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Delta Health Technologies, LLC v. Companions and Homemakers, Inc.

Superior Court of Pennsylvania

August 30, 2019

DELTA HEALTH TECHNOLOGIES, LLC
v.
COMPANIONS AND HOMEMAKERS, INC. Appellant

          Appeal from the Order Entered September 17, 2018 In the Court of Common Pleas of Blair County Civil Division at No(s): 2016 GN 2734

          BEFORE: PANELLA, P.J., STABILE, J., and McLAUGHLIN, J.

          OPINION

          McLAUGHLIN, J.

         Appellant Companions and Homemakers, Inc. ("Companions") appeals from the order overruling Companions' Preliminary Objections to Appellee Delta Health Technologies, LLC's ("Delta") Complaint, seeking dismissal for lack of personal jurisdiction. We affirm.

         The facts alleged in the pleadings are as follows. Delta is a Pennsylvania limited liability company with a place of business located in Altoona, Pennsylvania. Complaint, at ¶ 1. Delta is engaged in the business of developing, licensing, and servicing software for the home health, hospice, and private duty agencies in the United States and Canada. Id. at ¶ 3. Companions is a Connecticut corporation with a place of business in Farmington, Connecticut. Id. at ¶ 2. Companions provides home care services and care management services to members of the public. Id. at ¶ 8.

         Among Delta's products and services is "AppointMate," which is scheduling, billing, and payroll software for private agencies that provide in-home services for their clients. Id. at ¶¶ 4-5. AppointMate is provided to Delta's customers on a "software-as-a-service" basis, whereby the software is owned and operated by Delta and Delta's customers can access AppointMate from remote locations via the Internet on a subscription basis. Id. at ¶ 6. There is no software licensed or delivered to Delta's customers. Id. In addition, the AppointMate software cannot be modified by customers. Id.

         The parties' relationship began in 2011 when Delta and Companions began discussions about Companions' search for a new computerized scheduling system. Id. at ¶ 12. Negotiations between the parties continued until October 2013, and included Delta providing Companions with a "test account" to access AppointMate and demonstrating AppointMate to Companions. Id. at ¶¶ 15, 17, 20. Companions' access to the test account continued uninterrupted from July 2011 until mid-2012, during which time Companions loaded its own data into the test account, which was maintained in Pennsylvania by Delta, for purposes of testing the features and functions of AppointMate. Id. at ¶ 18. In October 2013, Companions informed Delta that it was terminating their negotiations. Id. at ¶ 21. However, in October 2014, Companions contacted Delta to re-start negotiations about becoming an AppointMate customer. Id. at ¶ 22.

         On April 10, 2015, the parties executed a written agreement (the "Agreement"), whereby Delta provided Companions with a subscription to AppointMate. Id. at ¶¶ 24-25. The Agreement also provided that Delta would create certain programming changes (the "Enhancements") to modify AppointMate to meet Companions' requirements. Id. at ¶ 25. The Agreement stated that the parties would work together after the execution of the Agreement to finalize the specifications for the Enhancements and that Companions would pay for the Enhancements on a time and materials basis. Id. The contract provided for a duration of three and a half years but Companions was free to terminate the agreement without cause within the initial six-month period. Id.; Agreement, at ¶ 2. The Agreement also stated that the laws of the state of Connecticut would govern the terms of the contract. Agreement, at ¶ 16.5.

         After the Agreement was made, between April 10, 2015 and July 21, 2015, both parties dedicated considerable resources, time, and effort via telephone, email, and several in-person meetings to define Companions' specific requirements for the Enhancements. Complaint, at ¶ 27. Delta then performed professional services to develop the Enhancements for Companions at its place of business in Altoona, Pennsylvania. Id. at ¶ 30. According to the Complaint, Delta did almost all of the work it performed on the Enhancements in Altoona, Pennsylvania. Id. at ¶ 44. Further, the Enhancements were loaded onto computer servers at data centers in Pittsburgh, Pennsylvania and Columbus, Ohio, and Delta operated them from its headquarters in Blair County, Pennsylvania. Id.

         Delta sent invoices to Companions on September 9 and December 7, 2015 for the work it had done to develop the Enhancements. Id. at ¶¶ 31, 39. Companions notified Delta on November 30, 2015, that it was exercising its option to early termination of the Agreement. Id. at ¶ 37. Delta alleges that Companions failed to pay the invoices of September 9 and December 7, 2015, in the total amount of $47, 536.33. Id. at ¶¶ 35, 43, 46.

         Delta brought the instant breach of contract action against Companions on September 6, 2016 for failure to pay for work that it performed before the Agreement's termination. Companions filed Preliminary Objections seeking dismissal for lack personal jurisdiction.[1] At oral argument on the Preliminary Objections, the trial court asked counsel if they wanted to take discovery on the issue of personal jurisdiction. Counsel for Companions responded by saying that he believed that the court could make a decision on the Preliminary Objections without the taking of evidence, and could do so based solely on the face of the pleadings and the fact that Companions is located in Connecticut. N.T., 5/23/17, at 3-4. The trial court also inquired whether representatives from Companions came to Pennsylvania. Counsel for Companions conceded that Delta's Complaint averred that Companions' representatives came to Pennsylvania, and agreed that the court must accept that fact as true, if it ruled based on the pleadings. Id. at 13-14.

         On August 18, 2017, the court overruled the Preliminary Objections and issued an opinion. Companions then filed a Motion for Reconsideration or in the alternative, Motion to Certify for Immediate Appeal. The court denied the Motion for Reconsideration but allowed Companions to take an appeal as of right pursuant to Pennsylvania Rule of Appellate Procedure 311(b)(2), stating in its order that the Preliminary Objections raised a substantial issue of jurisdiction.[2] Companions then filed the instant appeal, raising the following issue:

Whether the trial court erred by overruling Defendant Companions and Homemakers, Inc.'s Preliminary Objections and finding that sufficient contacts existed for the trial court to exercise jurisdiction over Companions and Homemakers, Inc., a Connecticut corporation which provides ...

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