By-Lo Oil Co. v. Partech, Inc.

11 Fed. Appx 538 (6th Cir. 2001)

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Nature of the Case

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Facts

D's predecessor in interest entered into an agreement with P to sell it various computer software programs--ProfiMax and PetroMax--and to service those programs. In September of 1997, P's Controller, Thomas Masters, wrote 'Terry' at D to inquire about 'software and hardware options with [D's] software and the concern of reaching the year 2000.' The letter requested that Mary Beth Eng, director of D's Cost Accounting Systems, contact Mr. Masters to discuss the matter. Ms. Eng did not respond. Masters wrote again and demanded 'a written response from [Ms. Eng] by January 31, 1998, of D's commitment that the software will function after December 31, 1999, with no problems.' P paid a maintenance fee of $625.00 with the expectation of the continued function of the software beyond December 31, 1999.' Masters threatened a lawsuit if he did not receive such response, warning that P would replace the software with that of another company and would seek the replacement cost from D. Mr. Masters was concerned about April 1, 1999, because that date was the beginning of P's fiscal year. Accordingly, some data would need to be entered using four-digit dates after that time. Ms. Eng responded by letter on January 30, 1998. She stated she could give Masters no answer to the question of 'whether . . . the software would be changed by D to handle year 2000' because the 'decision will be made by upper-level management within D once they have the appropriate data to make an informed decision.' She assured him that 'once the decision [was] made, [he would] be notified.' Masters made another attempt to secure more definitive assurances by traveling to D's Arlington, Texas headquarters where he was again told he would be informed when a decision was made. P filed suit on May 1, 1998, and then realized that that was not the ParTech with which it had an agreement. In June of 1998, concerned about the looming Y2K problem, P purchased a new computer system--both software and hardware--for over $175,000.00. D gave P the definitive answer for which it had been looking. D would supply the needed software at no cost and that the software needed to be installed prior to January 1, 1999, because the programs run on a 'date check plus one' system by which a year is added to certain dates the user enters. On December 18, 1998, D, as promised, sent By-Lo the necessary software with detailed instructions for loading it. Of course, because P was now operating on a different system, it did not install the software. P refiled in May of 1999 and claimed that D's actions were an anticipatory breach under Michigan's UCC sections 2-609 and 2-610. D moved for summary judgment, and it was granted. P appealed.