CareOne Management, LLC, et al. v. NaviSite, Inc. (Lawyers Weekly No. 12-043-17)

These consolidated lawsuits arise from the agreement by NaviSite, Inc., to develop and provide information technology services to CareOne Management, LLC and its affiliate Partners Pharmacy Services, LLC. NaviSite first contracted to provide an array of computerized services to CareOne. Several months later NaviSite contracted to provide a much more limited set of information technology services to Partners. After difficulties and disputes regarding implementation of its contract with CareOne, NaviSite threatened to and then did terminate both contracts.
CareOne and Partners asserted various claims against NaviSite, which in turn sued CareOne. (NaviSite also sued Partners, but Judge Sanders dismissed those claims.) NaviSite and CareOne both move for summary judgment; NaviSite does so on all claims while CareOne’s motion is limited to NaviSite’s claims against it.
The Court concludes that CareOne is entitled to summary judgment on the claims asserted against it by NaviSite, and that NaviSite is entitled to summary judgment on all claims asserted against it by CareOne and Partners. Final judgment will enter declaring the rights of the parties, with respect to the issues in controversy that CareOne and Partners identified in their claim for declaratory judgment, and dismissing all other claims with prejudice.
1. Background.
1.1. Undisputed Material Facts. The following are undisputed facts, as demonstrated in the evidentiary materials submitted by the parties or reasonable
inferences that one could draw from those facts. The Court “must … draw all reasonable inferences” from the evidence presented “in favor of the nonmoving party,” as a jury or judicial fact finder would be free to do at trial. Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). It has done so.
CareOne manages dozens of nursing homes. Partners operates commercial pharmacies that serve patients at more than 500 nursing homes, including those run by CareOne. These two companies are separate legal entities, though both were founded and are run by the same person.
CareOne retained NaviSite in September 2012 to develop, implement, host, and operate new computing services to be used at all of CareOne’s nursing facilities. The system design was to include “virtual desktops” through which CareOne employees could access programs, applications, and data that NaviSite would host on servers located at its facilities. It also included other computer services that would be implemented and hosted by NaviSite. NaviSite agreed that it would transition CareOne from its current IT vendor and begin providing the agreed upon services using NaviSite’s servers no later than January 1, 2013. The parties also agreed that CareOne would pay NaviSite certain upfront fees, but that the majority of the fees were to be billed and paid on a monthly basis for each component service after CareOne accepted delivery of that service. CareOne paid NaviSite roughly $ 580,000 in upfront charges upon signing of the parties’ contract.
The contract between CareOne and NaviSite consists of a number of interrelated documents that were executed at the same time. These parties executed a Master Statement of Work (“SOW”) that described many of the services that NaviSite agreed to provide through a “Third Party Provider.” They also executed a Master Services Agreement” (“MSA”). The SOW provided that it “is governed by and incorporates by reference, the terms and conditions of the” MSA. And these parties executed three detailed “Schedules” providing that NaviSite would provide CareOne with managed hosting services, managed messaging services, and cloud-enabled desktop as a service. These Schedules state that they are incorporated into and part of the MSA. Finally, at the same time these parties executed two sales orders in which
CareOne agreed to pay certain one-time and monthly fees for the managed hosting services. The sales orders state that they are subject to the terms of the MSA.
In November 2012 and December 2012 CareOne and NaviSite executed three more sales orders for email services and for the migration of CareOne’s existing email and SharePoint systems to NaviSite’s servers. These sales orders all state that they are subject to the terms of the MSA.
Separately, in November 2012 Partners and NaviSite executed a sales order for a Citrix production environment. This sales order originally designated CareOne as the purchaser, but it was revised by hand to change the purchaser to Partners. This sales order contains the same language as the others stating that it is subject to the terms and conditions of the MSA between CareOne and NaviSite. Partners admits, in the statement of facts regarding Partners’ claims, that by executing this sales order Partners “consented to the standard terms and conditions in the NaviSite/CareOne Master Services Agreement … as they pertained to Partners … as the ‘Customer’ .”
NaviSite’s work for Partners went fine. NaviSite delivered the implemented the promised services. Partners paid all required up-front fees and was paying all the agreed upon monthly fees.
In contrast, NaviSite’s work for CareOne went poorly. The SOW between these parties provided that NaviSite was to begin hosting and providing CareOne’s computer services no later than January 1, 2013. That did not happen. Implementation of the promised services was repeatedly delayed. Who caused or was responsible for the delays is in dispute. NaviSite blames CareOne and vice versa.
On January 31, 2013—one month after the due date—NaviSite sent an email asking CareOne to accept four of the promised systems. CareOne responded immediately, stating it “cannot accept this environment in its current state” because the computer systems were purportedly incomplete, had not been fully tested, and could not be used by CareOne. As a result CareOne refused to pay NaviSite’s first monthly invoice for January 2013.
NaviSite never sent CareOne any other notice stating that any part of the project was complete and ready for acceptance by CareOne. In April, June, and
August 2013 NaviSite made available test versions of many but not all of the services it had contracted to provide. CareOne informed NaviSite that it had discovered material problems with all of them. CareOne never accepted any of those services and never used them for any purpose other than acceptance testing.
After CareOne refused to pay the January 2013 invoice and rejected the first four services, the parties had further discussions about what it would take for NaviSite to finish implementing the project. CareOne and NaviSite negotiated the only amendment to their contract, which they executed on February 28, 2013. The amendment was called Amendment Number One to the MSA.
The Amendment provided as follows. CareOne agreed to pay NaviSite’s first monthly invoice, for the month of January 2013, by March 31, 2013. In turn, NaviSite agreed that CareOne would receive a credit of twice that amount that would be applied against CareOne’s monthly invoices in months 34, 35, and 36 of the MSA’s term. NaviSite also agreed to deliver an Active Directory Synchronization solution to CareOne by March 3, 2013. The Amendment stated that all terms and conditions of the MSA remained in effect except as otherwise provided in the Amendment.
CareOne paid NaviSite’s monthly invoice for January 2013 as agreed in Amendment Number One; that payment was in the amount of $ 365,169.30. CareOne also paid NaviSite’s invoices for February, March, and April 2013; the payments for those three invoices totaled just over $ 2 million,1 which means that CareOne paid some $ 2.4 million to NaviSite for these four monthly invoices. Thus, including the roughly $ 580,000 in upfront payments made when the contract was first executed, CareOne has paid NaviSite almost $ 3 million.
NaviSite submitted invoices for later months, but CareOne did not pay them. NaviSite was aware that CareOne refused to pay and was disputing the invoices issued after April 2013 because CareOne had still not received or accepted the services that CareOne was billing for.2
1 The summary judgment record shows that CareOne paid $ 587,894 on March 7, 2013, $ 725,438.60 on June 10, 2013, and $ 730,338.60 on June 21, 2013. This is more than what CareOne alleged in ¶ 102 of its amended complaint.
2 NaviSite’s understanding of these facts is confirmed in an internal email circulated within NaviSite on September 5, 2013.
In November 2013 CareOne informed NaviSite that it intended to terminate their Agreement for non-performance and sought to negotiate an orderly transition. NaviSite responded five days later by demanding $ 2.2 million as payment for its monthly invoices for April through September 2013. NaviSite said that if it did not receive payment of that amount within five days it would terminate all services it was providing to Partners.
After Partners successfully migrated its services from NaviSite to another provider, NaviSite finally terminated the contract and stopped providing any services to CareOne or Partners on January 24, 2014.
1.2. Relevant Contract Terms. The Court must construe the parties’ written contracts. Neither side appears to claim that any of the relevant contract documents is ambiguous. “If a contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.” Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002). “Whether a contract is ambiguous is also a question of law.” Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007). The Court concludes that the contract documents are unambiguous.
1.2.1. The Original Contract Documents. The parties agreed to allocate the risk of non-performance by NaviSite in several ways that are relevant to the pending claims and counterclaims. This allocation of risk is reflected in terms of the MSA that was executed by CareOne and NaviSite and accepted by Partners when it executed its sales order.
NaviSite agreed to bear much of the risk that it may not be able to deliver systems acceptable to CareOne, by agreeing to accept most of its compensation in the form of monthly recurring payments that would not be due for any service until it was accepted. The contract provides (in MSA §§ 3.1 and 3.3) that NaviSite was not entitled to invoice, and CareOne had no obligation to pay, monthly recurring fees for any service provided by NaviSite until after CareOne had accepted that particular service. NaviSite was required to send CareOne a “Completion Notice” as to each service once it had been fully implemented and was ready for use by CareOne. CareOne would then have ten days to test the service to determine whether it conformed to the agreed-upon specifications. If CareOne notified NaviSite that the
service did not conform to the specifications, then NaviSite would have to use commercially reasonable efforts to fix the problem and submit a new Completion Notice when the service was ready for use. CareOne only had to begin paying the monthly charge for a service if it accepted the service after having received a Completion Notice, or if was deemed to have done so because it did not respond to a Completion Notice within ten days or used the service for purposes other than acceptance testing after receiving a Completion Notice.
CareOne and Partners, in turn, agreed to bear most of the remaining risk that NaviSite might breach its contractual obligations. The MSA placed clear limits on CareOne’s and Partners’ remedies and NaviSite’s liability for any breach of contract.
The contract limits the remedies available to CareOne and Partners for any breach of contract by NaviSite. As relevant here, § 6.4 of the MSA provides that if NaviSite were to breach the contract then CareOne’s or Partners’ “sole and exclusive remedy, and NaviSite’s sole and exclusive liability,” would be as follows: (1) CareOne or Partners could give NaviSite notice of the breach, which would trigger a contractual obligation by NaviSite to work diligently to cure the breach at its expense; (2) CareOne or Partners could obtain a credit against monthly recurring fees for any services affected by the breach of contract; or (3) CareOne or Partners could terminate the contract for any uncured material breach, which would cut off any further obligations by CareOne and Partners to make any payments or doing anything else under the contract.3 The right to terminate the contract for an uncured material breach by the other side is spelled out in MSA § 7.4, which provides that a party could only terminate for an uncured material breach after giving the other side written notice of the claimed breach and at least thirty days to cure the breach.
The contract further limits NaviSite’s potential liabilities in several ways. Section 6.3 bars any claim that NaviSite breached any kind of implied warranty, by specifying that NaviSite did not make and expressly disclaimed any implied warranty of any kind. And § 9.1 provides that neither NaviSite, CareOne, nor Partners shall
3 CareOne and Partners also had the right to seek indemnification of any liability owed to a third-party, to the extent provided under the MSA. No third-party liability is at issue here.
be liable “for any indirect, consequential incidental, special or punitive damages—including, without limitation, loss of use, interruption of business, loss of data or loss of profits—arising out of, or in any way connected with” the parties’ contract.
In addition, the parties agreed to an allocation of the risk that CareOne or Partners might commit a material breach of the contract. Section 7.4 specifies that the failure by CareOne or Partners to pay amounts owed when due would be a material breach, and that NaviSite could terminate the contract if CareOne or Partners failed to make payment after being asked or failed to cure any other material breach. This section also contains an acceleration clause providing that if NaviSite were to terminate a schedule or the whole contract because of an uncured material breach by CareOne or Partners, then the Customer (CareOne or Partners) would have to pay all monthly fees that would have been due through the end of the contract term. The same right to accelerated payment of all monies owed under the contract would also apply if CareOne or Partners terminated the contract in a manner not expressly permitted (e.g., if it terminated for a non-material breach by NaviSite or terminated without giving NaviSite thirty days to cure any material breach). NaviSite has the right (per MSA § 3.2) to be reimbursed for any fees and costs it incurs to collect amounts owed to it under the contrary.
The parties also agreed in MSA § 10.14 that neither side would waive any right under the contract by failing to enforce any provision of it, and that contractual waivers would only be effective if made in writing.
1.2.2. Amendment Number One. The one contract amendment modified the “Completion Notice” requirement and process of the MSA only with respect to NaviSite’s first monthly invoice, which was for January 2013. CareOne agreed to pay that invoice, in exchange for receiving a credit of twice that amount that it could redeem later, even though it had not yet accepted the relevant services.
Nothing in the Amendment eliminated the Completion Notice requirements as a condition precedent to receiving any later monthly payments. That is the only reasonable interpretation of the plain language of Amendment Number One. The Amendment says nothing about eliminating the Completion Notice provisions of the MSA with respect to any monthly invoice for periods after January 2013, or about
CareOne agreeing to pay any other monthly invoices. And the Amendment specifies that, “[e]xcept as provided in this Amendment No. 1, all of the terms and conditions of the Agreement shall remain in full force and effect.”
If the Amendment were ambiguous in this regard, which it is not, then undisputed parol evidence regarding the parties’ negotiations would confirm that the Amendment was not intended to eliminate the condition that CareOne accept each service before having to pay monthly fees for it. In negotiating a possible contract amendment, NaviSite had asked CareOne to commit to timely payment of all future monthly invoices. In response, CareOne’s CTO informed NaviSite that CareOne would not sign the proposed amendment if that meant that CareOne was accepting delivery.4 Five days later NaviSite responded by agreeing to revise the proposed amendment to specify that it did not supersede the MSA.
2. NaviSite’s Claims against CareOne. The Court concludes that CareOne is entitled to summary judgment in its favor on NaviSite’s claims and identical counterclaims for breach of contract and violation of G.L. c. 93A.
2.1. NaviSite’s Contract Claim against CareOne. NaviSite claims that CareOne committed a material breach of the parties’ contract by refusing to pay any monthly invoice for periods after April 2013, that NaviSite had the right under MSA § 7.5 to terminate its contract with CareOne because of this uncured material breach, and that NaviSite is therefore entitled under MSA §§ 3.2 and 7.5 to collect all unpaid amounts owed by CareOne through the effective date of the termination, plus all fees that would have been due under the contract through the end of the contract term, plus all legal fees and costs incurred by NaviSite to collect what it is owed.
CareOne is entitled to summary judgment in its favor on this claim because the undisputed facts indicate that NaviSite never complied with a contractual condition precedent to being able to bill and get paid for the disputed monthly fees. Parties to a contract are free to agree that certain events must occur before one of the parties must carry out some contractual obligation; in law-speak such provisions are
4 The email states: “Please give me a call. Tying the deal of accept delivery now in order to begin invoicing to timely payments is not going to work for us. We will probably have to go back to leaving it as the original then.”
called “conditions precedent.” See generally Massachusetts Mun. Wholesale Elec. Co. v. Town of Danvers, 411 Mass. 39, 45 (1991) (“MMWEC”).
The contract expressly provided (in MSA § 3.1) that NaviSite was not entitled to bill CareOne monthly fees for any service provided by NaviSite until after “Acceptance” of that service by CareOne. Section 3.3 defines a specific process for NaviSite to seek and obtain Acceptance of a service: it had to send a “Completion Notice” informing CareOne in writing that a service has been implemented and is ready for use, and give CareOne ten days to test the service and decide whether to accept or reject it. The summary judgment record shows that NaviSite only sent one Completion Notice, in January 2013, which CareOne promptly rejected. NaviSite never sent another Completion Notice and never obtained Acceptance from NaviSite as that term is define in the contract.
CareOne has no contractual obligation to pay past or future monthly invoice amounts because NaviSite never sought or obtained Acceptance of the services that NaviSite had agreed to provide. Since NaviSite had no contractual right to start billing for those services, it cannot compel CareOne to pay any amount for those services. And, of course, since NaviSite is not entitled to collect any unpaid amounts from CareOne it is also not entitled to collect any legal fees or costs.
NaviSite argues that the MSA did not make Acceptance by CareOne a condition precedent because the contract does not expressly refer to Acceptance as a “condition precedent” or use other sufficiently “emphatic” language to do so. This argument is without merit.
A contract imposes a condition precedent if the contract as a whole makes clear that was the parties’ intent; no particular wording or emphasis is required. MMWEC, supra, at 46 (“[E]mphatic or precise words are not absolutely necessary to create a condition. … In the absence of the usual words, a condition precedent may nonetheless be found to exist if the intent of the parties to create one is clearly manifested in the contract as a whole.”).
Here, the parties agreed (in MSA § 3.1) that NaviSite could only send invoices for monthly fees “beginning on Acceptance of the applicable Services.” That made acceptance a condition precedent to CareOne’s obligation to pay for a service.
Where a contract provides that a party must make payment for services or goods that are accepted or approved, either by the party or by an agreed-upon third-party like an architect, the acceptance or approval is a condition precedent to any duty to make the payment. See F&W Welding Service, Inc. v. ADL Contracting Corp., 587 A.2d 92, 97-98 (1991) (acceptance was condition precedent in contract providing that payment was due within thirty days of acceptance of work); Restatement (Second) of Contracts § 226, illustration 2 (1981) (“A, a tenant of B, promises to pay $ 1,000 for ‘such repairs as an architect appointed by B shall approve.’ The appointment by B of an architect and the architect’s approval of repairs are conditions of A’s duty to pay for repairs.”)
NaviSite also argues that CareOne agreed in the contract amendment to begin paying monthly recurring fees. As discussed above in § 1.2.2 of this decision, that assertion is incorrect. What CareOne agreed to do in the Amendment was to pay the “first monthly recurring invoice for January 2013.” Nothing in the Amendment says that Care Once was agreeing to pay any subsequent monthly recurring fees on services it had not yet accepted. To the contrary, the Amendment specifies that all terms and conditions of the MSA—which necessarily includes the condition precedent of Acceptance—remain in effect except as provided in the Amendment.
Finally, NaviSite asserts that CareOne waived the condition precedent by paying the February, March, and April 2013 invoices without waiting for a Completion Notice and without any Acceptance of the relevant services by CareOne. This argument also fails. The parties agreed by contract (in MSA § 10.14) that “[no failure to … enforce any provision” of the contract “shall be construed as a future waiver” of that provision. Such a “no waiver” provision is enforceable. See Amerada Hess Corp. v. Garabedian, 416 Mass. 149, 154-155 (1993).
2.2. NaviSite’s Chapter 93A Claim against CareOne. NaviSite also claims that CareOne refused to pay what it owed under the contract, tried to “leverage” this breach to pressure NaviSite to renegotiate the terms of the deal, and thereby committed an unfair trade practice in violation of G.L. c. 93A, § 11.
Since NaviSite’s claim under c. 93A is based solely on and thus “is wholly derivative of” its claims for breach of contract, and the summary judgment record
shows that NaviSite’s contract claim is “legally unsupportable,” CareOne is entitled to summary judgment on the c. 93A claim as well. See Frohberg v. Merrimack Mut. Fire Ins. Co., 34 Mass. App. Ct 462, 465 (1993); accord Private Lending & Purchasing, Inc. v. First American Title Ins. Co., 54 Mass. App. Ct. 532, 539-540 (2002).
3. CareOne’s Claims against NaviSite. The Court concludes that NaviSite is entitled to summary judgment in its favor on all of CareOne’s claims against it.
3.1. Breach of Contract Claims. CareOne claims in Counts 1 and 6 of its amended complaint that NaviSite breached its express contractual obligations by terminating the contract instead of curing its non-performance, and that NaviSite breached the implied covenant of good faith and fair dealing by threatening to terminate its services to Partners in an attempt to pressure CareOne into paying money NaviSite had not earned. CareOne seeks actual damages (apparently meaning repayment of all amounts CareOne had paid to NaviSite) and consequential damages.
NaviSite is entitled to summary judgment on these claims because they are barred by the express contractual limitations on CareOne’s remedies and NaviSite’s liability.5 As explained above in § 1.2.1, CareOne agreed that its remedies for a breach of contract by NaviSite would be limited to seeking a cure of any breach, obtaining a credit against future monthly payments owed under the contract, or terminating the contract and thereby cutting off any further liability to NaviSite. Since CareOne expressly waived any right to seek actual or consequential damages from NaviSite for any breach of contract, NaviSite is entitled to judgment in its favor on these contract claims as a matter of law.
CareOne’s insistence that NaviSite was not ready, willing, and able to perform its obligations under the contract is beside the point. True, NaviSite could not prevail on a claim that CareOne breached the contract if NaviSite were unable to demonstrate that it was ready, willing, and able to perform its parts of the contract. Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 690 (2016); Singarella v. City of Boston, 342 Mss. 385, 387 (1961). But, in the absence of a claim and proof of fraud in
5 The Court reads NaviSite’s legal memoranda as arguing that both of CareOne’s contract claims are barred by the contractual limitations on remedies and liability, and arguing in the alternative that there are additional reasons why CareOne’s implied covenant claim fails as a matter of law.
the inducement that would render the whole contract voidable—which have not been made or proffered in this case—the contractual limitations on CareOne’s remedies and NaviSite’s liability would be enforceable even if NaviSite’s alleged breach of contract came about because it was not able to perform. See Canal Elec. Co. v. Westinghouse Elec. Corp., 406 Mass. 369, 372-375 (1990) (limitation of liability provision in contract between sophisticated commercial entities held enforceable even if exclusive remedy of cure failed of its essential purpose, as parties apparently stipulated); S.M. Wilson & Co. v. Smith Int’l, Inc., 587 F.2d 1363, 1372-1375 (9th Cir. 1978) (limitation of liability provision enforceable even though defendant could not repair machine and thus was unable to perform) (applying California law). The whole point of MSA §§ 6.4 and 9.1 was to limit NaviSite’s liability should it be unable to perform. CareOne cannot avoid the bite of terms it voluntarily agreed to on the ground that NaviSite was indeed unable to perform.
Nor may CareOne avoid the contractual limitations on remedies and liability on the ground that they are unconscionable. A contract is unconscionable only if no honest and fair person in their right mind would agree to it. Waters v. MIN Ltd., 412 Mass. 64, 69 (1992) (“an unconscionable contract is ‘such as no man in his senses and not under delusion would make on the one hand, and no honest and fair man would accept on the other’ ” (quoting Hume v. United States, 132 U.S. 406, 411 (1889), quoting in turn Earl of Chesterfield v. Janssen, 38 Eng. Rep. 82, 100 (Ch. 1750)). There was nothing crazy about allocating the risk of non-performance in the manner agreed to by CareOne.
To demonstrate that a contract provision is unconscionable and therefore unenforceable, a party must demonstrate that, as of “the time of the execution of the agreement, the contract provision could result in unfair surprise and was oppressive to the allegedly disadvantaged party.” Miller v. Cotter, 448 Mass. 671, 680 (2007), quoting Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 293 (1980).
As a sophisticated business entity, CareOne cannot demonstrate that it did not understand and for that reason is now surprised by the reach of MSA §§ 6.4 and 9.1. Cf. Zapatha, supra, at 294 (person with business experience and education cannot claim unfair surprise as to meaning of straightforward contract provision). Although
CareOne claims it was surprised to learn that NaviSite itself did not possess all of the technical expertise needed to supply the services for which CareOne had contracted, that assertion cannot be squared with the plain language of the contract itself. CareOne expressly agreed in the Statement of Work that the services would be provided by “NaviSite through its Third Party Provider.”
Nor can CareOne demonstrate that the limitation of remedy and liability provisions were oppressive as of the time the contract was executed. There is nothing unconscionable about a contract in which “two commercially sophisticated parties” have agreed to limit potential liabilities in order to allocate among themselves the risks of non-performance. Canal Elec., 406 Mass. at 374.
3.2. UCC Claims. CareOne claims in Count 8 that it is entitled to remedies for NaviSite’s alleged breach of contractual obligations either under art. 2 of the Uniform Commercial Code (which governs sales of goods) or under art. 2A of the UCC (which governs leases of goods). See G.L. c. 106, §§ 2-711 through 2-713, 2A-508, and 2A-518 through 2A-520. And CareOne claims in Counts 11 and 12 that it is entitled under art. 2 or art. 2A to remedies for NaviSite’s alleged breach of implied warranties of merchantability and fitness for a particular purpose. See G.L. c. 106, §§ 2-314, 2-315, 2A-212, and 2A-213.
NaviSite is entitled to summary judgment on these claims because the parties’ contract did not involve a sale or lease of goods and thus was not subject to UCC art. 2 or art. 2A. These UCC articles only apply to the sale or lease of “goods,” meaning things that “are movable at the time of identification to the” contract for sale or lease. See G.L. c. 106, §§ 2-102 and 2-105(1), and §§ 2A-102 and 2A-103(1)(h). Contracts to provide services are not covered by art. 2 or art. 2A. See White v. Peabody Constr. Co., 386 Mass. 121, 132 (1982).
Where a contract calls for the provision of services as well as the sale or lease of moveable goods, “the test is whether the predominant factor, thrust, or purpose of the contract” is to provide services (in which case the UCC does not apply) or to sell or lease goods (in which case it does). Cumberland Farms, Inc. v. Drehmann Paving & Flooring Co., 25 Mass. App. Ct. 530, 534 (1988); accord White, supra.
The summary judgment record makes clear that the predominant thrust of this contract was the rendition of services by NaviSite and its subcontractors. The parties said so in their Master Statement of Work, which provides that “NaviSite through its Third Party Provider will provide” a number of specified “services.” Similarly, MSA § 3.1 provides that CareOne’s obligation to make monthly payments would begin on “Acceptance of the applicable Services.” The MSA defines “Services” to mean “the services (including all associated NaviSite-Supplied Software and NaviSite-Supplied Hardware) purchased by” CareOne. Obviously, when a company like CareOne buys information technology services the provider must use computer hardware to provide the services. But CareOne was not purchasing computers that it would then operate on its own; this was not a contract to provide that kind of “turnkey” system.6 Rather, it hired NaviSite to develop, implement, host, and operate sophisticated computing services that would run on computer hardware located at NaviSite’s facilities.
Since the undisputed facts make clear that the predominant thrust of this contract was the provision of services, the UCC is inapplicable. See Mattoon v. City of Pittsfield, 56 Mass. App. Ct. 124, 141-142 (2002).
3.3. Unjust Enrichment Claim. CareOne claims in Count 9 that NaviSite has been unjustly enriched by the roughly $ 2.4 million it received from CareOne for the four monthly invoices for January through April 2013. CareOne correctly concedes in its summary judgment memorandum that this is a claim in the alternative that is only viable if the Court were to “find that the contract is unenforceable, or that it should be rescinded.”
NaviSite is entitled to summary judgment on this claim because the parties’ relationship was established and defined by an enforceable written contract. “Ordinarily, a claim of unjust enrichment will not lie ‘where there is a valid contract that defines the obligations of the parties.’ ”Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 641 (2013), quoting Boston Med. Ctr. Corp. v. Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 467 (2012). That is because “[a] valid contract defines the obligations of the parties as to matters within its scope,
6 USM Corp. v. Arthur D. Little Systems, Inc., 28 Mass. App. Ct. 108 (1989), which involved the provision of a turnkey system, is therefore inapplicable here.
displacing to that extent any inquiry into unjust enrichment.” Boston Med. Ctr. Corp., 463 Mass. at 467, quoting Restatement (Third) of Restitution and Unjust Enrichment § 2 (2011).
3.4. G.L. c. 93A, § 11. CareOne claims in Count 4 that NaviSite committed an unfair trade practice in violation of G.L. c. 93A, §§ 2 and 11, by threatening to discontinue service to Partners if CareOne did not pay NaviSite an additional $ 2.2 million under the parties’ contract.
NaviSite is entitled to summary judgment on this claim because CareOne has been unable to muster any evidence that it “suffered a ‘loss of money or property’ within the meaning of G.L. c. 93A, § 11,” which is a required element of any business-to-business claim under c. 93A. Lumbermens Mut. Cas. Co. v. Offices Unlimited, Inc., 419 Mass. 462, 468 (1995) (ordering summary judgment for counterclaim defendant), quoting G.L. c. 93A, § 11; accord Frullo v. Landenberger, 61 Mass. App. Ct. 814, 822-823 (affirming summary judgment for defendant), rev. denied, 442 Mass. 1111 (2004).
CareOne has admitted that it did not incur any costs to migrate its users to another information technology vendor after NaviSite threatened to terminate its contract and then carried out that threat.
Although CareOne argues that its employees had to spend time dealing with NaviSite’s threats to terminate its contract, this alleged loss of employee time does not constitute a “loss of money” within the meaning of the statute. Under § 11, “ ‘Money’ means money, not time, and … ‘property’ means the kind of property that is purchased or leased, not such intangibles as a right to a sense of security, to peace of mind, or to personal liberty.” Tech Plus, Inc. v. Ansel, 59 Mass. App. Ct. 12, 20, rev. denied, 440 Mass. 1108 (2003), quoting Baldassari v. Public Fin. Trust, 369 Mass. 33, 45 (1975). A mere loss of time in having to respond to and deal with any consequences of an alleged unfair trade practice is not a “loss of money” within the meaning of § 11. Halper v. Demeter, 34 Mass. App. Ct. 299, 303-304 (1993) (vacating judgment for plaintiff on claim under c. 93A, § 11).
The two Appeals Court decisions cited by CareOne do not hold that loss of time that results in no loss of money is compensable under G.L. c. 93A, § 11. VMark held only that damages for tortious misrepresentation can include compensation for
“hours fruitlessly spent by … employees trying to make the defective computer system work.” See VMark Software, Inc. v. EMC Corp., 37 Mass. App. Ct. 610, 620-621 (1994). The court never reached the issue of whether similar compensation is available under § 11 because it held that awarding such damages would be cumulative and that the plaintiff was not entitled to double or treble damages. Id. In Bump, the plaintiff was a business broker who charged clients for his time; the Appeals Court held that the plaintiff could recover for futile time spent trying to sell a company as a result of defendant’s unfair trade practices was compensable under § 11 because plaintiff’s inability to charge that time to other clients or projects was a loss of money. See Bump v. Robbins, 24 Mass. App. Ct. 296, 312 (1987). CareOne has presented no evidence that it lost money because it was unable to charge employees’ time to other projects.
3.5. Declaratory Judgment. In Count 10, CareOne seeks declaratory judgment regarding whether CareOne is liable to make accelerated payments under the contract now that NaviSite has terminated the contract and whether the contractual limitations on remedies and liability are unconscionable and.
The Court disagrees with NaviSite’s assertion that this claim is moot. NaviSite points that the contract has been terminated and the parties have no ongoing contractual relationship. But there nonetheless remains an actual controversy regarding the enforceability of the disputed contractual provisions and whether NaviSite is entitled to collect any more money from CareOne under the contract. The mere fact that there is no uncertainty regarding future relations among the parties does not moot the actual controversy regarding claims of past liability. See FMR Corp. v. Boston Edison Co., 415 Mass. 393, 396 (1993) (grant of summary judgment on plaintiff’s claims ended any obligation by defendant’s insurer to provide a defense, but did not moot defendant’s claims against insurer for past defense costs).
Since CareOne has standing and there is an actual controversy between the parties regarding their rights and obligations under their contract, the Court is obligated to declare the rights of the parties rather than dismiss this claim. See, e.g., Attorney General v. Kenco Optics, Inc., 369 Mass. 412, 418 (1976); Gennari v. City of Revere, 23 Mass. App. Ct. 979 (1987) (rescript). The Court will order the entry of
declaratory judgment consistent with its legal rulings regarding the failure of NaviSite’s contract claims against CareOne and the enforceability of the contractual limitations on remedies and liability.
4. Partners’ Claims against NaviSite. Finally, the Court concludes that NaviSite is also entitled to summary judgment in its favor on all of Partners’ claims. Although the claims asserted by Partners are in many respects quite similar to those by CareOne, the Court addresses them separately to make clear its resolution of NaviSite’s separate motion for summary judgment against Partners’ claims.
4.1. Breach of Contract. In Counts 1 and 5 of its amended complaint, Partners asserts claims for breach of express contractual obligations and breach of the implied covenant of good faith and fair dealing. These claims fail as a matter of law for the same reasons that CareOne’s very similar claims fail, as discussed above in § 3.1 of this decision. Even assuming that Partners had mustered any evidence that it suffered any compensable damages, which NaviSite contests, these claims would be barred by the contractual limitations on remedies and liability set forth in MSA §§ 6.4 and 9.1. 7
4.2. UCC Contract Remedies. Partners’ claim under the UCC in Count 7 fails as a matter of law because the party did not contract for the sale or lease of goods, as discussed above in § 3.2 of this decision.
The sales order signed by Partners establishes that the predominant thrust of this contract was the rendition of services by NaviSite and its subcontractors. Partners agreed to pay a one-time fee of $ 39,867.60 to cover hardware and software installation costs. It also agreed to pay $ 74,711.72 every month throughout the life of the contract for NaviSite to monitor and manage specified information technology “services.” The contract did not call for NaviSite to deliver a “turnkey” system that Partners would run on its own. To the contrary, Partners was hiring NaviSite to provide information technology services. The UCC does not apply to such a contract
7 The Court reads NaviSite’s legal memoranda as arguing that both of Partners contract claims are barred by the contractual limitations on remedies and liability, and arguing in the alternative that there are additional reasons why CareOne’s implied covenant claim fails as a matter of law.
because it is not predominantly for the sale or lease of goods. See, e.g., White, 386 Mass. at 132; Mattoon, 56 Mass. App. Ct. at 141-142.
4.3. G.L. c. 93A, § 11. Partners’ claim under c. 93A, § 11, in Count 3 fails for the reasons discussed above in § 3.4 of this decision: Partners has no evidence that it suffered any loss of money as a result of any alleged unfair trade practices. NaviSite has convincingly demonstrated that Partners ended up saving money as a result of NaviSite’s termination of the contract because Partners incurred no out-of-pocket cost to migrate to a new vendor and the total amount charged by the new vendor was less than what Partners would have owed NaviSite under their contract. In its memorandum in opposition, Partners does not even argue that it suffered a “loss of money” within the meaning of c. 93A, § 11.
4.4. Tortious Interference. Partners claims in Count 2 that NaviSite intentionally interfered with Partners’ contractual relationships with more than 500 long term care facilities by threating to stop providing service to Partners in an attempt to pressure CareOne into paying more.
NaviSite is entitled to summary judgment on this claim because there is no evidence that it actually interfered with a contract or other advantageous relationship. There is no evidence that NaviSite conduct other caused one or more of Partners’ clients to breach their contract with Partners, or that NaviSite did anything that prevented Partners from continuing to service any of its customers.
To make out its claim for tortious interference with contractual relations, Partners must prove that: (1) Partners had a contract with a third party; (2) NaviSite knowingly interfered with that contract either by inducing the third party to break the contract or by preventing Partners from performing its contractual obligations; (3) NaviSite’s interference with the contract was improper in motive or means; and (4) Partners was harmed as a result. See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 84 (2014); Shafir v. Steele, 431 Mass. 365, 369 (2000).
Partners argues that, under Shafir, it can prove the second or “interference” element of this claim by proving that NaviSite “caused the performance of Partners’ contract with its customers … to be more expensive and more burdensome,” even if it
has no evidence that the claimed additional burden caused either Partners or its customer to stop performing the contract. That is incorrect. Partners misreads Shafir.
In Shafir, the Supreme Judicial Court broadened the tort of interference with contracts under Massachusetts law, but not in a way that helps Partners. Prior cases held, consistent with Restatement (Second) of Torts § 766, that to prove this tort the plaintiff must show that “the defendant knowingly induced” a third party “to break” its contract with the plaintiff. See, e.g., G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 272 (1991). Shafir adopted § 766A of the Restatement, and held that it is just as tortious to interfere with a contract by making the plaintiff’s own performance more expensive or burdensome and thereby “preventing the plaintiff from performing” his contractual obligations. 431 Mass. at 369. But the SJC did not eliminate the element of interference that caused some party to the contract not to perform its obligations. Id. at 369-370.
If a defendant deliberately makes it more burdensome and difficult to carry out a contract, but that attempted interference never causes any party not to perform their contractual obligations, then the defendant has not committed the tort of intentionally interfering with contractual relations. See Anzalone v. Massachusetts Bay Transp. Auth., 403 Mass. 119, 123 (1988) (supervisor’s deliberate mistreatment of employee, including forcing him to suffer noxious fumes and work in a close room hotter than 100 degrees Fahrenheit, held not to constitute tortious interference because employment contract obligations were fully performed).
4.5. Declaratory Judgment. In Count 10, Partners seeks the same declaration of rights as CareOne. For the reasons stated above in § 3.5 of this decision, Partners is entitled to a declaration of the parties’ rights on the topics identified in this claim.
CareOne Management, LLC’s motion for summary judgment on the claims and counterclaims against it by NaviSite, Inc. is ALLOWED.
NaviSite’s for summary judgment in its favor on the claims against or by CareOne is DENIED IN PART with respect to NaviSite’s claims against CareOne and ALLOWED IN PART with respect to CareOne’s claims against NaviSite.
The motion by NaviSite for summary judgment in its favor on the claims against it by Partners Pharmacy Services, LLC is ALLOWED.
Final judgment shall enter (1) declaring that neither CareOne Management, LLC, nor Partners Pharmacy Services, LLC, has any obligation to further perform or to make any accelerated payments under their contracts with NaviSite, Inc., the parties’ Master Services Agreement is not voidable, and the limitation on liability and exclusive remedies provisions in the parties’ contracts are valid and enforceable; and (2) dismissing all other claims and counterclaims with prejudice.
April 24, 2017
Kenneth W. Salinger
Justice of the Superior Court

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