Investors Premium Corp. v. Burroughs Corp.

• Decision Date: 01 February 1974
• Docket Number: Civ. A. No. 72-1526.
• Citation: 389 F. Supp. 39
• Court: U.S. District Court — District of South Carolina
• Parties: INVESTORS PREMIUM CORPORATION, Plaintiff, v. BURROUGHS CORPORATION, Defendant.

389 F. Supp. 39

INVESTORS PREMIUM CORPORATION, Plaintiff, v. BURROUGHS CORPORATION, Defendant.

Civ. A. No. 72-1526.

United States District Court, D. South Carolina, Columbia Division.

Heard January 17, 1974.

Decided February 1, 1974.

Roy E. Garris, Jr., and W. Ralph Garris of Garris & Garris, Columbia, S. C., for plaintiff.

James M. Windham and R. B. Herbert, Jr., of Herbert, Dial & Windham, Columbia, S. C., for defendant.

HEMPHILL, District Judge.

ORDER

ON DEFENDANT'S MOTION UNDER RULE 37(d) TO DISMISS PLAINTIFF'S ACTION FOR FAILURE TO PROPERLY ANSWER WRITTEN INTERROGATORIES, AND ON DEFENDANT'S MOTION UNDER RULE 56 FOR SUMMARY JUDGMENT.

Defendant has moved under Federal Rule of Civil Procedure 37(d)¹ for dismissal of the second amended complaint with prejudice and costs, because of plaintiff's failure to properly answer written interrogatories, denoting purported answers as sham, and, in the alternative, defendant moves under Rule 56, Federal Rules of Civil Procedure, for summary judgment in favor of defendant. A thorough examination of the entire record convinces the court that defendant is entitled to entry of judgment in its favor on its second motion.

STATEMENT OF FACTS

Plaintiff had used defendant's posting equipment since 1967 and prior to October, 1970, looked at computers manufactured by at least three major producers and also considered off-premises computer service in its business. Plaintiff made a close study of its computer needs and ordered an I. B. M. computer.

Prior to February, 1971, plaintiff declined to complete the I. B. M. purchase² and in February, 1971, attended two demonstrations of defendant's L-5000 computer to see it first-hand in operation.³ Plaintiff's own employees operated it.

Defendant expressed to plaintiff a concern that the single keyboard on the computer might not post ledgers as fast as the two keyboards on the two posting machines then in use by plaintiff.

Nevertheless in March, 1971, as an experiment, rather than purchasing, plaintiff leased one of defendant's L-5000 computers on a one-year trial basis despite the higher cost of that shortest possible lease. The equipment was set up and running by July 31, 1971. Plaintiff had about 6000 active accounts at that time. (Plaintiff's answer No. 41(a)). The one-year trial lease was limited by a "conditional" provision which allowed plaintiff to get out of it at will (Harris deposition, pages 39-42; also, Exhibit C attached thereto).

After using the single computer for only two months under the one-year lease experiment, plaintiff decided to buy outright two such computers, said purchases later being converted to a five year lease from a leasing company.

Defendant supplied only the computers (hardware) and not the program systems (software).

Plaintiff did not order specially designed equipment (hardware) from defendant.

Plaintiff continues to use all of the hardware supplied by defendant and defendant continues to service it. Plaintiff now has about 7700 active accounts — up from 6000 when it began using defendant's computers.

Not only does plaintiff continue to use all of the hardware supplied by defendant, but in doing so, plaintiff is meeting the payroll and making a profit. (Harris deposition, page 52).

STATEMENT OF PROCEEDINGS

Plaintiff originally sought "a million dollars" actual and punitive damages on a complaint in which allegations of simple breach of warranty were embellished by characterizing as fraud, the representations defendant had made respecting its product—a computer. When defendant moved to strike the fraud and punitive damages from the complaint, plaintiff served its first amended complaint and attempted to enlarge the lawsuit by purporting to set out not one, but four, different alleged causes of action for (a) simple breach of warranty, (b) faulty design and manufacture, (c) fraudulent misrepresentation, and (d) breach of service contract. Even a casual reading of the first amended complaint reveals that the gravamen of plaintiff's alleged grievance is ex contractu, not ex delicto.

Defendant moved to strike the allegations of tort from the first amended complaint and the court ordered that plaintiff file a second amended complaint complying with Rule 8(a).⁴ Although the second amended complaint which plaintiff filed somewhat revised and refined the first, it was still subject to the same objections as the first. Nevertheless, rather than serve a third motion to strike, defendant filed its answer and then its amended answer; following which discovery proceedings were begun. Plaintiff served its notice to produce maintenance and repair records and its written interrogatories to which defendant duly responded. Defendant in turn served its written interrogatories on August 1, 1973.

FAILURE TO PROPERLY ANSWER WRITTEN INTERROGATORIES

The court finds that, despite an irregular and ragged furnishing of the information properly requested, that insufficient grounds for a dismissal exist. As to such issue the motion is refused.

ANALYSIS OF MOTION FOR SUMMARY JUDGMENT

The gravamen of plaintiff's second amended complaint is that computer equipment manufactured and sold by defendant for use in plaintiff's insurance premium service business did not perform as defendant had represented or warranted it would, and that defendant failed to service said equipment as it agreed to do under its maintenance contract. Here are presented both a simple breach of warranty action and a simple breach of contract action.

Plaintiff has, in its second count, characterized as careless, negligent, wilful and wanton, through faulty design, manufacture, etc., defendant's alleged failure to furnish a computer which would operate as warranted. In its third count, plaintiff has characterized as fraudulent defendant's representations and actions in promoting and selling its product to plaintiff.

It is not the characterization of the defendant's conduct that labels the action as one involving a tort, but the facts alleged by the plaintiff. (Emphasis in original.) Moody v. Stem, 214 S.C. 45, 58, 51 S.E.2d 163, 168 (1948).

No facts here alleged, nor developed in discovery proceedings, or revealed anywhere else in the record, constitute negligence or wilfulness, and none constitute fraud. Dailey Co. v. American Inst. of Mktg. Sys., Inc., 256 S.C. 550, 183 S.E.2d 444 (1971).

The real nature of plaintiff's grievance being ex contractu and there being no factual showing ex delicto, accordingly, any recovery would have been limited to such damages as are the natural and proximate result of the breach.⁵ Dailey Co. v. American Inst. of Mktg. Sys., Inc., supra; Blackman v. Independent Life and Accident Insurance Co., 229 S. C. 54, 91 S.E.2d 709 (1956); Moody v. Stem, supra; Holland v. Spartanburg Herald Journal Co., 166 S.C. 454, 165 S. E. 203, 84 A.L.R. 1336 (1932).

Plaintiff seeks to shift attention away from the two culminating equipment sale contracts, both dated October 19, 1971, (exhibits 2 and 3 in defendant's request for admissions), and instead concentrate on the prior lease dated March 11, 1971, which had been converted to one of said sales, plaintiff all the while ignoring said conversion itself.

These culminating two sales contracts of October 19, 1971, by which plaintiff bought outright two L-5000 computers came after (in inverse order):

(a) A two and one-half months' experiment in plaintiff's business with a single L-5000 computer and auto-reader. The equipment was set up and running by July 31, 1971.

(b) Entering upon a "conditional" one-year lease dated March 11, 1971, plaintiff could experiment with the single L-5000 set-up and get out of the lease at will.

(c) Mr. Harris attended two demonstrations of the L-5000 set-up prior to entering the "conditional" one-year lease.

(d) Mr. Harris made extensive investigation of computers and computer service put out by at least three other manufacturers and one service company, including the placing of an order with I. B. M., which order he later cancelled.

All of the four affidavits⁶ filed by plaintiff in support of its claims pertain to events prior to or in conjunction with plaintiff's acquisition of the single L-5000 computer with auto-reader under the lease of March 11, 1971. This lease was merged into or converted into one of the outright sales contracts (exhibit 2 in defendant's request for admissions): "To convert from 1 year lease to purchase. Conversion date to be 10-30-71". Thus all prior negotiations merged into said outright sale contract which plaintiff signed on October 19, 1971.

Prior to or in conjunction with the one-year "conditional" lease of March 11, 1971, defendant's employee had expressly warranted orally "that one Burroughs L-5000 computer and one autoreader had sufficient capacity and capability to handle plaintiff's then present business needs and to double that capacity without adding additional personnel". Plaintiff did not rely on such warranty but instead undertook an experiment with said equipment in its own business, which experiment proved that the equipment could not so perform. Thereupon, because one computer could not do the job, plaintiff converted its lease to an outright purchase, and in addition, bought a second computer outright the same day, October 19, 1971, and signed both final contracts. What had gone before was merged and "finalized" into the final writings of October 19, 1971. Plaintiff will not be allowed to go behind them.

That plaintiff cannot have recourse to supposed representations or warranties claimed to have been made by representatives of defendant prior to the said written contract is elemental; the terms of such a contract cannot be varied by parole evidence. "It is axiomatic that a written agreement betwixt two persons merges all prior talk about the subject of the agreement." Parham-Thomas-McSwain, Inc. v. Atlantic Life Insurance Co., 111 S.C. 37, 96 S.E. 697, 698 (1918).

Plaintiff's persistent...