Premier, Inc. v. Peterson,
2016 NCBC 39.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF MECKLENBURG 11 CVS 1054
PREMIER, INC.,
Plaintiff,
v.
DAN PETERSON; OPTUM COMPUTING
SOLUTIONS, INC.; HITSCHLER-CERA,
LLC; DONALD BAUMAN; MICHAEL ORDER AND OPINION ON PLAINTIFF’S
HELD; THE HELD FAMILY LIMITED MOTION FOR SUMMARY JUDGMENT
PARTNERSHIP; ROBERT WAGNER;
AND ENTRY OF DECLARATORY
ALEK BEYNENSON; I-GRANT
INVESTMENTS, LLC; JAMES MUNTER; JUDGMENT
GAIL SHENK; STEVEN E. DAVIS;
CHARLES W. LEONARD, III and JOHN
DOES 1-10,
Defendants.
{1} THIS MATTER is before the Court upon Plaintiff Premier, Inc.’s
(“Premier”) Motion for Summary Judgment pursuant to Rule 56 of the North
Carolina Rules of Civil Procedure (the “Motion”) in the above-captioned case.
Having considered the Motion, the briefs in support of and in opposition to the
Motion, the appropriate evidence of record, and the arguments of counsel at the
hearing on the Motion, the Court hereby GRANTS the Motion and ENTERS a
declaratory judgment in favor of Plaintiff as provided herein.
Moore & Van Allen, PLLC, by J. Mark Wilson, for Plaintiff Premier,
Inc.
The Spence Law Firm, LLC, by Mel C. Orchard, III, and Tin, Fulton,
Walker & Owen, PLLC, by Sam McGee, for Defendants 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.
Bledsoe, Judge.
I.
PROCEDURAL AND FACTUAL BACKGROUND
{2} This lawsuit arises out of a dispute concerning unpaid earnout payments
that Defendants allege they were entitled to receive pursuant to a stock purchase
agreement between the parties. Premier filed this lawsuit in 2011 seeking a
declaratory judgment determining that it had not breached the parties’ agreement,
and Defendants filed counterclaims for breach of contract and the recovery of
certain audit expenses and attorneys’ fees. Premier’s Motion seeks summary
judgment on its claim for declaratory relief, as well as on Defendants’
counterclaims.
{3} On September 29, 2006, Premier acquired Cereplex, Inc. (“Cereplex”) by
entering into a Stock Purchase Agreement (the “Agreement”) with Defendants, who
are the former shareholders of and stakeholders in Cereplex. (See Pl.’s Mem. Supp.
Mot. J. on the Pleadings or Summ. J. Ex. 1, hereinafter “Agmt.”.) Cereplex
developed and designed web-based surveillance and analytic services to healthcare
providers through its software products, Setnet and PharmWatch. (Peterson Aff.
Sept. 29, 2011 ¶ 3.) After acquiring Cereplex, Premier developed SafetySurveillor, a
successor product that combined the functionalities of Setnet and PharmWatch into
one software program. (Peterson Aff. ¶ 8.) SafetySurveillor, like its predecessors,
generates automated alerts to notify the user of potential medical problems that
require attention. (Peterson Aff. ¶ 9.) SafetySurveillor’s key features relate to its
ability to (i) facilitate infection prevention by firing alerts to infection control
professionals or other designated medical personnel regarding the potential
existence of clusters or outbreaks of healthcare-associated infections, (Peterson Aff.
¶¶ 5, 9); and (ii) provide configurable pharmacological-related alerts to medical
personnel based on set variables, including high-cost medication, drug
combinations, length of therapy, lab results, and other factors, (Peterson Aff. ¶ 11).
{4} The Agreement provides that Defendants were to receive an annual
earnout payment from Premier (the “Earnout Payment”) each year for five years
following the date of the Agreement. (Agmt. § 2(b)(iii).) The Agreement provides
that the Earnout Payment was to be in “an amount equal to $12,500 for each
Hospital Site where a Product Implementation occurs during the applicable 12-
month period[.]” (Agmt. § 2(b)(iii).)
{5} “Hospital Site” is defined in the Agreement as “an individual hospital,
nursing home, care center or similar facility (and for the avoidance of doubt a single
health care company or hospital group may consist of multiple Hospital Sites).”
(Agmt. § 2(b)(iii).)
{6} “Product Implementation” is defined in the Agreement as:
a Hospital Site that 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), 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.
(Agmt. § 2(b)(iii).)
{7} The Agreement further provides that Defendants were authorized to
conduct an annual audit to verify that Premier was paying the correct Earnout
Payment to Defendants each year. Defendants were responsible for paying the
expenses associated with the annual audit, unless the audit revealed that Premier
had underpaid the required Earnout Amount by more than five percent. (Agmt. §
6(e).)
{8} In order for SafetySurveillor to fire an alert, Premier must have access to
a Hospital Site’s data, which includes protected health information (“PHI”). (Davis
Dep. 14:18–14:23.) According to Defendants, PHI cannot be provided unless express
permission is given from the Hospital Site. (Davis Aff. ¶¶ 3–4.) Generally, Hospital
Site permission comes in the form of a Business Associate Agreement (“BAA”),
which grants permission for a Hospital Site’s PHI to be shared with Premier. (Pope
Dep. 61:23–62:1.) Although Premier enters into BAAs with some individual
Hospital Sites from time to time, more commonly Premier enters into BAAs with
hospital networks that cover the individual Hospital Sites within each network.
(Pope Dep. 63:18–63:23, 64:13–64:22.) Thus, according to Defendants, under
applicable federal regulations, for a Hospital Site to generate an alert, the Hospital
Site must have provided PHI to Premier subject to a BAA. (Pope Dep. 61:23–62:1.)
{9} Between May 2010 and September 2010, Defendant Dan Peterson (“Dr.
Peterson”), the co-founder and former Chief Executive Officer of Cereplex,
conducted a pilot audit so that Defendants could assess Premier’s compliance with
the Earnout Payment obligations under the Agreement. (Peterson Aff. ¶ 23.)
According to Dr. Peterson, his audit “reported on the occurrence of single-event
alerts as a simple and sure way to identify Product Implementations of
SafetySurveillor.” (Peterson Aff. ¶ 26.) A single-event alert refers to the
notification the SafetySurveillor program dispatches to infection control
professionals or other designated medical personnel to identify either (i) the
potential presence of a healthcare-associated infection in a patient who was
discharged from a Hospital Site and later sought medical attention from another
Hospital Site; or (ii) a possible problem with the antibiotic therapy prescribed to a
patient. (Peterson Aff. ¶ 9.)
{10} In conducting the audit, Dr. Peterson discovered that alerts had been fired
from over 1,000 healthcare facilities. (Defs.’ Answer and Countercls. Ex. B.)
According to Dr. Peterson, “[e]ach alert relates to an individual patient and is
specific to the facility at which that patient was seen, and each alert was sent to at
least one clinician who had chosen to be alerted about the event.” (Peterson Aff. ¶
26.) Dr. Peterson also averred that in order for an alert to be fired from a facility,
the SafetySurveillor program must have acquired access to the facility’s patient
data. (Peterson Aff. ¶ 19.)
{11} Dr. Peterson concluded from his audit that Premier had provided
SafetySurveillor to over 1,000 Hospital Sites but had only paid Earnout Payments
based on 263 Hospital Sites under the Product Implementation provision of the
Agreement. (Peterson Aff. ¶¶ 27–28.) Defendants thereafter advised Premier that
Defendants should be paid Earnout Payments based on the use of the
SafetySurveillor product at the Hospital Sites identified in the audit that had used
the product but for whose use Defendants had not been paid (the “Unlisted
Facilities”). (Peterson Aff. ¶ 32.) After Premier refused payment, Defendants
advised Premier that they intended to file suit against Premier for miscalculating
the Earnout Payment and violating the terms of the Agreement. (Davis Dep. 79:13–
79:18.)
{12} Subsequently, on January 19, 2011, Premier filed this action seeking a
declaratory judgment that it had not breached the Agreement. The case was
designated to this Court that same day, and assigned to Judge Calvin Murphy on
January 21, 2011. On April 27, 2011, Defendants filed an answer and
counterclaims for breach of contract and recovery of audit expenses and attorneys’
fees.
{13} On August 30, 2011, Premier filed a motion for judgment on the pleadings
pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure or, in the
alternative, a motion for summary judgment pursuant to Rule 56. This Court
(Murphy, J.) granted summary judgment in favor of Premier on both its declaratory
judgment claim and on Defendants’ counterclaims on December 11, 2012 (“Judge
Murphy’s Order”).
{14} Defendants appealed Judge Murphy’s Order and, on March 4, 2014, the
Court of Appeals issued its opinion resolving Defendants’ appeal (“Court of Appeals’
Opinion”). Premier, Inc. v. Peterson, 232 N.C. App. 601,
755 S.E.2d 56 (2014). The
Court of Appeals reversed Judge Murphy’s Order, concluding that summary
judgment was improperly entered, and remanded the case to this Court for “further
factual development” to determine whether Premier breached the Agreement.
Id.
at 610,
755 S.E.2d at 62.
{15} In reaching its decision, the Court of Appeals specifically interpreted the
phrase “subscribed to or licensed” in the critical provision of the Agreement defining
“Product Implementation,” (Agmt. § 2(b)(iii)), and concluded, as a matter of law, as
follows:
[T]he 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. Defendants simply cannot escape the
fact that the definition of Product Implementation makes clear that it
is the Hospital Site that must “subscribe[] to or license[]” the product.
. . . [T]he mere receipt of SafetySurveillor by a facility is, standing
alone, insufficient to trigger an Earnout Payment under the
Agreement.
Id. at 607, 755 S.E.2d at 60. Consistent with this conclusion, the Court of Appeals
further concluded 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. Finally, the Court of Appeals remanded the
case to this Court, specifically instructing that “further factual development is
necessary to explore what affirmative acts—if any—were taken by the facilities
identified by Defendants to obtain the SafetySurveillor product so that any such
acts can 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.
{16} After remand, the parties submitted a joint Case Management Report on
June 26, 2014 advising that they had agreed that fact discovery would follow a twophased sequence: the first phase to consist of fact witness depositions, and the
second phase to consist of written discovery (the “Sequencing Agreement”).
{17} On June 30, 2014, the Court (Murphy, J.) entered an Amended Case
Management Order (the “CMO”) establishing new deadlines for discovery and
providing that the parties would have through and including November 1, 2014 to
conduct fact discovery as contemplated under the Sequencing Agreement (the
“Initial Fact Discovery Deadline”).
{18} On the evening of October 31, 2014, the day before the Initial Fact
Discovery Deadline was to expire, Defendants served their First Set of
Interrogatories and Requests for Production of Documents. Thereafter, on
November 21, 2014, Premier filed a Motion for Protective Order seeking the Court’s
ruling that Defendants’ discovery requests were untimely under Rule 18.8 of the
General Rules of Practice and Procedure for the North Carolina Business Court
(“Business Court Rule(s)”) because the discovery could not be answered by the
Initial Fact Discovery Deadline.1 Although Defendants had plainly failed to comply
with Business Court Rule 18.8, the Court chose to give great deference to the Court
of Appeals’ directive to permit “fuller development of the factual record” concerning
Premier’s alleged breach, Premier, 232 N.C. App. at 610,
755 S.E. 2d at 62, and
directed Premier by Order dated March 12, 2015 to serve responses to Defendants’
tardy discovery requests. The parties subsequently engaged in extensive written
discovery and related document production.2
{19} Premier timely filed the Motion on December 1, 2015, and briefing was
completed on January 13, 2016. The Court held a hearing on the Motion on
February 26, 2016, and the Motion is now ripe for resolution.
II.
LEGAL STANDARD
{20} Summary judgment is appropriate when the “pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that any party
is entitled to judgment as a matter of law.” N.C. R. Civ. P. 56(c). The moving party
1 Business Court Rule 18.8 provides that “[t]he requirement that discovery be completed within a
specified time means that adequate provisions must be made for interrogatories and requests for
admission to be answered, for documents to be produced, and for depositions to be held within the
discovery period.” BCR 18.8.
2 As the Court noted in its August 26, 2015 order:
Since this case was remanded to this Court, the Court has sought to give full effect to
the Court of Appeals’ directive that this Court provide for “fuller development of the
factual record,” Premier, 755 S.E.2d at 62. In particular, the Court has permitted the
parties to implement the Sequencing Agreement, pursuant to which Defendants
elected to take three fact depositions in October 2014, and, over Plaintiff’s vigorous
objections regarding proper content and scope, has afforded Defendants a full and
fair opportunity to obtain written discovery and over 26,300 pages of documents from
Plaintiff consistent with the Court’s understanding of the instructions contained in
the Court of Appeals Opinion.
(Order Amending Amended Case Management Order (Second Revised) ¶ 11.)
has “the burden of showing there is no triable issue of material fact.” Farrelly v.
Hamilton Square, 199 N.C. App 541, 543, 459 S.E.2d 23, 25–26 (1995).
{21} The movant may meet this burden “by showing either that: (1) an
essential element of the non-movant’s case is nonexistent; or (2) based upon
discovery, the non-movant cannot produce evidence to support an essential element
of its claim; or (3) the movant cannot surmount an affirmative defense which would
bar the claim.” McKinnon v. CV Indus., 213 N.C. App. 328, 332,
713 S.E.2d 495,
499 (2011) (citations and internal quotation marks omitted). In determining
whether this burden has been met, the Court must view the evidence in the light
most favorable to the non-moving party and draw all reasonable inferences in its
favor. Whitley v. Cubberly,
24 N.C. App. 204, 206–07,
210 S.E.2d 289, 291 (1974);
see generally McKee v. James,
2014 NCBC LEXIS 74, at *13–14 (N.C. Super. Ct.
Dec. 31, 2014) (discussing standard).
III.
ANALYSIS
{22} The Agreement unambiguously provides that an annual Earnout Payment
shall be paid to Defendants in “an amount equal to $12,500 for each Hospital Site
where a Product Implementation occurs.” (Agmt. § 2(b)(iii).) The Agreement further
provides, in part, that a Product Implementation “means a Hospital Site that has
(A) subscribed to or licensed the [SafetySurveillor product]. . . .” (Agmt. § 2(b)(iii).)
{23} As noted above, the Court of Appeals concluded 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” for a Product
Implementation to occur. Premier, 232 N.C. App. at 607,
755 S.E.2d at 60. The
Court specifically rejected Defendants’ contention that the “subscribed to or
licensed” language could be “satisfied simply by virtue of Premier’s provision of the
SafetySurveillor product to a facility,” and instead held that “it is the Hospital Site
that must ‘subscribe[] to or license[]’ the product,”
id., because “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.
Having reached that conclusion, the Court of Appeals instructed that further
factual development be permitted in this Court to “explore what affirmative acts—if
any—were taken by the facilities identified by Defendants to obtain the
SafetySurveillor product so that any such acts can 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 (emphasis added).
{24} The Court concludes that the Court of Appeals’ interpretation of the
Agreement is binding on this Court under the law of the case doctrine. This wellestablished doctrine provides that “when an appellate court passes on a question
and remands the cause for further proceedings, the questions there settled become
the law of the case . . . in subsequent proceedings in the trial court.” Bank of Am.,
N.A. v. Rice, 780 S.E.2d 873, 880 (N.C. Ct. App. 2015) (quoting Hayes v. City of
Wilmington,
243 N.C. 525, 536,
91 S.E.2d 673, 681–82 (1956)). The doctrine applies
to “points actually presented and necessary to the determination of the
case,”Condollene v. Condollene,
137 N.C. App. 547, 551,
528 S.E.2d 639, 642 (2000),
and requires that “[n]o judgment other than that directed or permitted by the
appellate court may be entered.” D & W, Inc. v. City of Charlotte,
268 N.C. 720,
722,
152 S.E.2d 199, 202 (1966). As a result, “[o]n the remand of a case after
appeal, the mandate of the reviewing court is binding on the lower court, and must
be strictly followed, without variation and departure.” Couch v. Private Diagnostic
Clinic,
146 N.C. App. 658, 667,
554 S.E.2d 356, 363 (2001) (citations and quotation
marks omitted), disc. rev. denied and appeal dismissed,
355 N.C. 348,
563 S.E.2d
562 (2002). Accordingly, based on the Court of Appeals’ interpretation of the
Agreement, it is the law of this case that for a Product Implementation to occur
under the Agreement, a Hospital Site must have taken some affirmative act to
obtain the SafetySurveillor product.
{25} Much of Defendants’ opposition to Premier’s’ Motion, however, is premised
on Defendants’ contention that the Court of Appeals mistakenly interpreted the
“subscribe to or license” language in the Agreement and misunderstood how the
SafetySurveillor product was purchased, implemented, and used in actual practice.
(Defs.’ Br. Opp. Mot. Summ. J. 4.) In particular, Defendants argue that
SafetySurveillor was marketed and sold to hospital systems, not individual facilities
or Hospital Sites within those systems, and that the subscription agreements for
the product were entered between Premier and the hospital systems or networks,
not with the individual facilities or Hospital Sites. (Defs.’ Br. Opp. Mot. Summ. J.
4.) As a result, Defendants argue that the Agreement should be read as providing
that a Product Implementation occurs not only when the Hospital Site takes an
affirmative act to obtain the SafetySurveillor product, but also when someone
acting on behalf of the Hospital Site takes an affirmative act to obtain the product.
(Defs.’ Br. Opp. Mot. Summ. J. 19–22.) Construing the Agreement in this fashion,
Defendants argue that they have brought forward evidence showing that
affirmative acts were taken on behalf of the Unlisted Facilities to obtain the
SafetySurveillor product sufficient to defeat Premier’s Motion.
{26} The Court is not persuaded. First, it is undisputed that Defendants have
not brought forward evidence showing that any Unlisted Facility took affirmative
acts to obtain the SafetySurveillor product. For example, Dr. Peterson
acknowledged this lack of evidence at his deposition:
Q: So as we sit here today, you have no evidence to show that any of
the thousand plus entities for which you believe you’re entitled to an
earnout have taken any affirmative acts on their own to subscribe to or
license the SafetySurveillor product, correct?
...
A: At this very preliminary point, I do not have that.
(Peterson Dep. 15:13–15:24.)
Q: As you sit here today, you have no facts to show that any of the
entities for which you’re claiming you are owed an earnout have agreed
to utilize the services of SafetySurveillor, correct?
A: Correct.
(Peterson Dep. 22:2–22:7.) Defendants offer no evidence to the contrary from any
other Defendant, and likewise have not offered any evidence from any third party,
including from any of the Unlisted Facilities.
{27} Unable to proffer specific evidence that any Unlisted Facility took
affirmative acts to obtain the Safety Surveillor product, Defendants point to four
alleged “affirmative acts” made on behalf of the Unlisted Facilities that Defendants
contend create a genuine issue of material fact as to whether a Product
Implementation occurred.
{28} First, Defendants contend that a hospital network’s entry into a BAA with
Premier on behalf of an individual Unlisted Facility constitutes an affirmative act
by that Facility because under federal law a BAA must be in place for a Facility to
send PHI to Premier. Defendants, however, have presented no evidence that a BAA
existed between any Unlisted Facility and Premier. The Court concludes that
evidence of a legal requirement requiring a BAA between Premier and the hospital
networks is not evidence of an affirmative act taken by an Unlisted Facility, as
required under the Court of Appeals’ interpretation of the Agreement.
{29} Similarly, Defendants next argue that an affirmative act occurred each
time an Unlisted Facility sent PHI to Premier because of the legal requirement that
such information could not be transferred without a BAA between Premier and the
hospital networks covering the Facility. Again, however, Defendants do not offer
any evidence that any Unlisted Facilities (rather than the hospital networks)
actually sent PHI to Premier, and, in any event, the Court concludes that any such
evidence does not demonstrate an affirmative act taken by an Unlisted Facility as
required under the Agreement.
{30} Defendants also contend that the creation of an alert by an Unlisted
Facility constitutes an affirmative act because it demonstrates that the Facility has
requested that an infection preventionist at the Facility receive an alert.
Defendants, however, have presented no evidence showing that any of the Unlisted
Facilities actually set up alerts, requested alerts, were ever sent an alert, or were
aware that alerts were generated by SafetySurveillor. Moreover, even if an
infection preventionist set up alerts for a Facility, Defendants have presented no
evidence that the infection preventionist’s action was actually taken by the Facility,
rather than simply by the infection preventionist himself or for another entity. As
such, Defendants’ evidence does not show an affirmative act taken by an Unlisted
Facility under the Court of Appeals’ Opinion.
{31} Finally, Defendants argue that the hospital networks should be deemed
the agents of the Unlisted Facilities and that, therefore, the acts taken by the
networks on behalf of the Facilities constitute acts of the Facilities themselves. The
Court finds Defendants’ argument without merit. First, Defendants did not plead
agency in their answer or counterclaims, did not raise the issue in their opposition
brief, and asserted the argument for the first time at the hearing on the Motion.
Regardless, Defendants have not presented any evidence of the existence of an
agency relationship between any of the hospital networks and any of the Facilities.
“An agency relationship arises when parties manifest consent that one shall act on
behalf of the other and subject to his control.” Bauer v. Douglas Aquatics, Inc., 207
N.C. App. 65, 74,
698 S.E.2d 757, 764 (2010) (internal quotation marks and citation
omitted). In particular, Defendants have presented no evidence that any Facility or
any hospital network manifested consent that the network would act as an agent on
behalf of the Facility and under the Facility’s control. As a result, Defendants’
agency argument is unavailing at this stage of the litigation. See Smock v.
Brantley,
76 N.C. App. 73, 75,
331 S.E.2d 714, 716 (1985) (citation omitted) (when
there is no evidence tending to prove an agency relationship, the existence of agency
is a question of law for the Court).
{32} In sum, despite ample opportunity to develop a more complete factual
record, Defendants have failed to bring forward evidence that any of the Unlisted
Facilities took “affirmative acts . . . to obtain the SafetySurveillor product.”
Premier, 232 N.C. App. at 610,
755 S.E.2d at 62. Because the Court of Appeals has
concluded that “the Agreement requires some affirmative act by a Hospital Site to
subscribe to or license the SafetySurveillor product in order for Product
Implementation to occur,”
id., Defendants cannot show that there was a Product
Implementation at any Unlisted Facility. Because Earnout Payments are only due
under the Agreement for a Product Implementation, the Court concludes that no
Earnout Payments are due for use of the SafetySurveillor product at any Unlisted
Facility.
{33} Premier also seeks summary judgment on the basis that Defendants have
failed to offer evidence showing that (i) any of the Unlisted Facilities met the
definition of a “Hospital Site” under the Agreement and (ii) that any Unlisted
Facility “completed any applicable implementation, configuration and testing of the
product so that the product is ready for production use.”3 Defendants counter
Premier’s first argument by contending that “a simple google search of the locations
listed by Dr. Peterson easily resolves” whether the “facilities constitute Hospital
Sites.” (Def. Br. Opp. Mot. Summ. J. 12 n.2). While the Court declines Defendants’
invitation to perform over 1,000 Google searches, the Court is satisfied that
Defendants have offered enough evidence, through Google search and otherwise, to
create at least a genuine issue of material fact as to whether some or all of the
Unlisted Facilities constitute “Hospital Sites” under the Agreement.
{34} As to Premier’s second argument, however, the Court finds that
Defendants have largely offered evidence and arguments that ineluctably rest on
the theory expressly rejected by the Court of Appeals that receipt of an alert
equates to an affirmative act and thus a Product Implementation. Premier, 232
N.C. App. at 607,
755 S.E.2d at 60 (“[T]he mere receipt of SafetySurveillor by a
facility is, standing alone, insufficient to trigger an Earnout Payment under the
Agreement.”). As a result, the Court concludes that Premier’s Motion should also be
granted based on Defendants’ failure to bring forward evidence that any Unlisted
Facility “completed any applicable implementation, configuration and testing of the
product so that the product is ready for production use” as required under the
Agreement.
{35} Based on the above, the Court concludes that Premier is entitled to the
entry of a declaratory judgment finding that Premier has not violated Defendants’
3 The “Product Implementation” definition in the Agreement includes a Hospital Site that has “(B)
completed any applicable implementation, configuration and testing of the product so that the
product is ready for production use by the Hospital Site.” (Agmt. § 2(b)(iii).)
rights to receive Earnout Payments under the Agreement for alleged Product
Implementations at the Unlisted Facilities and that, as a result, dismissal of
Defendants’ counterclaims with prejudice is proper.
IV.
CONCLUSION
{36} Accordingly, the Court hereby GRANTS Premier’s Motion and ORDERS
as follows:
i. Defendants’ counterclaims for breach of contract, attorneys’ fees,
and recovery of audit expenses are hereby DISMISSED with
prejudice.
ii. The Court hereby enters judgment for Premier on Premier’s claim
for declaratory judgment.
{37} It is, therefore, ORDERED, ADJUDGED, and DECREED that Premier
has not violated Defendants’ rights to receive Earnout Payments under the
Agreement for alleged Product Implementations at the Unlisted Facilities or
otherwise violated any purported rights of Defendants as alleged by Defendants in
this action.
SO ORDERED, this the 13th day of May, 2016.
/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Special Superior Court Judge
for Complex Business Cases
