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DIVERSIFIED ENVIRONMENTS, INC. v. OLIVETTI CORP. O

December 4, 1978

DIVERSIFIED ENVIRONMENTS, INC., Plaintiff,
v.
OLIVETTI CORPORATION OF AMERICA, Defendant



The opinion of the court was delivered by: HERMAN

MEMORANDUM

This is an action for damages brought by a lessee of a computerized accounting system manufactured and sold by the Defendant, Olivetti Corporation of America (Olivetti). Plaintiff, Diversified Environments, Inc., (Diversified) alleges that the Olivetti computer that it leased has never been made operational and that Defendant is liable for damages on theories of breach of contract, misrepresentation and breach of express and implied warranties. Olivetti defends on the basis that it has fully performed and alternatively that it was excused from performance because Diversified unreasonably refused to permit it to effectuate its contractual duties. Plaintiff seeks relief for the total payments made under the lease agreement for the computer, the cost of paper products, and other consequential damages. The following are the Court's findings of fact and conclusions of law.

 FINDINGS OF FACT

 1. Plaintiff, Diversified Environments, Inc., is a Pennsylvania corporation engaged in the selling of temperature and energy control systems with its principal place of business at Camp Hill, Pennsylvania.

 2. Defendant, Olivetti Corporation of America, is a Delaware corporation engaged in the business of selling computer services with local business offices in Harrisburg, Pennsylvania.

 3. Jurisdiction is based upon diversity of citizenship and an amount in controversy in excess of ten thousand dollars.

 4. In July of 1974, Tim L. Fleegal, a sales representative of Olivetti contacted Diversified's President, Charles E. Andiorio, Jr., for the purpose of inducing him to buy or lease a computerized accounting system.

 5. Mr. Andiorio subsequently met with Mr. Fleegal and explained in detail the nature of Diversified's business and particularly noted that the most tedious part of his duties was the preparation of specifications to be used in submitting bids on jobs.

 6. Mr. Fleegal also met with Mr. Warren Beck, who was primarily responsible for the Plaintiff's accounting system, during July and Mr. Fleegal was made aware of all of the accounting procedures of Diversified and that Diversified's accounting records had to be compatible with Barber-Colman Co., for whom Diversified was a manufacturing representative.

 7. Neither Mr. Beck nor Mr. Andiorio were familiar with computer systems and they relied upon Mr. Fleegal's expertise.

 8. After Mr. Fleegal became thoroughly familiar with the operations of Plaintiff's business he stated that the Olivetti P-603 Computer System would meet all of the Plaintiff's requirements and perform all of the functions that were discussed.

 9. Mr. Fleegal was only qualified to sell the P-603 Computer System, which was an accounting computer, and not the Olivetti word processing machines.

 10. At the time of the discussions, Mr. Fleegal stated to both Mr. Beck and Mr. Andiorio that utilization of the P-603 Computer System would save the Plaintiff both time and expense by reducing manpower and record keeping.

 11. Mr. Fleegal represented to Mr. Andiorio that he would only need to push a button and he would have the specifications, that Mr. Andiorio would save half of his time, and that the computer would enable Diversified to do without one of its secretaries.

 12. On July 26, 1974, Mr. Fleegal submitted a proposal to Mr. Andiorio and advised that the P-603 accounting computer could effectively meet all of the objectives discussed between the parties.

 14. The proposal stated that the total cost of the system was $ 9,590.00 which included all programming, forms design, initial operator training, delivery and installation of equipment.

 15. It further provided:

 
"in dealing with Olivetti you do business with a firm which herein guarantees in writing the exact performance of the system both machine and program. Only after these assurances have been met can we ship the machine and bill you as a customer. In addition you have my personal assurance and that of the Harrisburg District Management that all of our resources will be employed toward your complete satisfaction in the system."

 16. During July or August of 1974, parts of the proposed computer package were demonstrated to Mr. Beck in the Defendant's office, however, at no time were either the specification writing or estimating demonstrated.

 17. On August 7, 1974 Mr. Beck signed in two places, on behalf of Diversified, a "Customer Software Acceptance" form provided by Mr. Fleegal.

 18. The Customer Software Acceptance form contains three places for signatures and Mr. Beck signed his name after the ...


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