Blaisdell v. Dentrix Dental Systems, Inc.
Blaisdell v. Dentrix Dental Systems, Inc.
Opinion of the Court
opinion of the Court:
INTRODUCTION
T1 This case concerns the loss of data during the installation of software at a dentist's office. We hold that provisions in the software contract allocating the risk of such a loss to the consumer are enforceable.
BACKGROUND
T2 Mark H. Blaisdell is a dentist. Dr. Blaisdell performs professional dental services through his professional corporation. Like dentists everywhere, Dr. Blaisdell preserved information about his patients on computers. To aid his patient data requirement, Dr. Blaisdell agreed to purchase dental practice management software from Dentrix
7. LIMITATION OF LIABILITIES. In no event will Dentrix be Hable to you for any indirect, incidental, consequential, special, or exemplary damages arising out of or in connection with your use or inability to use the Product, the breach of any express or implied warranty, or otherwise in connection with the Product, its Software, the Documentation and/or the license even if Dentrix has been advised of the possibility of such damages. In no event shall Dentrix be held liable to you whenever registry files are examined and/or edited. Because some states do not allow the exclusion or limitation of liability for consequential or incidental damages, the above limitation may not apply to you.
In no event shall Dentrix's total liability for any damages, direct or indirect, in connection with the Product, its Software, the Documentation and/or this License exceed the license fees paid for your right to use this Product whether such liability arises from any claim based upon contract, warrants, tort or otherwise.
T8 As promised, Dentrix sent software upgrades to Dr. Blaisdell. In 2006, Dentrix sent Dr. Blaisdell the G2 Software Upgrade. One of Dr. Blaisdell's employees installed the (42 Upgrade while on the phone with a Den-trix technical support employee. Following an unsuccessful attempt to install the GZ Upgrade on a computer workstation, the G2 Upgrade erased Dr. Blaisdell's electronic patient files, appointment book, treatment plans, and insurance information. Dentrix has acknowledged that, after Dr. Blaisdell's data loss, it discovered the G2 Upgrade could overwrite the Dentrix Data files on a computer system after an unsuccessful G2 Upgrade installation.
{4 Everyone agrees that Dentrix had unambiguously warned Dr. Blaisdell to back up his patient data, but Dr. Blaisdell's backup system was not working properly. After his patient data was lost, Dr. Blaisdell's staff had to collect and reenter data manually while managing the office without patient records.
T5 Dr. Blaisdell sued Dentrix under numerous theories including negligence in tort, strict products liability, and negligent misrepresentation. Dr. Blaisdell also sued for breach of contract, breach of implied warranty, breach of express warranty, breach of implied warranty of merchantability, fraudulent nondisclosure, and punitive damages. Dentrix resisted the claims and, in time, moved for summary judgment. The district court granted Dentrix's motion for summary judgment on Dr. Blaisdell's contract claims and his fraudulent nondisclosure claim. The court also granted summary judgment on the tort claims, which it determined were barred by the economic loss rule. Dr. Blaisdell appeals only the order granting summary judgment on his tort claims. Because neither the district court nor the parties addressed the limitation of liabilities clause quoted above on appeal, we ordered supplemental briefing on that issue.
STANDARD OF REVIEW
16 "We review the district court's grant of a motion for summary judgment for correctness. Summary judgment is appropriate when ... 'there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law'"
ANALYSIS
T7 The contract between Dr. Blaisdell and Dentrix limited Dr. Blaisdell's remedies for
I. THE UTAH PRODUCTS LIABILITY ACT DOES NOT RENDER THE LIMITATION OF LIABILITIES CLAUSE UNENFORCEABLE
118 Dr. Blaisdell argues that the legislature, by enacting the Utah Products Liability Act, explicitly rendered unenforceable the limitation of liabilities clause at issue here. The relevant section of the Act is titled "Indemnification provisions void and unenforceable." It states,
Any clause in a sales contract or collateral document that requires a purchaser or end user of a product to indemnify, hold harmless, or defend a manufacturer of a product is contrary to public policy and void and unenforceable if a defect in the design or manufacturing of the product causes an injury or death.5
As read by Dr. Blaisdell, this provision renders the limitation of liabilities clause in his contract with Dentrix unenforceable because it requires Dr. Blaisdell "to hold Dentrix-'the manufacturer of a product for 'any indirect, incidental, consequential, special, or exemplary damages. "
¶ 9 The statutory language-"indemnify, hold harmless, or defend"-however, refers to situations where one party agrees to assume the tort liability of another.
We note that the term "hold harmless" can release one of the contracting
II. THE LIMITATION OF LIABILITIES CLAUSE IS ENFORCEABLE AND PROPERLY LIMITS DR. BLAIS-DELL'S STRICT PRODUCTS LIABILITY CLAIM
111 Utah law and precedent permit contracts limiting strict products liability in some situations. Dr. Blaisdell argues that, as a matter of law, a strict products liability claim "is not affected by any disclaimer or other agreement" under section 402A of the Restatement (Second) of Torts.
{12 The Uniform Commercial Code permits an agreement that "limit[s] or alter{s] the measure of damages recoverable ... as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts."
{13 The district court addressed the enforceability of the limitation of liabilities clause as it applied to Dr. Blaisdell's contract
III, THE RECORD SUPPORTS SUMMARY JUDGMENT FOR DENTRIX ON DR. BLAISDELL'S GROSS NEG LIGENCE CLAIM
¶ 14 Dr. Blaisdell argues that the limitation of liabilities clause cannot shield Den-trix to the extent it was grossly negligent.
115 But Dr. Blaisdell's claim is less complicated. "[SJlummary judgment is generally inappropriate to resolve negligence claims and should be employed only in the most clear-cut case."
1 16 In another case concerning data loss, the Fifth Circuit affirmed a grant of summary judgment for the defendant on a gross negligence claim.
*622 [The expert] allegled] that Wang was grossly negligent in using the last back-up copy while attempting repairs to the machine and in failing to make a sufficient number of copies, to test and verify the computer before back-ups were performed, and to print the data before attempting to reformat or copy the last data.28
The district court determined "that reasonable minds could not differ as to whether Wang's personnel's conduct was grossly negligent. Clearly gross negligence has not been exhibited by the defendant's personnel."
117 Dentrix exercised more care in preserving client data than Wang Laboratories. Part of Dentrix's update procedure was to request confirmation that Dr. Blaisdell had a backup copy of the data. Dr. Blaisdell's employee confirmed that a backup was available; had the backup system been functioning properly, the data would not have been lost. It cannot be reasonably asserted that Dentrix "show[ed] utter indifference" to the possibility that the G2 Upgrade could erase the data.
CONCLUSION
$18 The limitation of liabilities clause in the contract between Dr. Blaisdell and Den-trix is enforceable and precludes the remedy Dr. Blaisdell seeks in this case. We affirm the district court's grant of summary judgment.
. ''The appellate court will affirm the judgment, order, or decree appealed from if it is sustainable on any legal ground or theory apparent on the record, even though such ground or theory differs from that stated by the trial court to be the basis of its ruling or action, and this is true even though such ground or theory is not urged or argued on appeal by appellee, was not raised in the lower court, and was not considered or passed on by the lower court." Goodsel v. Dep't of Bus. Regulation, 523 P.2d 1230, 1232 (Utah 1974) (internal quotation marks omitted).
. Overstock.com, Inc. v. SmartBargains, Inc., 2008 UT 55, ¶ 12, 192 P.3d 858 (citation omitted) (quoting Utan R. Civ. P. 56(c)).
. Cope §§ 78B-6-701 to -707.
. Cf. Frey Dairy v. A.O. Smith Harvestore Prods., Inc., 886 F.2d 128, 132 (6th Cir. 1989) ("There is no need to resort to the judicially created economic loss doctrine to delineate the line to be drawn between tort and contract remedies [when the] contract itself represents the bargain the parties made on this subject.").
. Cone § 78B-6-707.
. Cf. Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 341 (Utah 1997) ("As USF & G's brief correctly states, however, 'Courts have over and over again interpreted the phrase "liability assumed by the insured under any contract'' to apply only to indemnification and hold-harmless agreements, whereby the insured agrees to "assume" the tort liability of another. ").
. Meadow Valley Contractors, Inc. v. Transcon. Ins. Co., 2001 UT App 190, ¶¶ 16-19, 27 P.3d 594.
. Uran Cope § 13-8-1(1)(b).
. Meadow Valley Contractors, Inc., 2001 UT App 190, ¶ 18, 27 P.3d 594.
. Am. Rural Cellular, Inc. v. Sys. Comme'n Corp., 939 P.2d 185, 192 (Utah Ct.App. 1997).
. Id.
. See, e.g., Russ v. Woodside Homes, Inc., 905 P.2d 901, 903-04 (Utah Ct.App. 1995) (upholding hold-harmless agreement in suit between contracting parties); see also, e.g., Nelson ex rel. Hirschfeld v. Corp. of the Presiding Bishop of the Church of Jesus Christ of Latterday Saints, 935 P.2d 512, 513 (Utah 1997) (using "General Release and Hold Harmless Agreement" to settle a claim).
. State v. Gallegos, 2007 UT 81, ¶ 16, 171 P.3d 426 (alteration in original) (citation omitted) (internal quotation marks omitted).
. Buack's Law Dictionary 837-38 (9th ed. 2009) (defining "indemnity clause").
. Dr. Blaisdell's brief notes that "injury or death" in section 78B-6-707 might refer only to personal injury. We do not reach this issue.
. Restatement (Seconp) or Torts § 402A emt. m (1965).
. Id. 116.
. Utah Cope § 70A-2-719(1)(a).
. Interwest Constr. v. Palmer, 923 P.2d 1350, 1356 (Utah 1996) (alteration in original) (quoting Resrarement (Secomp) or Contracts § 195(3) (1981)).
. Restatement (THirp) or Torts: Propucts § 21 cmt. f (1998).
. See Hawkins ex rel. Hawkins v. Peart, 2001 UT 94, ¶ 9, 37 P.3d 1062.
. Berry v. Greater Park City Co., 2007 UT 87, ¶ 26, 171 P.3d 442 (internal quotation marks omitted); cf. Milne v. USA Cycling Inc., 575 F.3d 1120, 1130-31 (10th Cir. 2009) ("[Alppeals courts have affirmed grants of summary judgment on gross negligence claims where the undisputed evidence showed that the defendants took precautionary measures and did not ignore known and obvious risks.").
. Berry, 2007 UT 87, ¶ 30, 171 P.3d 442 (internal quotation marks omitted). But cf. Milne, 575 F.3d at 1126-29 (applying federal standard instead of Utah's requirement that there be a standard of care fixed by law for summary judgment).
. Pearce v. Utah Athletic Found., 2008 UT 13, ¶ 26 n. 2, 179 P.3d 760 (bobsled); see also Berry, 2007 UT 87, ¶¶ 28-30, 171 P.3d 442 (ski resort).
. Berry, 2007 UT 87, ¶ 27, 171 P.3d 442 (internal quotation marks omitted).
. Orthopedic & Sports Injury Clinic v. Wang Labs., Inc., 922 F.2d 220, 222 (5th Cir. 1991).
. Id. at 223.
. Id. at 223 n. 3 (internal quotation marks omitted).
. Id. (internal quotation marks omitted).
. Id. at 224.
Reference
- Full Case Name
- Mark H. BLAISDELL, an individual, and Mark H. Blaisdell, D.D.S., P.C., a Utah professional corporation, and v. DENTRIX DENTAL SYSTEMS, INC., a Utah corporation, and
- Cited By
- 27 cases
- Status
- Published