Connect-Care, LLC v. The Echo Group CV-03-040-JD 10/15/03 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Connect-Care, LLC
v. Civil No. 03-40-JD Opinion No. 2003 DNH 175 The Echo Group
O R D E R
Following an arbitration decision awarding damages to
Connect-Care, LLC, The Echo Group brought an action challenging
the decision in state court. Connect-Care brought an action in
this court to confirm the award and removed Echo's state court
action to this court. Those cases are now consolidated here.
Connect-Care moves for summary judgment to confirm the
arbitrator's decision, which Echo opposes.
Background
Connect-Care is a company located in Alpharetta, Georgia,
that develops, implements, and services customer relationship
management software.1 Echo is a software company, located in
Conway, New Hampshire. During the summer of 2000, Echo began to
shop for a software system to keep track of its customer
1Connect-Care was known as ProAmerica Systems, LLC. during its dealings with Echo. To avoid confusion, the court will refer to Connect-Care, rather than ProAmerica Systems. information and to perform certain customer operations.
On September 29, 2000, Connect-Care and Echo entered into
three separate agreements: a software license agreement, a
professional services agreement, and a software support
agreement. Schedule B of the license agreement provides the fee
and payment part of the agreement for the software licenses,
services, and maintenance. The total fee listed was $138,675, of
which Echo paid all but the last payment of $34,670. The license
agreement and services agreement had arbitration clauses. The
support agreement did not have an arbitration clause.
After their relationship broke down, Connect-Care filed a
demand for arbitration on February 12, 2002. Connect-Care
claimed Echo had breached the license agreement and sought
payment of $103,383.26, along with attorneys' fees, costs, and
interest. Echo filed its answer on June 4, 2002, denying that it
had breached the "software agreement," asserting a counterclaim
that Connect-Care breached "the Agreement," and demanding
$122,285.69, in refund of the fees it had paid to Connect-Care.
Echo's answer and counterclaim do not specify which agreement, of
the three, is at issue.
The arbitrator held a hearing in late September of 2002. In
the course of the hearing, the parties indicated that they
intended to submit all three agreements for arbitration, although
2 the support agreement did not have an arbitration clause. The
arbitration case manager sent a letter on September 27, 2002,
which noted the parties' intent to submit the services and
support agreements for arbitration, along with the license
agreement, and directed them to "file with the AAA the necessary
reguest to do so." In response, Connect-Care filed an amended
claim on October 17, 2002, in which it repeated its claim of
breach of the license agreement but also appended copies of the
services and support agreements, along with the license
agreement.
On October 25, 2002, the case manager again wrote to the
parties concerning the scope of the proceeding. The case manager
reported that the arbitrator had noted that Connect-Care's
amended demand for arbitration did not submit claims under all of
the agreements. Connect-Care was directed to file a second
amended demand "specifying that the claim is brought under two
written contracts containing an arbitration agreement (the
ProAmerica Systems, LLC Software License Agreement dated
September 29, 2000 and the ProAmerica Systems, LLC Professional
Services Agreement dated September 29, 2000)." As to the support
agreement, which lacked an arbitration clause, the case manager
stated the following: "Pursuant to their oral agreement
referenced above the parties should file with the American
3 Arbitration Association a written submission to arbitrate any and
all claims arising under the software support agreement, in
accordance with Commercial Dispute Resolution Procedures R-5."
On November 1, 2002, Connect-Care filed a second amended demand
for arbitration, stating that the claim was brought under the
license agreement and the services agreement. Neither party
complied with the AAA reguirements to submit the support
agreement to arbitration. Echo did not file an amended answer or
amended counterclaim.
In its brief submitted to the arbitrator, Connect-Care
stated that the primary issue was its claim that Echo breached
the license agreement. Connect-Care also argued that Echo acted
in bad faith. Echo stated in its brief that Connect-Care had
amended its demand for arbitration to include claims under both
the services and support agreements. Echo asserted that it did
not breach the parties' agreements but instead that Connect-Care
breached the agreements. Echo relied in part on the support
The arbitrator issued his decision on December 12, 2002. In
his decision, the arbitrator explained that the parties had
agreed that the relevant documents were the license, services,
and support agreements. He noted that Connect-Care sought relief
under the license and services agreements only and that counsel
4 for Echo had not disputed those agreements as the bases for the
demand for arbitration. The arbitrator explained the scope of
his decision as follows:
Accordingly, my award and rulings are intended to dispose of all claims arising under the License Agreement and the Services Agreement. Claims arising under the Support Agreement, if any, are not comprehended in the original or the Second Amended Demand and my award and ruling is not intended to dispose of such claims, if any. I specifically rule that the Support Agreement, although referenced in the License Agreement at section 3.3, is a separate agreement that is excluded from the License Agreement by section 14.9 of the License Agreement as well as by its own terms (see section 7.1), that does not include an arbitration provision, and that is not a basis for any claim in this proceeding.
The arbitrator found that Connect-Care did not breach any
obligation under the license agreement and was entitled to an
award of the fees owed. The arbitrator found that Connect-Care
was also entitled to an award of attorneys' fees and costs, along
with interest on the amounts owed. The arbitrator denied Echo's
motion for a modification of the award. On January 29, 2003, the
arbitrator awarded $103,383.26 as breach of contract damages,
along with attorneys' fees, expenses, interest, an interest per
diem amount, and an estimated confirmation cost. The arbitrator
also calculated the administrative fees and expenses for the
proceeding and ordered Echo to pay Connect-Care that amount.
5 Discussion
Echo contends that the award should be vacated or modified
because the arbitrator improperly failed to consider Echo's
defenses and counterclaim under the support agreement but awarded
damages to Connect-Care under that agreement. Connect-Care moves
for summary judgment to confirm the award. Echo argues that
material factual issues preclude summary judgment.
Summary judgment is appropriate when "the pleadings,
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Connect-Care, LLC v. The Echo Group CV-03-040-JD 10/15/03 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Connect-Care, LLC
v. Civil No. 03-40-JD Opinion No. 2003 DNH 175 The Echo Group
O R D E R
Following an arbitration decision awarding damages to
Connect-Care, LLC, The Echo Group brought an action challenging
the decision in state court. Connect-Care brought an action in
this court to confirm the award and removed Echo's state court
action to this court. Those cases are now consolidated here.
Connect-Care moves for summary judgment to confirm the
arbitrator's decision, which Echo opposes.
Background
Connect-Care is a company located in Alpharetta, Georgia,
that develops, implements, and services customer relationship
management software.1 Echo is a software company, located in
Conway, New Hampshire. During the summer of 2000, Echo began to
shop for a software system to keep track of its customer
1Connect-Care was known as ProAmerica Systems, LLC. during its dealings with Echo. To avoid confusion, the court will refer to Connect-Care, rather than ProAmerica Systems. information and to perform certain customer operations.
On September 29, 2000, Connect-Care and Echo entered into
three separate agreements: a software license agreement, a
professional services agreement, and a software support
agreement. Schedule B of the license agreement provides the fee
and payment part of the agreement for the software licenses,
services, and maintenance. The total fee listed was $138,675, of
which Echo paid all but the last payment of $34,670. The license
agreement and services agreement had arbitration clauses. The
support agreement did not have an arbitration clause.
After their relationship broke down, Connect-Care filed a
demand for arbitration on February 12, 2002. Connect-Care
claimed Echo had breached the license agreement and sought
payment of $103,383.26, along with attorneys' fees, costs, and
interest. Echo filed its answer on June 4, 2002, denying that it
had breached the "software agreement," asserting a counterclaim
that Connect-Care breached "the Agreement," and demanding
$122,285.69, in refund of the fees it had paid to Connect-Care.
Echo's answer and counterclaim do not specify which agreement, of
the three, is at issue.
The arbitrator held a hearing in late September of 2002. In
the course of the hearing, the parties indicated that they
intended to submit all three agreements for arbitration, although
2 the support agreement did not have an arbitration clause. The
arbitration case manager sent a letter on September 27, 2002,
which noted the parties' intent to submit the services and
support agreements for arbitration, along with the license
agreement, and directed them to "file with the AAA the necessary
reguest to do so." In response, Connect-Care filed an amended
claim on October 17, 2002, in which it repeated its claim of
breach of the license agreement but also appended copies of the
services and support agreements, along with the license
agreement.
On October 25, 2002, the case manager again wrote to the
parties concerning the scope of the proceeding. The case manager
reported that the arbitrator had noted that Connect-Care's
amended demand for arbitration did not submit claims under all of
the agreements. Connect-Care was directed to file a second
amended demand "specifying that the claim is brought under two
written contracts containing an arbitration agreement (the
ProAmerica Systems, LLC Software License Agreement dated
September 29, 2000 and the ProAmerica Systems, LLC Professional
Services Agreement dated September 29, 2000)." As to the support
agreement, which lacked an arbitration clause, the case manager
stated the following: "Pursuant to their oral agreement
referenced above the parties should file with the American
3 Arbitration Association a written submission to arbitrate any and
all claims arising under the software support agreement, in
accordance with Commercial Dispute Resolution Procedures R-5."
On November 1, 2002, Connect-Care filed a second amended demand
for arbitration, stating that the claim was brought under the
license agreement and the services agreement. Neither party
complied with the AAA reguirements to submit the support
agreement to arbitration. Echo did not file an amended answer or
amended counterclaim.
In its brief submitted to the arbitrator, Connect-Care
stated that the primary issue was its claim that Echo breached
the license agreement. Connect-Care also argued that Echo acted
in bad faith. Echo stated in its brief that Connect-Care had
amended its demand for arbitration to include claims under both
the services and support agreements. Echo asserted that it did
not breach the parties' agreements but instead that Connect-Care
breached the agreements. Echo relied in part on the support
The arbitrator issued his decision on December 12, 2002. In
his decision, the arbitrator explained that the parties had
agreed that the relevant documents were the license, services,
and support agreements. He noted that Connect-Care sought relief
under the license and services agreements only and that counsel
4 for Echo had not disputed those agreements as the bases for the
demand for arbitration. The arbitrator explained the scope of
his decision as follows:
Accordingly, my award and rulings are intended to dispose of all claims arising under the License Agreement and the Services Agreement. Claims arising under the Support Agreement, if any, are not comprehended in the original or the Second Amended Demand and my award and ruling is not intended to dispose of such claims, if any. I specifically rule that the Support Agreement, although referenced in the License Agreement at section 3.3, is a separate agreement that is excluded from the License Agreement by section 14.9 of the License Agreement as well as by its own terms (see section 7.1), that does not include an arbitration provision, and that is not a basis for any claim in this proceeding.
The arbitrator found that Connect-Care did not breach any
obligation under the license agreement and was entitled to an
award of the fees owed. The arbitrator found that Connect-Care
was also entitled to an award of attorneys' fees and costs, along
with interest on the amounts owed. The arbitrator denied Echo's
motion for a modification of the award. On January 29, 2003, the
arbitrator awarded $103,383.26 as breach of contract damages,
along with attorneys' fees, expenses, interest, an interest per
diem amount, and an estimated confirmation cost. The arbitrator
also calculated the administrative fees and expenses for the
proceeding and ordered Echo to pay Connect-Care that amount.
5 Discussion
Echo contends that the award should be vacated or modified
because the arbitrator improperly failed to consider Echo's
defenses and counterclaim under the support agreement but awarded
damages to Connect-Care under that agreement. Connect-Care moves
for summary judgment to confirm the award. Echo argues that
material factual issues preclude summary judgment.
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 the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c). "Judicial review of [an] arbitrator's decision is
extremely narrow and exceedingly deferential." Wonderland
Greyhound Park, Inc. v. Autotote Sv s ., Inc., 274 F.3d 34, 35 (1st
Cir. 2001) (internal guotation marks omitted). The court must
confirm an arbitration award "if it is in any way plausible, even
if [the court] think[s] [the arbitrator] committed serious
error." I d . (internal guotation marks omitted).
Because the parties have agreed to accept the arbitrator's
interpretation of their contract and the applicable facts, his
decision controls as long as "the arbitrator is even arguably
construing or applying the contract and acting within the scope
6 of his authority." Bull HN Info. Svs., Inc. v. Hutson, 229 F.3d
321, 330 (1st Cir. 2000). Echo invokes the statutory exceptions
which allow a court to vacate an arbitrator's decision "where the
arbitrator[] [was] guilty of misconduct ... in refusing to hear
evidence pertinent and material to the controversy . . . or where
the arbitrator[] exceeded [his] powers, or so imperfectly
executed them that a mutual, final, and definite award upon the
subject matter submitted was not made." 9 U.S.C. § 10(a) (3) &
(4). Echo also contends, pursuant to 9 U.S.C. § 11(b), that the
award should be vacated or modified because it was based on the
support agreement, a matter that the arbitrator ruled was not
within the scope of the proceeding.
It is undisputed that counsel for the parties agreed that
all three agreements would be submitted for arbitration.
Connect-Care presented its demand under only two of those
agreements, however: the license agreement and the services
agreement. Although the case manager reminded the parties that
the support agreement was not part of the demand and that it did
not have an arbitration clause. Echo did not clarify its intent
to proceed under the support agreement.2 More importantly, it is
2Echo's counterclaim does not specify which agreement Echo asserts was breached, and Echo never amended nor sought leave to amend the counterclaim.
7 undisputed that Echo did not file a written submission with the
AAA for permission to arbitrate claims under the support
agreement, despite the directive from the case manager to do so.
Based on these circumstances, Connect-Care did not bring a
claim under the support agreement, and Echo did not properly
present its claim under the support agreement. Therefore, the
arbitrator correctly ruled that no claim under the support
agreement was before him.
Echo also contends that the arbitrator awarded damages for
maintenance fees under the support agreement because Schedule B
of the license agreement includes fees for maintenance. In the
statement of the award, the arbitrator found no breach of the
license agreement and ruled that Connect-Care was entitled to an
award of the fees owed by Echo under that agreement. Schedule B
of the license agreement states the "License, Services and
Maintenance Fees." Although the maintenance fees in Schedule B
apparently relate to services performed under the support
agreement, the payment provision is part of the license
agreement. While more than one interpretation of the agreement
package might be possible, the arbitrator construed the license
agreement to obligate Echo to pay the fees demanded by Connect-
Care, including the maintenance fees, as part of the license
agreement. That is a plausible interpretation of the agreement. Conclusion
For the foregoing reasons, the plaintiff's motion for
summary judgment (document no. 10) is granted. The arbitration
award is confirmed.
The clerk of court shall enter judgment accordingly and
close the case.
SO ORDERED.
Joseph A. DiClerico, Jr. United States District Judge
October 15, 2003
cc: Roy S. McCandless, Esguire Robert R. Lucic, Esguire