BY-LO OIL CO. V. PARTECH, INC.
11 Fed. Appx 538 (6th Cir. 2001)
NATURE OF THE CASE: By Lo (P) appealed a summary judgment for Partech (D) on P's suite to
determine whether a modification provision--that D would modify software purchased by P at
its request--obligated D to make the software year 2000 compliant.
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 Host 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.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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