Computer Associates International Inc. has filed suit to dissolve its partnership with banks systems firm Newtrend Group seeking to regain control of banking software it once sold.
In the suit, filed last week in chancery court in Delaware, Computer Associates asked to dissolve CA Newtrend Inc., which the Islandia, N.Y.-based software vendor formed in 1991 with Newtrend Group of Orlando.
The partnership was meant to be synergistic. It allowed Computer Associates, one of the world's largest software firms, to sell its Infopoint commercial banking software, line through a vendor with industry savvy.
The deal also diversified Newtrend Group's business. Before the partnership. The privately held vendor had focused on selling core software for thrifts, called Miser. That runs on Unisys Corp. computers. Infopoint runs on International Business Machines Corp. mainframes.
Through its court action, Computer Associates seeks to take back the Infopoint software and to give Newtrend Group control of the software it had sold before the merger, said Robert E. Lund. Newtrend's chief operating officer.
Computer Associates said the partnership should be dissolved because the vendor was not being allowed to have a say in the management of Newtrend.
Directors Split Up
The partnership agreement split the six CA Newtrend directors between appointees of Computer Associates and Newtrend Group.
Charles B. Wang, Computer Associates' chief executive, was made chairman of CA Newtrend, and Robert E. King, Newtrend Group's chief executive, retained that position in the partnership.
In its suit, Computer Associates said that the few board meetings that had been held had been "extremely acrimonious."
Overriding the Board
Computer Associates charged that there had been related deadlocks on a range of issues, including acquisitions, compensation for Mr. King and a proposal to terminate Mr. King's employment.
The vendor added that Mr. King and Newtrend Group had usurped the board's authority on several occasions.
Incidents were said to include refusing to allow senior Newtrend managers to communicate directly with Mr. Wang, the suit said.
Computer Associates added that Newtrend Group officials had failed to give the board a "deficiency letter" from the Office of Thrift Supervision, and had not consulted the board when deciding to hire Joseph C. Fagliarone, a First Fidelity Bancorp. executive who had testified against Computer Associates in a lawsuit between the vendor and the bank.
Letter Called Inaccurate
Mr. Fagliarone is scheduled to begin managing computer operations in a Newtrend data center in New Jersey next week.
Mr. Lund said that Computer Associates' depiction of the OTS letter was inaccurate. and that the agency had actually given Newtrend a satisfactory rating.
He declined to comment on the other allegations but offered an alternative explanation for the suit - that it was a pressure tactic to get Newtrend Group to sell out its stake in CA Newtrend to Computer Associates.
"Several months ago they attempted to buy the whole venture, but we weren't interested." Mr. Lund said.
A Computer Associates spokeswoman declined to comment.