United States District Court, D. Massachusetts
WIRED INFORMATICS, LLC, Plaintiff and Defendant-in-Counterclaim,
OMNIMD INC., Defendant and Plaintiff-in-Counterclaim.
MEMORANDUM AND ORDER ON MOTION TO DISMISS
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
Wired Informatics, LLC (“Wired”), a software
developer, filed this action against its former client,
Defendant OmniMD Inc. (“OmniMD”), alleging breach
of contract, breach of the implied covenant of good faith and
fair dealing, and unfair and deceptive business practices in
violation of Massachusetts General Laws ch. 93A, § 11.
[ECF No. 1-1 at 6-9]. OmniMD brought counterclaims against
Wired for fraud, breach of the implied warranties of fitness
and merchantability, and breach of contract. [ECF No. 4
(“Counterclaim Complaint” or “Counterclaim
Compl.”) ¶¶ 23-36]. Currently pending before
the Court is Wired's motion to dismiss the Counterclaim
Complaint pursuant to Federal Rule of Civil Procedure
12(b)(6). [ECF No. 6]. For the reasons set forth below,
Wired's motion to dismiss [ECF No. 6] is
GRANTED, and OmniMD may file an amended counterclaim
complaint consistent with this Order.
following facts are drawn from the Counterclaim Complaint,
the well-pleaded allegations of which are taken are true for
purposes of evaluating Wired's motion to dismiss. See
Ruivo v. Wells Fargo Bank, 766 F.3d 87, 90 (1st Cir.
September 17, 2017, Wired and OmniMD entered into a Master
Software License and Services Agreement (“MSL”).
[Counterclaim Compl. ¶ 4]. The MSL granted OmniMD
licenses to use Wired products as specified in one or more
ordering documents, which would amend or supplement the MSL.
[Id. ¶¶ 5, 7]. The licenses would either
be “Development” licenses, which would allow the
use of Wired products in a development or testing
environment, or “Production” licenses for using
Wired products in a commercial or production environment.
[Id. ¶ 6]. The MSL also provided for technical
support to accompany licenses of Wired's products.
[Id. ¶ 8].
March 22, 2018, OmniMD ordered two Development licenses for a
term of nine months for a product called
“Invenio.” [Id. ¶ 9]. OmniMD
intended to use Invenio “as an artificial intelligence
engine to read and parse natural language in medical
transcripts, [to] select vital medical information from
those transcripts[, ] and [to] transfer that information to
specific locations in standardized electronic health records
. . .” for patients being treated by medical
professionals using OmniMD's electronic health records
software. [Id. ¶ 10]. Wired represented to
OmniMD that Invenio was “ready to use, ” and the
parties anticipated that the nine-month term would be used to
“fine-tune, ” test, and adapt Invenio for
OmniMD's expected usage. [Id.].
March 22, 2018, OmniMD ordered nine Production licenses for
Invenio for a twelve-month term to immediately follow the
expiration of the term of the Development licenses.
[Id. ¶ 11]. Before OmniMD placed its order for
the Development and Production licenses, Wired had
represented to it that “the nine-month term of the
Development licenses would be a sufficient period of time for
the Invenio artificial intelligence engine to adapt” to
the integration with OmniMD's electronic health records
software. [Id. ¶ 12].
received the Development licenses, OmniMD tried
unsuccessfully to integrate Invenio into its electronic
health records software. [Id. ¶ 13]. During
this time, Wired failed to provide sufficient technical
support, despite OmniMD notifying Wired that Invenio was not
fit for its intended purpose and was not merchantable.
[Id. ¶¶ 16, 18-19]. After the nine-month
term ended and OmniMD had spent more than $17, 500 in license
fees, Invenio was “barely working for only a small
portion of functions” that Wired had represented it
could perform. [Id. ¶ 10]. OmniMD determined
that Invenio would need several more years of work before it
would be usable and that it could not be incorporated into
OmniMD's electronic health records software at that time.
[Id. ¶¶ 10, 20]. OmniMD informed Wired
that it was terminating the March 22, 2018 order as well as
the MSL. [Id. ¶¶ 20-21]. As a result of
the time spent by OmniMD on unsuccessfully adapting Invenio
for use with its electronic health records software, OmniMD
was delayed in getting its own product to market.
[Id. ¶ 22].
November 19, 2018, Wired filed a complaint in Suffolk County
Superior Court. [ECF No. 1-1 at 3-9]. OmniMD removed the
action to this Court on January 3, 2019 and thereafter filed
an answer, affirmative defenses, and counterclaims on January
25, 2019. [ECF Nos. 1, 4]. On February 14, 2019, Wired file a
motion to dismiss the counterclaims, which OmniMD opposed on
March 11, 2019. [ECF Nos. 6, 10].
motion to dismiss a counterclaim under Federal Rule of Civil
Procedure 12(b)(6), the Court must accept as true all
well-pleaded facts, analyze those facts in the light most
favorable to the plaintiff-in-counterclaim's theory, and
draw all reasonable inferences from those facts in favor of
the plaintiff-in-counterclaim. See United States ex rel.
Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 383
(1st Cir. 2011). While detailed factual allegations are not
required, a counterclaim complaint must set forth “more
than labels and conclusions, ” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007), and it must contain
“factual allegations, either direct or inferential,
respecting each material element necessary to sustain
recovery under some actionable legal theory, ”
Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir.
2008) (citations omitted). The facts alleged must be
sufficient to “state a claim to relief that is
plausible on its face.” A.G. ex rel. Maddox v.
Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting
Twombly, 550 U.S. at 570).
assessing the sufficiency of a counterclaim complaint, the
Court first “separate[s] the [pleading's] factual
allegations (which must be accepted as true) from its
conclusory legal allegations (which need not be
credited).” Id. (quoting Morales-Cruz v.
Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)). Next,
the Court “determine[s] whether the remaining factual
content allows a ‘reasonable inference that the
[defendant-in-counterclaim] is liable for the misconduct
alleged.'” Id. (quoting
Morales-Cruz, 676 F.3d at 224). “[T]he court
may not disregard properly pled factual allegations,
‘even if it strikes a savvy judge that actual proof of
those facts is improbable.'” Ocasio-Hernandez
v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011)
(quoting Twombly, 550 U.S. at 556).