Kuwaiti Danish Computer Co. v. Digital Equipment Corp.

781 N.E.2d 787, 438 Mass. 459, 49 U.C.C. Rep. Serv. 2d (West) 729, 2003 Mass. LEXIS 11
CourtMassachusetts Supreme Judicial Court
DecidedJanuary 16, 2003
StatusPublished
Cited by159 cases

This text of 781 N.E.2d 787 (Kuwaiti Danish Computer Co. v. Digital Equipment Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kuwaiti Danish Computer Co. v. Digital Equipment Corp., 781 N.E.2d 787, 438 Mass. 459, 49 U.C.C. Rep. Serv. 2d (West) 729, 2003 Mass. LEXIS 11 (Mass. 2003).

Opinion

Spina, J.

Kuwaiti Danish Computer Co. (KDCC) sued Digital Equipment Corporation (DEC), alleging breach of contract, misrepresentation, and violation of G. L. c. 93A. The contract claim was eliminated on DEC’s motion for summary judgment on the ground that the writings failed to comply with the Statute of Frauds, but the trial judge, who was not the motion judge, allowed KDCC to present its contract claim at trial under G. L. c. 106, § 2-201 (2), an exception to the Statute of Frauds. The common-law counts were tried to a jury in the Superior Court, and the judge reserved all aspects of the c. 93A claim to himself. The jury found for DEC on the count alleging breach of contract, but awarded KDCC damages in the amount of $65,500.80 on the count alleging misrepresentation. The judge found for KDCC on the c. 93A count, and awarded damages of $90,920.30, which he doubled after determining that DEC’s violation of G. L. c. 93A, § 2, had been wilful and knowing.1 DEC appealed, asserting that the judge committed error (1) by permitting KDCC’s counsel to read to the jury DEC’s alternative affirmative defense to the contract claim; (2) by excluding the deposition testimony of a DEC sales manager, who was unavailable to testify on the subject of the alternative affirmative defense; (3) in his instructions on reasonable reliance; (4) by denying its motion for judgment notwithstanding the verdict (judgment n.o.v.) on the misrepresentation claim; and (5) by finding a violation of G. L. c. 93A, including a finding that the unfair conduct complained of occurred primarily and substantially within the commonwealth. KDCC cross-appealed, claiming error in the allowance of DEC’s motion for summary [461]*461judgment as to the contract claim, and in the denial of prejudgment interest on the multiple damages awarded under c. 93A. We transferred the case from the Appeals Court on our own motion. We affirm the judgment on the contract count, and reverse the judgment on the count alleging misrepresentation because DEC’s motion for judgment notwithstanding the verdict should have been allowed. We also reverse the c. 93A judgment because the conduct in question “did not occur primarily and substantially within the commonwealth.” G. L. c. 93A, § 11, eighth par.

1. The jury could have found the following facts. KDCC is a Kuwaiti corporation engaged in the business of buying and selling computer equipment and systems, principally in the Middle East. It had business dealings with DEC, a Massachusetts business corporation, in Massachusetts during the mid-1980’s, but in 1989 DEC insisted that any future business involving products destined for resale in Kuwait be conducted either through DEC’s United Kingdom facility or independent distributors responsible for delivery of products to Kuwait.

In September, 1991, Kuwait University, in Kuwait, awarded a fixed-price turnkey contract to KDCC to supply, install, and maintain computer systems for its college of engineering. The contract called for installation of various computer systems by mid-January, 1992. Duplicate VAX 6510 systems made by DEC were to be the centerpiece of the project, and smaller systems made by other manufacturers would also be needed. Because of the fixed-price structure of its contract, KDCC sought to minimize its expenses by obtaining an educational discount on its purchase.

Farouk Ayoub, a representative of Kuwaiti Digital Computer Co., a Massachusetts business corporation and wholly owned subsidiary of KDCC, contacted DEC’s Waltham office on behalf of KDCC and sent a list of requirements for the VAX 6510 systems for the college of engineering at Kuwait University. Ayoub also advised that KDCC was looking for the educational discount. He was referred to DEC’s Washington, D.C., office, having been informed that educational discounts were handled by that office. DEC’s Waltham office forwarded the list of requirements to Norris Roy, the designated salesperson in its Washington office.

[462]*462Roy telephoned Ayoub a few days later and quoted a price of approximately $900,000. Ayoub told him it was out of the question and that KDCC needed the educational discount because the system was for a university. Roy said he would get back to him. The two talked several times over the following several days, and Ayoub told Roy that his budget was in the neighborhood of $600,000. As the negotiations progressed Roy expressed an interest in closing the deal before the end of September. Ayoub arranged a teleconference among himself; his superior at KDCC, Sayed Ismail; Roy; and Roy’s supervisor, Luletha Cheatham. They discussed price, the need to network the various components made by other manufacturers, and the delivery deadline in Kuwait.

Ayoub, Ismail, and Roy met in Washington for three days, starting October 1, 1991, to finalize the deal. Ismail had authority to negotiate all matters on behalf of KDCC, and because Ismail had a tight time schedule, Cheatham told Ismail that Roy had authority for DEC. Cheatham was not able to attend the meeting because of a prior commitment. Ismail and Ayoub produced evidence at the meeting, as requested, that they were acting for an educational institution. That evidence consisted of a letter from the dean of Kuwait University, Kuwait, indicating that KDCC was awarded the contract for delivery of systems to the university. At that meeting, Roy understood, if he had not understood before, that the computer systems were to be shipped to Kuwait.

By October 3, 1991, Roy and Ismail reached an agreement about the parts and pricing issues. Roy prepared a quotation that included a price of $601,799.20, with the educational discount, and the list of specific parts and components agreed on. The quotation also contained qualifying statements that it was “an invitation to offer only,” and that “[a]ny contract resulting from the quotation must be accepted at [DEC’s] Corporate offices by a duly authorized representative of [DEC].” Although Ismail and Ayoub reviewed the quotation for parts and pricing, they did not take the time to read these statements, which were contained in two paragraphs appearing below the total price quote and above Roy’s signature. Roy did not discuss the qualifying language with Ismail, and he did not tell Ismail that any further approval was required from anyone at DEC. At Roy’s request, Ismail prepared [463]*463a purchase order. The purchase order, signed by Ismail, expressly referred to the quotation prepared by Roy. Roy also gave Ismail details for a letter of credit that would be needed for payment. The three men expressed satisfaction with the deal, shook hands, and parted.

On Monday, October 7, 1991, Roy delivered the paperwork to Robert Burklow, DEC’s district operations manager, for approval. Burklow expressed doubts about the transaction because it would violate established DEC policies: (1) the educational discount was not available to educational institutions outside the United States, and (2) he was not authorized to approve transactions involving shipment of goods outside his district. At Roy’s request, Burklow agreed to make inquiry at higher corporate levels to see whether an exception to company policy could be made. Burklow was told that an exception would not be made.

Roy, who thought the deal was “dead” as of October 8 or 9, never alerted Ayoub to any problems during their ongoing telephone conversations until sometime during the week of October 14. When Roy broke the news to Ayoub, he only told Ayoub that there were some problems but that they would work it out.

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Bluebook (online)
781 N.E.2d 787, 438 Mass. 459, 49 U.C.C. Rep. Serv. 2d (West) 729, 2003 Mass. LEXIS 11, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kuwaiti-danish-computer-co-v-digital-equipment-corp-mass-2003.