United States District Court, D. Colorado
CHILDREN'S HOSPITAL COLORADO, Plaintiff/Counterclaim Defendant,
DIGISONICS, INC., Defendant/Counterclaim Plaintiff.
ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT
Brooke Jackson United States District Judge
Inc. moves for summary judgment on Children's Hospital
Colorado's (“Children's Hospital”) claims
under Section 24 of the Master Service and Support Agreement
(“MSA”) and on its counterclaims under Section 7
of the Statement of Work (“SOW”), ECF No. 55,
while Children's Hospital moves for summary judgment on
Digisonics' counterclaims under Section 13 of the MSA,
ECF No. 51. The motions are denied.
10, 2012 Children's Hospital and Digisonics entered into
an agreement for Digisonics to develop, license, install, and
support a customized cardiology picture archiving and
communication system (“the System”) for
Children's Hospital. ECF No. 1 at ¶10, 14; ECF No.
55 at 1. The System would provide Children's
Hospital's physicians an “anytime, anywhere”
platform for viewing, managing, and analyzing patients'
medical diagnostic data. ECF No. 58, § 2. In developing
the System, Digisonics was to start with a preexisting
software package called “DigiView” and to provide
additional features requested by Children's Hospital.
Id. The parties memorialized their agreement in two
documents: the MSA and the SOW. The documents reference each
other and were designed to work together. See, e.g.,
ECF No. 57 at 5; ECF No. 58 at 6.
after executing the agreement, Children's Hospital made
its first installment payment to Digisonics for $264, 455.50,
and Digisonics started working on the project. ECF No. 1 at
28; ECF No. 55 at 31; ECF No. 65 at 20. In late 2013
Digisonics requested the second installment payment, but
Children's Hospital believed payment was not yet due.
See ECF No. 53-4; ECF No. 55-21. In July 2014
Children's Hospital offered to pay half of the second
installment-$238, 008-until Digisonics made more progress.
ECF No. 55 at 31, 36; ECF No. 65 at 20; ECF No. 68 at 5.
fall of 2014 Digisonics still had not delivered the System to
Children's Hospital. See ECF No. 55 at 2; ECF
No. 65 at 4. Children's Hospital became worried that the
System would not be ready in time to replace its aging
software without a gap in support. See ECF No. 64-1
at 163:10-25; ECF No. 64-4 at 132:17-23. Beginning in
November 2014 executives from Children's Hospital and
Digisonics exchanged a number of emails and met several times
to try to resolve Children's Hospital's concerns.
See, e.g., ECF Nos. 64-10, 64-11, 64-13, 64-14,
December 2, 2014 Digisonics released and installed DigiView
version 18.104.22.168 on Children's Hospital's workstation.
ECF No. 64-10. In January 2015 Children's Hospital
provided Digisonics a list of software issues that it wanted
corrected for its “go-live” version ECF No. 55-4.
24, 2015 Digisonics delivered DigiView version 22.214.171.124 to
Children's Hospital. ECF No. 55-14. However,
Children's Hospital believed that this release was still
defective, so the next day it sent Digisonics notice that it
was terminating the contract. ECF No. 55-19.
January 5, 2016 Children's Hospital filed this suit for
breach of contract, breach of implied duty of good faith and
fair dealing, and unjust enrichment. ECF No. 1. Digisonics
responded with counterclaims for breach of contract, breach
of implied duty of good faith and fair dealing, unjust
enrichment, promissory estoppel, and breach of
confidentiality clause. ECF No. 9.
December 26, 2016 Digisonics submitted two memoranda
regarding whether briefing motions for summary judgment on
the claims or counterclaims would be appropriate. ECF Nos.
39, 40. Children's Hospital took the position that the
issues identified “cannot and should not be resolved on
summary judgment.” ECF No. 43 at 4; ECF No. 44 at 4.
January 11, 2017 the Court invited the parties to “file
a total of 25 pages of briefing per side, including all pages
from the caption through the certificate of service, ”
concerning the interpretation of MSA Section 24, SOW Section
7,  and MSA
Section 13, with this page allowance “to be used as you
see fit.” ECF No. 45. This was a modest increase from
the Court's practice standards. My order must not have
been as clear as I thought it was, however, because each side
submitted its own motion for summary judgment on January 24,
2017- notwithstanding Children's Hospital's position
that the issues “cannot and should not be resolved on
summary judgment”-and the parties apparently
interpreted the phrase “a total of 25 pages of
briefing” to mean “25 pages per motion and
response.” Children's Hospital submitted 49
pages across the two motions, including a 25-page response to
Digisonics' motion, see ECF Nos. 51, 65, 78,
while Digisonics submitted 50 pages, including a 23-page
motion, a 22-page response, and a motion for leave to file
even more pages in its reply, see ECF Nos. 55, 68,
75, 77. These submissions would normally be struck for their
excessive length, repetitiveness, and failure to stick to the
issues identified in the Court's order, but instead the
narrow contract interpretation issues presented will be
resolved on their merits so that the trial need not be
Court may grant summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The moving party has the burden to show that there is
an absence of evidence to support the nonmoving party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific
facts showing that there is a genuine issue for trial.”
Id. at 324. A fact is material “if under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir. 1998). A material fact is
genuine if “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). The Court will examine the factual record and make
reasonable inferences in the light most favorable to the
party opposing summary judgment. Concrete Works of Colo.,
Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517
(10th Cir. 1994).
motions for summary judgment concern three questions under
different provisions of the parties' contracts: (1)
whether Children's Hospital has waived any right of
recovery by failing to invoke the dispute resolution clause
in MSA Section 24; (2) whether Children's Hospital has
accepted the System and given rise to final payment under SOW