GalaxE.Healthcare Solutions, Inc. v RxSense, LLC

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GalaxE.Healthcare Solutions, Inc. v RxSense, LLC 2023 NY Slip Op 31743(U) May 23, 2023 Supreme Court, New York County Docket Number: Index No. 654114/2019 Judge: Andrew Borrok Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 654114/2019 [FILED: NEW YORK COUNTY CLERK 05/23/2023 04:56 P~ NYSCEF DOC. NO. 329 RECEIVED NYSCEF: 05/23/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 53 ----------------------------------------------------------------------------------- X GALAXE.HEALTHCARE SOLUTIONS, INC., INDEX NO. Plaintiff, MOTION DATE 654114/2019 N/A, N/A - V - MOTION SEQ. NO. RXSENSE, LLC, 011 012 DECISION+ ORDER ON MOTION Defendant. ----------------------------------------------------------------------------------- X HON. ANDREW BORROK: The following e-filed documents, listed by NYSCEF document number (Motion 011) 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147,148,204,205,206,207,208,209,210,211,212, 213,214,215,216,217,218,219,220,221,222,223,224,225,226,227,228,229,230,231,232, 233,234,235,236,237,238,239,240,241,242,243,244,245,246,288,289,290 JUDGMENT-SUMMARY were read on this motion to/for The following e-filed documents, listed by NYSCEF document number (Motion 012) 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99,100,101,102,103,104,105,106,107,108,109,110,111,112,113, 114,115,116,117,118,119,120,121,122,123,124,125,126,127,128,129,130,131,132,133, 250,251,252,253,254,255,256,257,258,259,260,275,276,277,278,279,280,281,282,283, 284,285,286,287 PARTIAL SUMMARY JUDGMENT were read on this motion to/for The plaintiffs motion (Mtn. Seq. No. 011) for summary judgment must be denied. As discussed more completely on the record (5.23.23), the fully developed record before the Court firmly establishes that the parties worked iteratively on the development of the code and that the plaintiff unilaterally demanded "immediate payment" of a June 25, 2019 invoice (the June Invoice) and then walked off the job - neither of which it was not entitled to do under the Information Technology Services Agreement (the ITSA; NYSCEF Doc. No. 137), dated June 7, 2018. Putting aside that the record establishes a course of dealing pursuant to which invoices were paid over time and within a reasonable period of time, the idea of "on demand" and "immediate termination" are antithetical to the course of conduct and the express provisions of 654114/2019 GALAXE.HEALTHCARE SOLUTIONS, vs. RXSENSE, LLC Motion No. 011 012 [* 1] 1 of 4 Page 1 of4 INDEX NO. 654114/2019 [FILED: NEW YORK COUNTY CLERK 05/23/2023 04:56 P~ NYSCEF DOC. NO. 329 RECEIVED NYSCEF: 05/23/2023 the ITSA which only permitted the plaintiff to suspend services after 45 days following nonpayment had elapsed which in fact it did not (see Section 6.3 of the ITSA). On the record before the Court, the plaintiff was paid over $6 million for a product that had substantial bugs and required fixing and which the ITSA obligates the plaintiff to fix at its cost (see Section 3 .4[b] of the ITSA). Pursuant to Section l. l(a) of the ITSA, the parties agreed that they would agree in writing as to the specification of services that the plaintiff would provide. This the parties defined as "Work Orders" and the definition of Work Orders includes both time and materials invoices and fixed priced invoices (see Section 1.5 of the ITSA). In either case, pursuant to Section 3.1 of the ITSA, the parties agreed that a Completion Notice was to be sent by the plaintiff with deliverables. Indisputably this was not sent. Thus, having not sent the predicate notice triggering the defendant's obligation to send a Non-Acceptance Notice, the plaintiff is not entitled to summary judgment for payment of its June Invoice based on the defendant's failure to send such notice. Indeed, as discussed above, the record reflects a course of dealing between the parties that was different than as set forth in the ITSA including payments of invoices from the defendant without requiring any such Completion Notice in the past, and significant external and internal plaintiff communications (e.g., NYSCEF Doc. No. 218) reflecting bugs in the code. Ultimately, the plaintiff demanded immediate payment for the June Invoice which was different than the parties' course of dealings where payment had been made in the ordinary course and over time, a complete suspension of services when the unilateral demand was not acceded to 654114/2019 GALAXE.HEALTHCARE SOLUTIONS, vs. RXSENSE, LLC Motion No. 011 012 [* 2] 2 of 4 Page 2 of 4 INDEX NO. 654114/2019 [FILED: NEW YORK COUNTY CLERK 05/23/2023 04:56 P~ NYSCEF DOC. NO. 329 RECEIVED NYSCEF: 05/23/2023 given issues surrounding such June Invoice (including whether the June Invoice was for new code or for fixing existing code for which the plaintiff was not permitted to charge pursuant to Section 3.4 of the ITSA) and a potential shake-down by the plaintiff for an additional $7.5 million payment from the defendant in exchange for a $200,000 credit for the issues the defendant raised with the quality of the plaintiff's work and also with the alleged inappropriate billing (NYSCEF Doc. No. 233). Thus, the plaintiff's motion must be denied. The defendant's motion (Mtn. Seq. No. 011) for partial summary judgment, by contrast, must be granted. Pursuant to Section 4.4 of the ITSA, the defendant owns the code that was delivered to it. For completeness, on the record (5.23.23) the plaintiff conceded as much but merely indicated that they could not have the code without paying for it. As discussed above, the record unequivocally establishes that the plaintiff delivered code that did not work properly and contained substantial bugs which required remedy. Inasmuch as it is also clear from the deposition testimony and the invoices that the plaintiff did not separate the time it billed for creating new code from the time spent remedying mistakes (for which they are responsible), they also breached the ITSA by not fixing previously delivered code at their cost pursuant to Section 3 .4(b) of the ITSA. The invoices reflect only charges for estimated services and services actually incurred with a credit provided for any overestimates without any further detail. What is not clear is the amount of overlap between that which was billed for new code and that which was billed for repairing old code (for which billing was improper). This is the sole issue for trial. The defendant is also entitled to dismissal of the plaintiff's anticipatory repudiation claim because there is no evidence that the defendant did not intend to pay the June Invoice. They may well have paid it in the ordinary course as they had paid over $6 million of prior invoices. No 654114/2019 GALAXE.HEALTHCARE SOLUTIONS, vs. RXSENSE, LLC Motion No. 011 012 [* 3] 3 of 4 Page 3 of 4 INDEX NO. 654114/2019 !FILED: NEW YORK COUNTY CLERK 05/23/2023 04: 56 PM! NYSCEF DOC. NO. 329 RECEIVED NYSCEF: 05/23/2023 one is identified who allegedly specifically disavowed the June Invoice indicating that they would not pay it and, as such, there is no issue for trial. The Court has considered the plaintiff's remaining arguments and finds them unavailing. It is hereby ORDERED that the plaintiff's motion for summary judgment is denied; and it is further ORDERED that the defendant's motion for summary judgment is granted; and it is further ORDERED that the parties shall appear for a pre-trial conference on July 13, 2023, at 11 :30am. 5/23/2023 DATE CHECK ONE: APPLICATION: CHECK IF APPROPRIATE: ANDREW BORROK, J.S.C. ~ NON-FINAL DISPOSITION CASE DISPOSED GRANTED DENIED SUBMIT ORDER INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT 654114/2019 GALAXE.HEALTHCARE SOLUTIONS, vs. RXSENSE, LLC Motion No. 011 012 [* 4] GRANTED IN PART SETTLE ORDER 4 of 4 OTHER REFERENCE Page 4 of 4

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