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Princeton Cmty. Hosp. Ass'n v. Nuance Communs., Inc.

United States District Court for the Southern District of West Virginia

April 6, 2020, Decided; April 6, 2020, Filed

CIVIL ACTION NO. 1:19-00265

Opinion

AMENDED MEMORANDUM OPINION

On March 31, 2020, the court denied defendant's motion to dismiss. The reasons for that decision follow.

I. Background

This civil action arises out of a data breach that occurred on June 27, 2017. See Complaint ¶ 1. Plaintiff Princeton Community Hospital Association, Inc. ("PCH") alleges that software from defendant Nuance Communications, Inc. ("Nuance") was integrated into PCH's hospital computer network. See id. at ¶ 2. According to PCH, the "Nuance system was infected by malicious malware that embedded and destroyed all data. Shortly thereafter, the same malicious malware encrypted PCH's entire computer health network and [*2]  destroyed all data content." Id. at ¶ 3. PCH contends that Nuance is responsible for PCH's total damages in the amount of approximately $6.8 million, net of payments from PCH's insurers. See id. at ¶ 4. The complaint alleges breach of contract and negligence on the part of Nuance. See id. at ¶¶ 75-86.

Nuance removed the case to this court on the basis of diversity jurisdiction. PCH moved to remand the case to state court and, on March 31, 2020, the remand motion was denied.

A Healthcare Master Agreement ("Master Agreement") establishes the contractual obligations of the parties. The Master Agreement provides in relevant part:

12. LIMITATION OF LIABILITY

12.1 The following provisions set out the exclusions and limitations of liability of Nuance and its Affiliates, and their respective officers, agents, contractors and employees, to [PCH] . . ., under or in connection with this Agreement, and/or in connection with any tortious act or omission including without limitation negligence and/or breach of duty including statutory duty arising under or in connection with this Agreement.

12.2 Nothing in this Agreement shall be taken to exclude or limit Nuance's liability for fraud or fraudulent misrepresentation, [*3]  for intentional or criminal misconduct; for death, personal injury or tangible property damage caused by its negligence in providing services at Company locations; or to the extent that such exclusion or limitation is not otherwise permitted by law.

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2020 U.S. Dist. LEXIS 60490 *

PRINCETON COMMUNITY HOSPITAL ASSOCIATION, INC., Plaintiff, v. NUANCE COMMUNICATIONS, INC., Defendant.

Subsequent History: As Amended April 7, 2020.

Prior History: Princeton Cmty. Hosp. Ass'n., Inc. v. Nuance Communs., Inc., 2020 U.S. Dist. LEXIS 55266 (S.D. W. Va., Mar. 31, 2020)

CORE TERMS

gist, allegations, limitation of liability, force majeure, indemnity provision, motion to dismiss, Parties, damages, tangible property, provisions, indemnify, tort claim, first-party, reimburse, losses, breach of contract claim, economic loss rule, negligence claim, tortfeasor, destroyed, grounded, malware