VIP UNIVERSAL MED. INS. GRP., LTD v. TRINITY COMPUT. SERVS., INC., 2024 NCBC 77

STATE OF NORTH CAROLINA
NEW HANOVER COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
24 CVS 2020
VIP UNIVERSAL MEDICAL
INSURANCE GROUP, LTD and VIP
UNIVERSAL MEDICAL INSURANCE
GROUP, LLC,
Plaintiffs,
v.
TRINITY COMPUTER SERVICES,
INC. d/b/a CHORDLINE HEALTH,
Serve: Capitol Services, Inc., Registered
Agent for Trinity Computer Services,
Inc., d/b/a Chordline Health, 108
Lakeland Avenue, Dover, Delaware,
19901,
Defendant.
ORDER AND OPINION ON
DEFENDANT’S MOTION FOR
PARTIAL JUDGMENT ON THE
PLEADINGS
1. 	THIS MATTER is before the Court on Defendant’s Motion for Partial
Judgment on the Pleadings (the “Motion”), (ECF No. 20).
2. 	Having considered the Motion, the related briefing, the arguments of
counsel at a hearing on the Motion, and other relevant matters of record, the Court,
in the exercise of its discretion, hereby GRANTS in part and DENIES in part the
Motion.
Troutman, Pepper, Hamilton, Sanders LLP by Dennis Deak and William
J. Farley, for Plaintiffs.
Ward and Smith, P.A. by Isabelle Chammas and Edward Coyne and
Kane, Russel, Coleman, Logan PC by Brian W. Clark (admitted pro hac
vice), for Defendant.
Earp, Judge.
VIP Universal Med. Ins. Grp., Ltd v. Trinity Comput. Servs., Inc., 2024 NCBC 77.

I. 	FACTUAL BACKGROUND
3. 	The Court does not find facts on a motion for judgment on the pleadings
pursuant to Rule 12(c) but rather recites the facts alleged in the pleadings that are
relevant to the Court’s determination of the motion. Willard v. Barger, 2019 NCBC
LEXIS 43, at *1-2 (N.C. Super. Ct. July 12, 2019) (citing Erikson v. Starling, 235 N.C.
643, 657 (1952)).
4. 	Plaintiff VIP Universal Medical Insurance Group, LLC (“VIP LLC”) is a
Texas limited liability company with its principal place of business in Miami, Florida.
(Compl. ¶ 1, ECF No. 3; Def.’s Mem. Law Supp. Mot. Partial J. Pleadings at 2 [“Def.’s
Memo.”], ECF No. 21.)1
5. 	Defendant, a Delaware corporation, develops and licenses software for
insurance companies and has its principal place of business in Wilmington, North
Carolina. (Compl. ¶ 3; Def.’s Memo. at 2.)
6. 	On 1 September 2023, Plaintiff and Defendant entered into a contract
titled, “Binding Business Associate Agreement and Terms of Service With Exhibits”
(“Agreement”), the purpose of which was to “implement and utilize the ACUITYnxt –
an on-line clinical workflow system offered by Defendant . . . . to aid in the workflow
1 There are two named Plaintiffs in the Complaint: VIP Universal Medial Insurance Group,
Ltd., and its parent company, VIP Universal Medical Insurance Group, LLC. 	However,
according to the Complaint “[t]he Contract references ‘VIP Universal Medical Group, Ltd.’
Plaintiffs assert that this is a scrivener’s error, and the intended contracting party was ‘VIP
Universal Medical Group, LLC.’” (Compl. at 1, n.1.) 	Therefore, the Court will refer to the
Plaintiffs together in the singular, “Plaintiff.”

and medical management of [Plaintiff’s] policyholders and dependents as covered
members.” (Compl. 2, Ex. A)2
7. 	The parties signed an associated Statement of Work (“SOW #1”) on 16
October 2023, to be effective 1 September 2023. (Compl. ¶ 7, Ex. B.) SOW #1 included
a “Go Live Date” of “on or before April 30, 2024.” (Compl. ¶ 11.)
8. 	Plaintiff entered into the Agreement and SOW #1 “with the expectation
that the software services . . . would enhance Plaintiff’s operations and facilitate its
business model, particularly in the context of providing medical travel insurance
services throughout South America and Central America.” (Compl. ¶ 12.) 3
9. 	However, 	as 	early 	as 	November 	2023, 	Plaintiff 	began 	noticing
inconsistencies 	between 	Defendant’s 	offerings 	and 	Plaintiff’s 	operational
requirements, including processing delays, lack of Spanish and Portuguese language
support, and data inconsistencies. (Compl. ¶¶ 17, 22.)
10. 	The parties attended multiple “training sessions” to work through these
issues. Specifically, during training sessions on 8 November 2023 and 14 November
2023, the parties discussed how the software could be used for group contract
management. 	(Compl. ¶¶ 23-24.) 	During a training session on 20 November 2023,
the parties discussed adopting Defendant’s software for Spanish and Portuguese
speaking users. (Compl. ¶ 25.)
2 The first few paragraphs of the Complaint are not numbered. Therefore, the Court refers
to the content of this part of the Complaint by page number.
3 The Complaint states that Defendant entered into the contracts with this expectation, but
this appears to be a typographical error.

11. 	Among 	other 	things, 	Plaintiff 	alleges 	that 	Defendant 	had 	“actual
knowledge that Plaintiff sold its services only to customers outside of the United
States and particularly in Central and South America. However, Defendant did not
disclose 	that 	it 	had 	no 	experience 	or 	ability 	to 	service 	non-English 	speaking
platforms.” (Compl. ¶¶ 26-27.)
12. 	From 1 November 2023 through 4 March 2024, Plaintiff made monthly
payments to Defendant in accordance with the Agreement and its attached Pricing
Addendum. In total, Plaintiff paid Defendant $200,309.89. (Compl. ¶ 34; Agreement
at 5.)
13. 	Plaintiff alleges that despite communicating with Defendant regarding
continued failures in the software, Defendant failed to implement the software
services as specified and required by both the Agreement and SOW #1 by the Go Live
Date. (Compl. ¶ 31.)
14. 	As a result, Plaintiff terminated the Agreement pursuant to Paragraph 28,
which provides in relevant part:
If CHORDLINE commits a material breach of this Agreement, Client
may either:
a) terminate this Agreement immediately; or
b) provide CHORDLINE with an opportunity to cure such breach with
a stated period which shall be less than 30 days. If we do not cure such
breach within the time-period You have stated You may terminate this
Agreement immediately.
(Agreement ¶ 28.)

15. 	On 	6 	May 	2024, 	Plaintiff 	sent 	a letter of 	termination 	to Defendant
terminating the Agreement for cause and stating that Defendant had materially
breached the contract in the following ways:
(1) failure to implement the software services; (2) severe processing
delays; (3) the absence of computed fields in the software restricting
[Plaintiff’s] ability to perform essential calculations; (4) the lack of
Spanish and Portuguese support, especially given Defendant’s prior
knowledge of [Plaintiff’s] primary operations in Central and South
America; (5) the ACUITYnxt software’s inflexibility regarding workflow;
(6) the lack of data fields essential to [Plaintiff’s] business process which
creates inaccurate and confusing letters and reports; (7) the ACUITYnxt
software’s tendency to create significant gaps in historical data and
accessibility; and (8) the ACUITYnxt software’s cripplingly insufficient
access control measures which posed a material risk to data integrity
and compliance with data protection standards.
(Compl. ¶ 33.)
16. 	Defendant responded the following day, denying any breach of contract and
requesting confirmation that the contract was being terminated. 	Defendant also
demanded payment for invoices and for a Termination Fee referenced in paragraph
28 of the Agreement. (Compl. ¶ 36.)
17. 	The Termination Fee is described in paragraph 28 as follows:
Should Client terminate this Agreement prior to the expiration of the
Term, and CHORDLINE has not breached the Agreement, Client must
notify CHORDLINE in writing sixty (60) days prior to the date of
termination and must pay a Termination Fee.
Client agrees to pay a Termination Fee calculated as (X minus Y)
(“Termination Fee”), where “X” equals $1,230,000 (the “Base Amount”)
and “Y” equals all License and Service fees for ACUITYnxt paid as of
the effective date of termination.
(Agreement ¶ 28.)

18. 	Plaintiff 	replied 	by 	letter 	dated 	15 	May 	2024, 	confirming 	that 	the
Agreement was terminated but denying that it was obligated to pay the termination
fee because, it contends, Defendant materially breached the contract. (Compl. ¶¶ 36-
39.)
II. PROCEDURAL BACKGROUND
19. 	Plaintiff commenced this action on 21 May 2024, stating claims for (1)
material breach of contract, (2) fraudulent inducement, (3) fraudulent concealment,
(4) breach of warranty of merchantability, and (5) breach of warranty of fitness for a
particular purpose. In addition to the above claims, Plaintiff requests a declaratory
judgment that the Termination Fee described in the Agreement is not owed due to
both Defendant’s material breach of contract and because the Termination Fee is an
unenforceable penalty. 	(See generally Compl.) 	Plaintiff’s Complaint includes as
attachments the Agreement, as well as the various exhibits and addendums thereto.
20. 	On 26 July 2024, Defendant filed an Answer and Counterclaim, in which it
alleges breach of contract for failure to pay invoices for services rendered and failure
to pay the Termination Fee. 	(See generally Def.’s Answer and Countercl., ECF No.
11.) Also on 26 July 2024, Defendant filed a Motion to Partially Dismiss Complaint
for Failure to State a Claim, (ECF No. 12).
21. 	The Court determined that the Motion to Partially Dismiss was untimely
and denied it in an Order dated 31 July 2024. 	(Order on Def.’s Mot. to Partially
Dismiss Compl. for Failure to State Claim, ECF No. 15.)

22. 	Thereafter, on 26 August 2024, Plaintiff filed an Answer to Defendant’s
Counterclaim, (ECF No. 16). The pleadings having closed, Defendant filed a Motion
for Partial Judgment on the Pleadings on 10 September 2024, (ECF No. 20). It is this
motion that is currently before the Court.
23. 	Defendant seeks an order dismissing Plaintiff’s claims for fraudulent
inducement, fraudulent concealment, breach of the warranty of merchantability,
breach of the warranty of fitness for a particular purpose, negligence, punitive
damages, attorneys’ fees, and declaratory judgment. 	(See generally Def.’s Mot. for
Partial J. on the Pleadings.) The parties’ cross-claims for breach of contract are not
implicated by the Motion.
24. 	After full briefing, the Court held a hearing on the Motion on 31 October
2024. 	(See Not. of Hearing, ECF No. 36.) 	All parties were present through counsel
and were heard.
25. 	Following the hearing, Plaintiff filed a Notice of Voluntary Dismissal
without Prejudice, voluntarily dismissing its First Cause of Action (material breach
of contract) “only to the extent the cause of action relies upon any allegation of the
language functionality of Spanish and Portuguese,”4 the Second Cause of Action
4 Remaining alleged breaches include: (1) failure to implement the software services; (2)
severe processing delays; (3) the absence of computed fields in the software restricting
[Plaintiff’s] 	ability 	to 	perform 	essential 	calculations; 	(4) 	the 	ACUITYnxt 	software’s
inflexibility regarding workflow; (5) the lack of data fields essential to [Plaintiff’s] business
process, which creates inaccurate and confusing letters and reports; (6) the ACUITYnxt
software’s tendency to create significant gaps in historical data and accessibility; and (7) the
ACUITYnxt software’s cripplingly insufficient access control measures, which posed a
material risk to data integrity and compliance with data protection standards.

(fraudulent inducement), the Third Cause of Action (fraudulent concealment), the
Fourth Cause of Action (breach of warranty of merchantability), and the Fifth Cause
of Action (breach of warranty of fitness for a particular purpose). 	(Pl.’s Not. of
Voluntary Dismissal Without Prejudice, ECF No. 37.)
26. 	The balance of the Motion is now ripe for disposition.
III. 	LEGAL STANDARD
27. 	“The standard of review for a Rule 12(c) motion is the same as for a motion
to dismiss under Rule 12(b)(6).” 	Akzo Nobel Coatings, Inc. v. Rogers, 2011 NCBC
LEXIS 42, at **19 (N.C. Super. Ct. Nov. 3, 2011) (citing A-1 Pavement Marking, LLC
v. APMI Corp., 2008 NCBC LEXIS 15, at *7 (N.C. Super. Ct. Aug. 4, 2008)).
28. 	“A 	motion 	for 	judgment 	on 	the 	pleadings 	is 	a 	summary 	procedure,
authorized by Rule 12(c) of the North Carolina Rules of Civil Procedure, which allows
a trial court to enter judgment when all the material allegations of fact are admitted
in the pleadings and only questions of law remain.” 	George Shinn Sports, Inc. v.
Bahakel Sports, Inc., 99 N.C. App. 481, 486 (1990).
29. 	In 	reaching 	its 	determination, 	the 	Court 	must 	“view 	the 	facts 	and
permissible inferences in the light most favorable to the nonmoving party.” Ragsdale
v. Kennedy, 286 N.C. 130, 137 (1974). 	“All well pleaded factual allegations in the
nonmoving party’s pleadings are taken as true and all contravening assertions in the
movant’s pleadings are taken as false.” Id.
30. 	In addition, when ruling on a Rule 12(c) motion, a trial court may consider
a contract that is the subject matter of an action. See, e.g., Davis v. Durham Mental

Health/Dev. Disabilities/Substance Abuse Area Auth., 165 N.C. App. 100, 104 (2004);
cf. Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60 (2001) (citing Coley v. Bank,
41 N.C. App. 121, 126 (1979)).
31. 	The Motion “should not be granted unless the movant clearly establishes
that no material issue of fact remains to be resolved and that he is entitled to
judgment as a matter of law.” Carpenter v. Carpenter, 189 N.C. App. 755, 761 (2008)
(citing Toomer v. Branch Banking & Trust Co., 171 N.C. App. 58, 66 (2005)). 	Since
judgment on the pleadings is final, “each motion under Rule 12(c) must be carefully
scrutinized lest the nonmoving party be precluded from a full and fair hearing on the
merits.” Ragsdale, 286 N.C. at 137.
IV. 	ANALYSIS
A. 	Negligence, Punitive Damages, and Attorneys’ Fees
32. 	Defendant contends that any negligence claim should be dismissed to the
extent it is pleaded in the Introduction to the numbered paragraphs of the Complaint.
(Def.’s Memo. at 19.) 	Defendant further contends that there is no support for the
recovery of either attorneys’ fees or punitive damages. (Def.’s Memo. at 20-21.)
33. 	Plaintiff concedes that it did not assert a claim for negligence. (Responsive
Br. Opposition Def.’s Mot. Partial J. Pleadings at 4 [“Pl.’s Br.”], ECF No. 34.)
Accordingly, there is no claim to dismiss, and this aspect of the Motion is DENIED
as moot.
34. 	As for damages, given Plaintiff’s voluntary dismissal of its tort claims, any
demand for punitive damages is without basis. 	However, Plaintiff argues that

dismissal of its request for attorneys’ fees is premature, (Pl.’s Br. at 17), and the Court
agrees.
35. 	Therefore, in its discretion, the Court DENIES Defendant’s Motion for
Partial Judgment on the Pleadings with respect to Plaintiff’s request for attorneys’
fees. Whether Plaintiff is entitled to any such fees and, if so, in what amount, will be
decided at a later date on a more complete record.
B. 	Declaratory Judgment
36. 	Next, Defendant argues for dismissal of Plaintiff’s claim for a judgment
declaring that the Termination Fee is not owed due to (1) Defendant’s material breach
of the Agreement and, in any event, (2) because the Termination Fee provision is an
unenforceable penalty and not a permissible liquidated damages clause. 	(Compl.
¶¶ 106-112.)
37. 	In Defendant’s view, it did not breach the Agreement, and the Termination
Fee provision is neither a liquidated damages clause nor a penalty. (Def.’s Memo. at
24-25.) Instead, Defendant contends that the Termination Fee is the amount Plaintiff
agreed to pay to exercise an option to terminate the Agreement early. Because that
option can be exercised without the necessity of a material breach, Defendant argues
that 	Plaintiff’s 	argument 	applying 	the 	law 	regarding 	liquidated 	damages 	is
irrelevant. (Def.’s Memo. at 23-24.)
38. 	Plaintiff sees the Termination Fee provision differently, as one intended to
apply in the event Plaintiff is determined to have breached the Agreement by failing
to pay Defendant’s invoices as they became due.

39. 	Thus, the parties’ contentions raise three possible scenarios: (1) Defendant
breached the contract, releasing Plaintiff from its contract obligations, including the
Termination 	Fee; 	(2) 	Plaintiff 	breached 	the 	contract 	and 	Defendant 	suffered
damages, but the Termination Fee is an unenforceable liquidated damages clause; or
(3) neither party breached the contract, but Plaintiff exited early and then failed to
pay Defendant the early Termination Fee that was negotiated in the contract.
40. 	Again, the Termination Fee provision provides in relevant part:
Should Client terminate this Agreement prior to the expiration of the
Term, and CHORDLINE has not breached the Agreement, Client must
notify CHORDLINE in writing sixty (60) days prior to the date of
termination and must pay a Termination Fee.
(Agreement ¶ 28 (emphasis added).) There is no mention of a Termination Fee to be
paid in the event of Plaintiff’s breach of the Agreement.5 The plain language of the
Agreement establishes that the Termination Fee is triggered only when Defendant
has not breached the Agreement, but Plaintiff nevertheless wishes to be released from
its contractual obligations.
41. 	Defendant relies on Brenner v. Little Red School House, Ltd., 302 N.C. 207
(1981). 	In Brenner, the plaintiff contracted with Little Red School House to pay
tuition for the entire school year in advance of the first day of school in exchange for
the defendant’s promise to hold a place for the plaintiff’s child. 	Id. at 211-12. 	The
5 Defendant’s counterclaim does not seek payment of the Termination Fee as a form of
liquidated damages for Plaintiff’s alleged failure to pay invoices when they came due.
Instead, Defendant’s theory of the case is that Plaintiff exercised its option to terminate the
contract early and then breached the Agreement by refusing to pay the early Termination
Fee.

contract provided in pertinent part: “[w]e understand that the tuition is $ 1,080.00
per year, payable in advance on the first day of school, no portion refundable.” Id. at
210.
42. 	When the child dropped out before the school year ended and the school
refused to return the tuition, our Supreme Court determined that “[t]he non-
refundable tuition provision was simply one term of the contract, not a measure of
recovery in the event of a breach, thus the law of damages has no bearing upon the
case.” Id. at 214.
43. 	Central to the Supreme Court’s decision in Brenner was the fact that no
breach of contract existed in the case. 	Neither party had promised that the child
would actually attend the school, and both had fully performed their obligations to
the extent possible without the presence of the child in the school. 	The Court
observed:
[P]laintiff contracted to pay the tuition for the entire school year in
advance of the first day of school. In consideration therefor, defendant
promised to hold a place in the school for plaintiff's child, to make all
preparations necessary to educate the child for the school year, and to
actually teach the child during that period. Both parties received
valuable consideration under the terms of the contract. After receiving
plaintiff's tuition payment, defendant reserved a space for plaintiff's
child, made preparations to teach the child, and at all times during the
school year kept a place open for the child. This performance by
defendant was sufficient consideration for plaintiff's tuition payment. A
school such as defendant must make arrangements for the education of
its pupils on a yearly basis, prior to the commencement of the school
year.
Id. at 211-12. In this context, the Court determined that the language of the contract
established that the non-refundable tuition provision was simply one term of the

contract to be performed and not a measure of recovery in the event of a breach. Id.
at 214.
44. 	Here, Plaintiff’s request for a declaration is two-fold. First, unlike Brenner,
Plaintiff seeks a declaration that the Termination Fee is not owed due to Defendant’s
material breach of contract. Plaintiff alleges that it was Defendant’s breaches of the
contract that caused it to end, not Plaintiff’s exercise of an agreed-upon option for
early termination. To that extent, Plaintiff states a claim for declaratory judgment,
and the Motion shall be DENIED.
45. 	Alternatively, Plaintiff requests a declaration that the Termination Fee is
not an enforceable liquidated damages provision but rather is an impermissible and
unenforceable penalty that bears no relationship to the damages Defendant would
suffer in the event Plaintiff breached the contract. 	(Compl. ¶¶ 106-112.)6 	As in
Brenner, the language of the Agreement belies Plaintiff’s contention that it was
intended to be a liquidated damages provision at all, much less an unenforceable one.
Accordingly, the Motion with respect to this aspect of Plaintiff’s declaratory judgment
claim shall be GRANTED.7
6 As an aside, Defendant challenges this characterization but nevertheless contends that it
is irrelevant to the Court’s determination.
7 Plaintiff contends that Defendant’s argument improperly asks the Court to expand the
scope of its review with respect to the Motion. In essence, Plaintiff argues that Defendant is
asking the Court, not to rule that Plaintiff’s claim is subject to dismissal, but rather to go one
step farther and rule that Defendant is entitled to summary judgment with respect to
Defendant’s breach of contract counterclaim. (Pl.’s Br. at 18-19.) In ruling on the Motion,
the Court does not determine either party’s breach of contract claim. 	To the contrary, the
Court holds only that, based on the plain language of the Agreement, the Termination Fee
provision is not a liquidated damages clause.

V. 	CONCLUSION
46. 	WHEREFORE, Defendant’s Motion for Partial Judgment on the Pleadings
is GRANTED in part and DENIED in part, as follows:
a. 	The Motion is GRANTED with respect to Plaintiff’s demand for
punitive damages.
b. 	The Motion is GRANTED with respect to Plaintiff’s Declaratory
Judgment 	Claim, 	but 	only 	to 	the 	extent 	Plaintiff 	demands 	a
judgment 	declaring 	that 	the 	Termination 	Fee 	provision 	is 	an
unenforceable liquidated damages clause.
c. 	Except as herein specified, the Motion is DENIED.
SO ORDERED, this the 5th day of December, 2024.
/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases