T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc.
United States Court of Appeals for the Second Circuit
592 F.3d 329 (2010)
Dempsey Pipe & Supply (plaintiff) contracted to buy steel pipe from T.Co Metals (defendant) under agreements that barred consequential damages and required arbitration. When delivered pipe arrived bent, Dempsey straightened and resold it at a price still below what non-defective pipe would have brought, then withheld part of its payment to T.Co. T.Co initiated arbitration for the unpaid balance, and Dempsey counterclaimed for its diminution-in-value loss under UCC 2-714(2); the arbitrator awarded Dempsey over $420,000. T.Co petitioned the district court to vacate the award, arguing the contracts' bar on consequential damages precluded it, and the district court denied the petition; T.Co appealed.
Whether a contract clause barring consequential damages also bars a buyer from recovering diminution-in-value damages for defective goods under UCC section 2-714(2).