The motion for a preliminary injunction is granted in part conditioned on deposit by Plaintiff of the contractual monthly payments into a trust account of its attorney, to be held pending further order of the court or agreement of the parties.  So long as such payments are made, Defendants are enjoined from terminating the contract and are ordered to cooperate with reasonable requests by Plaintiff as it attempts to remedy defects in the application of the software to its business.

Defendant does not dispute the evidence that it has not cured the “front end” defects in its program, claiming that only “back end” billing and collection software were ordered.  However, this is contradicted by the License and Service Agreement [the Agreement].

The Agreement provides in §1.2(d) that services include “electronic access to and storage of Patient Data (EMR)” and electronic integration with Plaintiff’s business systems.  The reference to the SOW (Scope of Work) modifies the statement that Defendant will provided tools to prepare “forms and documents”; it does not limit the contract to services mentioned in the SOW.  See also §1.2(l) & (m).  In §2.12, the Services in the Agreement include those in SOW; services are not limited to those in the SOW.

Therefore, the Court finds the declarations in the moving papers to be more credible than that of Mr. Salloum.  They establish that Defendant is in breach of the warranties in §2.12 (performance as specified by the Agreement and representations during demonstration of services) and §5.4 (conformity to functions and descriptions in documentation given the customer).

It is unnecessary to determine at this time whether §8.6 was violated, i.e., the extent to which Plaintiff and Defendant were responsible for problems in migrating data.  Based on the declarations in the moving and opposing papers, it appears probable that they share the responsibility.

Plaintiff has shown that Advanced Orthopedics is a beneficiary under the contract.  See Ex.B to the Agreement, items 1 & 2, and the supplemental declaration of Patrick Nazemi, ¶¶43-47 and Ex.2 & 3.

Therefore, the Court will enjoin Defendant from terminating the contract and from shutting off Plaintiff’s access to Defendant’s software.  Ms. Perez declares in ¶¶9 and 26 that the defects in Defendant’s system prevents transfer to another system and that Plaintiff will be forced out of business if denied access.  This is irreparable injury. Dingley v. Buckner (1909) 11 Cal.App. 181, 183.

However, the proposed injunction to force Defendant to “maintain the status quo” is too indefinite to enforce.  Also, as it is a mandatory injunction, it can only be imposed in “extreme cases” where Plaintiff has clearly established a right to it.  Teachers Ins. & Annuity Assn. v. Furlotti (1999) 70 Cal.App.4th 1487, 1493.  Because of the conflicting evidence regarding responsibility for migration problems, that is not the case here.

Nor has Plaintiff established that Defendant must continue to provide services for free.  The consideration for the alleged promise to waive payments while problems were being worked out was Plaintiff’s promise not to sue.  Nazimi declaration, ¶¶5-8.  That consideration has failed.  However, given the evidence of Defendant’s breach and Mr. Nazimi’s testimony in ¶19 about Plaintiff’s costs in attempting repair of the system, Plaintiff may be entitled to an offset. Therefore, the payments should be held in trust pending resolution of these issues.

Plaintiff is to give notice.