Prairie River Home Care, Inc. v. Procura, LLC

Prairie River Home Care, Inc. (plaintiff) was a family-owned business that provided in-home medical services for elderly and disabled people. Prairie River was not commercially sophisticated. In 2015, Prairie River contracted with Procura, LLC (defendant) to buy a license to Procura’s software. Procura, which was a more commercially sophisticated company than Prairie River, required Prairie River to enter the contract by September 30, 2015. The contract included a performance warranty, which guaranteed that the software would be substantially functional within 90 days of the agreement. The contract explicitly disclaimed all liability for consequential damages and limited available remedies to a refund of the price paid for the software, if paid within the 12 months preceding notice of any dispute. Procura delivered a database to Prairie River in November of 2015, but the software was defective and never functioned properly on Prairie River’s computer system. Prairie River did not discover the defects until after it had fully integrated the software into its computer system and tried unsuccessfully to update and fix the software. Prairie River eventually gave up on trying to use the software more than 12 months after it had paid Procura. Prairie River sued Procura for breach of contract in the United States District Court for the District of Minnesota, seeking remedies including consequential damages. Prairie River alleged that Procura knew about the software’s defects and concealed the defects from Prairie River. Procura moved to dismiss the consequential-damages claim based on the remedy limitation in the parties’ contract. In response, Prairie River argued that the remedy-limitation provision was inapplicable because it had failed of its essential purpose. Prairie River also argued that the exclusion of consequential damages was procedurally and substantively unconscionable.