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County of Milwaukee v. Northrop Data Systems Inc.

decided: July 23, 1979.

COUNTY OF MILWAUKEE, PLAINTIFF-APPELLANT,
v.
NORTHROP DATA SYSTEMS, INC., DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Eastern District of Wisconsin No. 77 C 442 -- Robert W. Warren, Judge.

Before Cummings and Wood, Circuit Judges, and Jameson, Senior District Judge.*fn*

Author: Jameson

Plaintiff-appellant has appealed from a summary judgment in favor of defendant-appellee, Northrop Data Systems, Inc. (Northrop), in a breach of contract action in which the district court held that the action was barred by a one-year limitation provision in the contract. We affirm.

Factual Background

The County owns and operates Milwaukee County General Hospital. On June 14, 1972, the County solicited bids for the design, manufacture, and installation of a computerized laboratory information system in the hospital in conformity with specifications prepared by the County. On June 30, 1972, Northrop's predecessor, Berkeley Scientific Laboratories, Inc. (BSL), submitted a bid. It was accepted, and the County issued a purchase order to BSL. The parties then commenced negotiations on a formalized, written sales agreement.

On November 22, 1972, BSL submitted a standard form sales agreement. Following conferences between representatives of both parties, BSL submitted a substantially revised version to the County on January 25, 1973. Further negotiations followed, with numerous revisions in portions of the proposed agreement. On January 3, 1974, after 14 months of negotiation, the final Sales Agreement was executed by the County and returned to BSL. The agreement was executed on behalf of the County by William Mohaupt, Purchasing Administrator of the County Procurement Division, and Ronald Bruni, Associate Hospital Administrator of Milwaukee County Medical Complex.

The initial proposal submitted by BSL in November, 1972, contained as paragraph 19(g) the following provision:

No action, regardless of form arising out of the transactions under this agreement, may be brought by either party more than one (1) year after the cause of action occurred, except that an action for non-payment may be brought within one (1) year after the date of the last payment.

This provision remained intact in all subsequent revisions and appears as sub-paragraph 15(h) in the executed agreement.*fn1

The contract provided for delivery of equipment by May 15, 1974, commencement of acceptance testing by June 15, 1974, and acceptance by the County on or before July 18, 1974. The deadlines passed without performance. Revised schedules were submitted by BSL on October 10, 1974 and November 27, 1974, the latter establishing delivery and acceptance dates in January and February, 1975. On January 17, 1975, the County submitted a proposed addendum covering the new dates. On February 25, 1975, BSL confirmed by letter its inability to deliver a system by November, 1975, and proposed mutual cancellation.

On June 17, 1975, James J. Bonifas, Deputy Corporation Counsel of Milwaukee County, sent a letter of cancellation to BSL, stating that he had been "directed to cancel the contract" and the "BSL has breached its contract and the county has no alternative but to cancel and request damages". This action was commenced on May 17, 1977.

In granting summary judgment the district court found that there was no genuine issue of any material fact (Rule 56(c) F.R.Civ.P.); Wisconsin law permits the parties to agree upon a limitation period shorter than that provided by statute; the time begins to run when the cause of action accrues; the County's letter of June 15, 1975 cancelling the contract was the last date the cause of action could accrue; and the action accordingly is barred by the one-year contractual period of limitations.

Contentions of Appellant

Appellant contends that: (1) the applicable statute of limitations, Wis.Stat. ยง 402.725, prescribes a six year period and could not be modified by the parties because the County was not a "merchant"; (2) the County's Purchasing Administrator lacked authority to bind the County to the shorter period of limitations; (3) BSL waived the one year ...


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