Not Adversely Affected, Firm Says : Computer Automation Settles Customer Lawsuit

Computer Automation Inc., on the ropes from nine consecutive quarterly losses, got some good news Tuesday in an out-of-court settlement of a $15-million lawsuit filed four years ago by a disgruntled customer.

Terms of the settlement were not announced because of an agreement between the parties. But George Pratt, Computer Automation’s chairman and chief executive, said the settlement would not “adversely affect the company.”

The suit, filed in April, 1981, by AMF Inc. of White Plains, N.Y., claimed that Irvine-based Computer Automation sold it about 300 faulty and defective computer systems and then failed to honor its warranty promises.

The settlement removes at least one major worry for the struggling computer maker, which has lost about $12 million in the last three years and recently retained an investment banking company to determine how to salvage its best operations. Merlin Eelkema, the company’s attorney, said Computer Automation’s auditors have cited the lawsuit for the last four years as a reason to qualify their opinion of Computer Automation’s financial condition.

Eelkema said Computer Automation was anxious to settle the suit because defending it would have been costly and time-consuming.