Court Opinion

ID: 78733
Source: CourtListenerOpinion
Date Created: 2010-04-28 04:04:35+00
Date Added: 2024-06-11T17:21:22.953622
License: Public Domain

[DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS
                                                                     FILED
                         FOR THE ELEVENTH CIRCUIT   U.S. COURT OF APPEALS
                           ________________________   ELEVENTH CIRCUIT
                                                                  APR 23, 2010
                                 No. 09-14379                      JOHN LEY
                           ________________________                  CLERK

                    D. C. Docket No. 09-00989-CV-T-30-AEP

DOCTORS' ADMINISTRATIVE
SOLUTIONS, LLC,

                                                                  Plaintiff-Appellee,

                                       versus

ALLSCRIPTS, LLC,

                                                              Defendant-Appellant.

                           ________________________

                   Appeal from the United States District Court
                       for the Middle District of Florida
                        _________________________

                                  (April 23, 2010)

Before DUBINA, Chief Judge, MARTIN and HILL, Circuit Judges.

PER CURIAM:

      Plaintiff-Appellee Doctors’ Administrative Solutions, LLC (“DAS”) filed

this suit against Defendant-Appellant Allscripts, LLC (“Allscripts”) in a Florida
state court, asserting claims for breach of warranty, breach of contract, and tortious

interference with prospective business relationships. DAS sought both monetary

damages and injunctive relief. Allscripts removed the action to the United States

District Court for the Middle District of Florida. After filing its answer to the

complaint, Allscripts filed a motion to compel arbitration and stay the proceedings.

The district court denied Allscripts’ motion and this appeal followed.

                                I. BACKGROUND

      DAS provides technology-based solutions, including as a value added

reseller, for physician practices throughout Florida and the United States.

Allscripts provides software, services, information and connectivity solutions to

physician practices. A third company, Misys Physician Systems, LLC (“Misys”),

provides similar services as Allscripts. The undisputed facts show that DAS has

been a reseller for Misys since approximately 2004. On July 31, 2008, at Misys’

request, DAS and Misys entered into a partner agreement (“Misys Agreement”)

that solidified the relationship between the companies and continued to allow DAS

to resell Misys products. Nothing in the Misys Agreement prevented DAS from

also selling products made by competitors of Misys. According to David

Schlaifer, who entered into the Misys Agreement on behalf of DAS, he knew at the

time he entered into the agreement that Misys was about to merge with another

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company–Allscripts.

      The Misys Agreement contains a written arbitration clause, which provides:

      In case of any and all disputes in connection with the negotiation,
      execution, interpretation, performance or non-performance of this
      Agreement, [Misys and DAS] agree to seek non-binding mediation[.] .
      . . In the event that any such mediation does not produce a settlement,
      unless the dispute is otherwise settled, the dispute shall be determined
      by binding and final arbitration in Atlanta, Georgia, by three (3)
      arbitrators selected by the Parties (or by the American Arbitration
      Association if the parties cannot agree) in accordance with the law of
      the State of Georgia and the rules of the American Arbitration
      Association.

Supp. Record, Tab 2, § 19(d). Section 19(n) of the Misys Agreement provides that

“this Agreement shall inure to the benefit and be binding upon the Parties hereto

and their respective successors and permitted assigns.” Section 19(o) of the Misys

Agreement provides that “this Agreement may not be modified or amended except

by an instrument in writing signed by the parties or their duly authorized

representatives.”

      Beginning around July 2008, around the same time that DAS entered into

the Misys Agreement, DAS began discussing with Allscripts the possibility of

DAS becoming a reseller of Allscripts products. At this time, although it had been

announced that Misys and Allscripts intended to merge, the merger had not yet

taken place. On September 30, 2008, DAS and Allscripts entered into an

agreement (“Allscripts Agreement”). Unlike the Misys Agreement, the Allscripts

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Agreement did not include an arbitration clause. It did, however, include a

provision which provided that venue and jurisdiction for any and all disputes is

Hillsborough County, Florida. Supp. Record, Tab 3, Addendum at ¶ 9. The

Allscripts Agreement also included the following provision:

      [I]n the event Allscripts is acquired by, merges with, or acquires
      another company . . . with which [DAS] has existing contractual
      relations as a reseller, channel partner, services provider, or other, the
      parties agree to use best efforts to timely consolidate such agreements
      on terms most favorable to [DAS] . . . . Such consolidation shall be
      completed within 30 days of any such corporate change. Breach of
      this provision shall be considered a material breach of this agreement.

Id. at Exhibit “F” at ¶ 12.

      Misys and Allscripts merged on October 10, 2008. Subsequent to the

merger, Allscripts and DAS attempted to negotiate a new, consolidated agreement

as was required by the above-cited provision. On behalf of DAS, Mr. Schlaifer

presented Allscripts with a chart of certain terms he believed should be included in

the new agreement, some of which came from the Allscripts Agreement and some

of which came from the Misys Agreement. Not surprisingly, DAS’s proposed

terms did not include the arbitration provision contained in the Misys Agreement.

Despite efforts to negotiate a new, consolidated agreement, the parties were unable

to reach an agreement as to the new terms. Accordingly, no formal consolidated

agreement was ever signed or entered into. According to Schlaifer, the disputes

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that arose during the attempt to consolidate the two agreements are a large part of

what gave rise to DAS’s legal claims in this case.

      DAS filed its complaint in April 2009, after the negotiations between

Allscripts and DAS failed. DAS asserted claims for breach of warranty, breach of

the Allscripts contract, and tortious interference with prospective business

relations. DAS sought both monetary and injunctive relief. The case was removed

to the district court on May 28, 2009, and Allscripts filed its answer and

affirmative defenses on June 11, 2009. In its answer, Allscripts asserted that

DAS’s claims arose out of or related to the arbitration provision contained in the

Misys Agreement and that, pursuant to that arbitration provision and the Federal

Arbitration Act (“FAA”), all of DAS’s claims were subject to mandatory, binding

arbitration. Doc. No. 6, p.7. That same day, Allscripts filed a motion to compel

arbitration and to stay the proceedings. Doc. No. 8.

      The district court held an evidentiary hearing on Allscripts’ motion to

compel arbitration on July 29, 2009.1 After hearing the videotaped deposition

testimony of Kelly Schudy, an Allscripts employee, as well as the live testimony of

Schlaifer, the district court found that the only issue it had to decide was whether

or not the arbitration provision contained in the Misys Agreement would be

      1
          The full transcript of this hearing can be found at District Court Docket No. 38.

                                                  5
included in the new, consolidated agreement that was required by the consolidation

clause of the Allscripts Agreement. Doc. No. 38, p.39. The court noted that this

would depend on whether or not the arbitration provision would be “favorable” to

DAS. Id. at 38-39. After hearing arguments from both parties, the district court

ruled as follows:

      I rule that DAS has a right to a new contract, negotiating in good faith
      within 30 days containing the terms most favorable to DAS, and it
      remains in dispute what those terms might be; but if the parties can’t
      agree on what those terms are, either side is entitled to try to have the
      Court or an arbitration panel decide for them what those terms are so
      that they do have a contract.

Id. at 56. However, the district court went on to hold: “But I make a finding that

the arbitration provision is not most favorable to DAS and, therefore, would not be

a part of the new contract and rule that the new Allscripts Misys company is not

entitled to arbitration.” Id. On August 5, 2009, the district court entered an order

denying Allscripts’ motion to compel arbitration and stay proceedings for the

reasons stated on the record during the evidentiary hearing. Doc. No. 31.

Allscripts filed a timely appeal.

      The issue on appeal is whether the district court erred in denying Allscripts’

motion to compel arbitration and stay proceedings based on its finding that the

new, consolidated agreement that was required by the Allscripts Agreement upon

the merger of Allscripts and Misys would not contain the arbitration provision

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from the Misys Agreement because such a provision would not be “most

favorable” to DAS.

                           II. STANDARD OF REVIEW

      This court reviews de novo a district court’s denial of a motion to compel

arbitration. Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 873

(11th Cir. 2005) (citing Musnick v. King Motor Co. of Ft. Lauderdale, 325 F.3d

1255, 1257 (11th Cir. 2003)).

                                  III. DISCUSSION

      We affirm the district court’s denial of Allscripts’ motion to compel

arbitration and stay proceedings. However, we need not decide, as the district

court did, whether the new, consolidated agreement that was required by the

Allscripts Agreement upon the merger would or should contain an arbitration

provision. Instead, it is enough to hold that the agreement that governs the

disputes in this case is the Allscripts Agreement, not the Misys Agreement.

Therefore, the fact that the Misys Agreement contains a written arbitration

provision is irrelevant. Instead, all that matters is that the relevant contract–the

Allscripts Agreement–undisputably does not contain an arbitration provision.

Accordingly, the arbitration agreement that was entered into between the parties

does not govern the current dispute and, therefore, is inapplicable. Because there is

                                            7
no governing arbitration agreement, we conclude that the district court correctly

denied Allscripts’ motion to compel arbitration.

      AFFIRMED.

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