SIGNAL PUMP, LLC D/B/A SIGNAL POWER v. ARROW ELECTRONICS, INC.

This appeal concerns an unsuccessful business relationship between two companies. Signal Pump, LLC (“Signal”), a company that builds LED light towers, contracted with Arrow Electronics, Inc. (“Arrow”), a major supplier of electronics components, for Arrow to become Signal’s exclusive supplier. The relationship broke down as Arrow failed to timely supply Signal with parts and Signal failed to pay Arrow. Signal sued Arrow in the Chancery Court for Hamilton County (“the Trial Court”) alleging, among other things, breach of contract and fraud. New York substantive law governed this lawsuit as provided for by the parties’ agreement. Arrow filed a counterclaim against Signal for breach of contract based on Signal’s alleged failure to fully compensate Arrow for its products and services. According to Signal, Arrow’s failure to timely supply parts per the agreement cost Signal massive losses in profits it otherwise would have earned. Arrow, in turn, has asserted throughout that Signal continually changed its requests for parts. After a bench trial, the Trial Court found that both parties breached the agreement. The Trial Court awarded Arrow damages for Signal’s failure to pay. However, the Trial Court declined to award Signal any damages for lost profits, citing a liability limitation clause in the parties’ agreement. Signal appeals. We hold that the liability limitation clause is an exculpatory clause. We modify the Trial Court’s judgment in that respect. Otherwise, we affirm.