice-of-law analysis locating most significant relation to New Mexico; this affected related damages and expert costs awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the UCC applies to the contract | Plaintiff contends UCC does not apply to software licenses and related services. | Defendants argue the contract is a goods transaction within UCC Article Two. | UCC governs the contract as a transaction in goods. |
| Whether contract warranty limitations and alleged pre-contract express warranties are enforceable | Plaintiff asserts warranty limitations are unenforceable and pre-contract statements created express warranties. | Defendants contend only the contract's express warranty controls and parol evidence should not create extra warranties. | Contract language governs; merger clause bars extrinsic express warranties; only the contract's express warranty applies. |
| Whether CUTPA applies and which law governs the CUTPA claim | Plaintiff contends CUTPA applies due to Connecticut choice-of-law and forum provisions. | Defendants argue CUTPA does not apply; New Mexico law governs tort-based unfair trade practices. | CUTPA does not apply; New Mexico law governs the unfair trade practices claim. |
| Whether the expert costs and related fees may be awarded given CUTPA not applicable | Plaintiff seeks expert witness costs under CUTPA provisions. | Costs under CUTPA cannot be awarded absent a CUTPA prevailment. | No expert costs under CUTPA due to CUTPA inapplicability. |
| Whether Cerner is liable under successor liability and CUTPA | Plaintiff asserts successor liability may attach to Cerner for CUTPA violations. | Cerner argues no CUTPA liability due to lack of applicable conduct. | If CUTPA does not apply, Cerner cannot be liable under CUTPA. |
Key Cases Cited
- Latham & Associates, Inc. v. William Raveis Real Estate, Inc., 218 Conn. 297 (1991) (UCC governs hybrid software/real estate contracts; integration issues)
- Bead Chain Mfg. Co. v. Saxton Products, Inc., 183 Conn. 266 (1981) (UCC preemption of common-law contracts where applicable)
- Triangle Underwriters, Inc. v. Honeywell, Inc., 604 F.2d 737 (2d Cir. 1979) (application of UCC to hardware/software contracts; installation context)
- Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479 (2000) (contract interpretation between sophisticated commercial parties; integration clause)
- O’Connor v. O’Connor, 201 Conn. 632 (1986) (lex loci delicti and Restatement approach to choice-of-law; arbitrary result framework)
- Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791 (2003) (choice-of-law factors; most-significant-relationship approach)
- ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (merger clause impact on misrepresentation claims; parol evidence)