San Joaquin College of Law

Civil Procedure–Interim Exam Mar 2000/Cartier

TIME ALLOCATION: 1 hour 25 minutes

             Computer Pro Users (CPU) is a California corporation with offices in San Francisco and Los Angeles that provides computer training under contracts with local businesses. Last year, the purchasing agent for CPU contacted Discount Computer Warehouse (DCW), an Ohio corporation engaged in nation-wide sales of computers and peripherals, to purchase $85,000 of equipment for the CPU office in San Francisco and $50,000 of equipment for the office in Los Angeles. CPU also purchased a $15,000 service contract that covered the equipment at both locations. DCW sent the order for equipment to Computer Inc. (C-Inc), a Delaware corporation with its sole place of operation in Ohio. C-Inc does no direct sales to retail consumers but regularly fills orders sent to it by various mail order computer merchants. As instructed, C-Inc sent the CPU equipment to San Francisco and Los Angeles, via FedAir, under separate purchase orders. FedAir is a Mississippi corporation that provides air express delivery throughout the 48 contiguous United States.

             Upon receiving its equipment, the San Francisco office sent a check to DCW for $85,000. Shortly thereafter, the equipment delivered to the San Francisco office failed to function properly. Attempts to correct the problems have failed. CPU filed an action against DCW in the Superior Court of the State of California in and for the County of San Francisco to rescind the contract (a revocation of acceptance of contract under UCC 2-608) seeking return of the monies paid under the contract. CPU has withheld payment of the remaining $65,000 (for the Los Angeles equipment and for the service contract) owing to DCW.

             DCW promptly removed the case to the United States District Court for the Northern District of California and filed an answer and a counterclaim against CPU to recover the $65,000 balance. Additionally, DCW impleaded C-Inc--the computer manufacturer. For its part, C-Inc seeks to join 1) FedAir--since equipment may have been damaged in transit, and 2) Asahi Components--since the failure of the equipment to function properly may have resulted from a defective component supplied by Asahi, a Japanese Corporation that provides electrical components for computers to C-Inc and to other computer manufacturers in Washington and Utah.

             C-Inc also asserts claims against CPU and DCW for the wholesale purchase price of the equipment for which C-Inc has not been paid.

Considering all relevant facts and assuming that all appropriate objections have been made, which of the above claims (claims, counterclaims, cross-claims or third party claims) are properly before the United States District Court? DISCUSS.