Cyberchron Corp. v. Calldata Systems Development
| Decision Date | 30 August 1993 |
| Docket Number | No. CV 90-4358 (ADS).,CV 90-4358 (ADS). |
| Citation | 831 F. Supp. 94 |
| Parties | CYBERCHRON CORPORATION, Plaintiff, v. CALLDATA SYSTEMS DEVELOPMENT, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Wickwire Gavin, Vienna, VA (Jeffrey G. Gilmore, L. James D'Agostino, of counsel), for plaintiff.
Shea & Gould, New York City (Richard L. Spinogatti, Darlene Fairman, of counsel), for defendant.
James M. Black, III, Corporate Atty., Bethpage, NY, for Grumman Corp.
In this case involving the manufacture of "ruggedized" computer equipment, two crucial issues are presented. First, was there a valid contract entered into between the parties, and, if so, was there a breach by one or both of the parties, and, if so, what damages were incurred? Second, if no valid agreement was consummated, is the plaintiff entitled to recover under either the doctrine of quantum meruit or promissory estoppel?
The plaintiff Cyberchron Corporation ("Cyberchron" or the "plaintiff"), a New York corporation, is engaged in the business of providing customized computer hardware for military and civilian use. The defendant Calldata Systems Development Inc. ("Calldata") is a Florida corporation and a subsidiary of Grumman Data Systems Corp. ("Grumman"). In this decision, except where otherwise indicated, the Court shall refer to the defendant Calldata as "Calldata," "Grumman," or "the defendant". Grumman had a contract with the United States Marine Corps to build a combat command control system, which included providing containers for high-tech computers. The equipment at issue is a "rugged computer work station" designed to operate under rough military and combat conditions in a command center. This equipment consisted of three units, a video processor, a work station and a color monitor. (See Plaintiff's Exh. 42 — photographs of the equipment). This "ruggedized" computer equipment was to be used by Grumman in a Marine Corps defense program known as the Advanced Tactical Air Command Central ("ATACC"). The ATACC was designed to be a "lightweight compact easily deployed advanced version of the U.S. Marine Corps Tactical Air Command" (Plaintiff's Exh. 1, p. 103431).
During the years 1989 and 1990, the parties were involved in extended negotiations as a result of which Cyberchron attempted to produce this "ruggedized" computer equipment. It is undisputed that although some equipment was produced by the plaintiff, no such equipment was actually delivered to Calldata or Grumman, nor was any payment made to the plaintiff. As a result, this lawsuit evolved.
The first amended complaint sets forth three counts or causes of action requesting monetary damages, based on the following grounds: (1) breach of contract, (2) quantum meruit and (3) promissory estoppel.
In addition to denials and nine affirmative defenses, the answer of the defendants interposes a counterclaim for breach of contract, for which Grumman seeks money damages.
This opinion and order includes the Court's findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a) ().
During this discussion, the Court will make findings of fact which will be supplemented by additional findings later in the opinion.
As a result of a contract between Grumman and the United States Marine Corps involving ATACC, Grumman sought to obtain "ruggedized" or "toughened up" computer equipment. This computer equipment was to be modified to enable it to withstand rough battlefield conditions. Cyberchron was a firm in the business of "ruggedizing" computer equipment. At the center of the controversy between the parties was the continuing dispute over the weight of the three pieces of computer equipment which formed the "rugged computer work station," namely: (1) a video processor, (2) a work station, and (3) a color monitor.
The long and tortuous paper trail in this case starts on November 7, 1989 with the issuance by Grumman of an "Invitation to Quote — Not an Order" ("ITQ") (Plaintiff's Exh. 1) to Cyberchron and four other companies. The ITQ requested "a firm-fixed-price proposal for 55 units of the ruggedized hardware components." The Court notes that of the twelve Performance Objectives set forth in the ITQ, the "size, weight and cost" element was the second most important.
At this juncture, to place the issue of the weights in proper perspective, the Court finds that the weight of the ruggedized equipment was a critical part of the ATACC program and was a material term of the proposed agreement between the parties. Grumman ATACC Program Director Edwin A. Mitchell, a twenty-year Army veteran who had very little contact with Cyberchron, testified that the ATACC Center directed the air combat tactics of the Marine Air Corps from four shelters containing the work stations. Air battles would be controlled from these shelters. Mitchell testified that the weight of the work station "was pretty critical to the program ... because we had the weight limit on the shelters ... so it was a concern to me, yes." (Tr. at p. 9491).
Cyberchron responded to the Grumman ITQ by an undated proposal transmitted on or about December 1, 1989 (Plaintiff's Exh. 2). Cyberchron proposed a video processor and work station of 48 pounds each with a monitor weighing 50 pounds, for a total weight of 146 pounds for the three units.
Following this response by Cyberchron, the parties engaged in many discussions. On February 2, 1990, the defendant submitted to Cyberchron a list of technical questions (Plaintiff's Exh. 3). Included in the questions was a request for "the total weight of your workstation processor ...? video processor?" and "the total weight of your monitor ...?"
The plaintiff responded to the questions on February 13, 1990 (Plaintiff's Exh. 4). As to the weights, the plaintiff stated:
Video processor 30 lbs
Workstation and monitor 100 lbs
________
TOTAL: 130 lbs
Elsewhere in the response to the technical questions, the plaintiff stated that "the total weight of the monitor is approximately 70 pounds."
As to the proposed contractual status between the parties, the plaintiff stated:
"CYBERCHRON is willing to act upon a letter of intent, letter contract or other contract vehicle to proceed with the commercial deliveries, if this will minimize the schedule impact for the Grumman ATACC program." (Plaintiff's Exh. 4 at p. 300396).
Certainly, as of February 13, 1990 when the plaintiff responded to the defendant's technical questions, the parties were still negotiating and there was no agreement between them.
However, by March 1, 1990 the parties apparently agreed on prices. In a letter to Grumman dated March 1, 1990 (Plaintiff's Exh. 5), the plaintiff confirmed a series of prices, including the total price of $1,383,879.00. This letter also set forth certain delivery dates "subject to receipt of Grumman PO NLT March 30."
Notwithstanding the apparent agreement on price, the question of the weights continued to present a problem precluding agreement by the parties. On April 20, 1990, they apparently started negotiations anew when Grumman issued a second "Invitation to Quote — Not an Order" ("ITQ2") (Plaintiff's Exh. 6). In this ITQ2, among other things, Grumman requested that Cyberchron "specify weight limits for the equipment." The ITQ2 also provided that "the total combined weight of one Monitor plus its associated Workstation, including all peripheral devices (except the digitizing tablet) and all directly attached mounting brackets, shall not exceed 115 pounds."
In addition, in capital letters, ITQ2 contains the following warning:
The plaintiff responded to ITQ2 on May 1, 1990 (Plaintiff's Exh. 7) and included a counteroffer as to the weights, as follows:
Workstation 52 lbs
Video Processor 52 lbs
Monitor 80 lbs
_______
TOTAL: 184 lbs.
According to Howard Paul, Cyberchron Director of Program Management, and the major participant on its behalf, these latter weights were its "best engineering estimate of what we thought the weights would be ... it was a highly customized product and, not having built one before, we could only go with engineering estimates" (Tr. at p. 77).
On May 1, 1990, the same date as it responded to the ITQ2, Cyberchron also submitted a formal proposal to Grumman (Plaintiff's Exh. 8). The proposed cost for material, labor and overhead applicable to providing the equipment was the sum of $1,101,511.34, and the estimated profit or fee was $143,196.50, for a total cost of $1,244,707.84.
Finally, a purchase order was issued by Grumman to Cyberchron on May 15, 1990 (Plaintiff's Exh. 9) which contained the statement that "weight shall not exceed the following:
Workstation 45 lbs.
Video Processor 30 lbs.
Monitor 70 lbs.
________
TOTAL: 145 lbs."
As to the weights, the May 15, 1990 purchase order further stated:
The Court finds that these weight...
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