Computer Systems of America v. IBM

Citation: Computer Systems of America, Inc. v. International Business Machines Corp., 578 F. Supp. 558 (D. Mass. 1983).

Factual Background
Plaintiff, Computer Systems of America, Inc. (CSA) brought this action against St. Regis Paper Company (St. Regis) and International Business Machines Corporation (IBM) to collect damages for a business deal that fell through. Specifically, CSA claimed that St. Regis broke an agreement to lease a computer for its Dallas facility and that IBM was the reason why the transaction turned sour.

In 1977, St. Regis and IBM entered into a contract to lease a computer, the IBM 3033. St. Regis' delivery date was September 1979. St. Regis wanted an earlier date but IBM could not provide one. By the fall of 1978, St. Regis began looking for other companies from whom to lease the computer. Although St. Regis and IBM had a written contract for the lease, St. Regis' search elsewhere had IBM's blessings. CSA was also in line to buy a 3033 from IBM but its delivery date was several months earlier than St. Regis' delivery date. CSA contacted St. Regis about leasing the computer earlier from them. St. Regis agreed to a 48 month lease of the computer with CSA. CSA claims that St. Regis also agreed to a daily or "precommencement" rent accruing from an installation date of May 18 to July 15, but payable in July. St. Regis disputed that. Problems later arose when St. Regis was told of the precommencement rental. CSA had already informed IBM that St. Regis would be the recipient of the computer it had on order. In the meantime, IBM had managed to improve the September delivery date for the computer St. Regis had ordered in 1977. On April 30, following CSA's notification to it that St. Regis was to get CSA's computer, IBM offered St. Regis delivery in late June on the 1977 order. On May 11, St. Regis formally terminated its negotiations with CSA.

District Court Decision
Counts I and II of the complaint against St. Regis allege breach of contract and promissory estoppel, respectively. Counts III and IV against IBM allege interference with contractual relations and interference with prospective business relationship, respectively. St. Regis and IBM move for summary judgment on all four counts.

St. Regis made three arguments in support of summary judgment on Count I alleging breach of contract. First, it claimed that there was no contract because there was no agreement on its essential terms. Second, it contended that even if there was an agreement on all terms, the contract was conditioned upon the execution of a written document. Finally, St. Regis argued that any contract which did exist is not enforceable under the statute of frauds.

As to the first argument, the court found that whether parties to a purported contract agree on all essential terms is a question of fact for the jury and therefore summary judgment is inappropriate. Regarding the second argument, the court found that because the agreement was expressly contingent on a written lease which was never executed, no contract existed. Therefore, the court granted St. Regis' motion for summary judgment on Count I. Because the court found that there was no contract in the first place, summary judgment was granted on Count II as well. Count II alleged promissory estoppel &mdash; a doctrine not applicable in this case because the promise was contingent on the written execution of the contract which never happened. Count III accuses IBM of interfering with contractual relations. However, the existence of a contract is an essential element of this claim and because the court found that there was no contract between CSA and St. Regis, there was nothing IBM could interfere with. Therefore, the court granted summary judgment for Count III. As to Count IV alleging interference with prospective business relations, the court concluded that summary judgment was not appropriate because there was a genuine issue of material fact. There is evidence that IBM knew of the negotiations between CSA and St Regis. Also, the evidence was inconclusive as to how, why or under what circumstances IBM was able to change its delivery date to St. Regis. The court found that the mere sequence of events in this case was enough to give rise to an inference that IBM wrongfully interfered and such issues were to be resolved at trial, making summary judgment inappropriate.