Transport Corporation of America, Inc. v. International Business Machines Corporation, Inc.

International Business Machines Corporation, Inc. (IBM) (defendant) sold computers to Innovative Computer Corp. (ICC) (defendant), and ICC resold the computers with installed software. The agreement between IBM and ICC disclaimed all implied warranties and limited IBM’s warranty to the repair or replacement of computer parts. In December 1989, ICC resold an IBM computer system to Transport Corporation of America, Inc. (TCA) (plaintiff), a trucking company. The agreement between ICC and TCA disclaimed TCA’s ability to recover consequential damages. IBM, ICC, and TCA were all sophisticated business parties, though TCA was not in the business of buying and selling computers. The IBM computer system helped to manage TCA’s orders, dispatches, and records. TCA backed up its computer data on a nightly basis in case of a system failure. On December 19, 1990, almost one year after the computer system had operated without any issues, the system went down, and one of the disk drives indicated an error code. TCA timely notified IBM, while also restarting the system. TCA requested a replacement part, but IBM responded that its service protocol was to analyze the disk drive. Having just restarted the system, TCA did not wish to immediately shut it down again. IBM scheduled service for December 22, 1990, and ultimately repaired the disk drive. TCA sued IBM and ICC, asserting tort and warranty claims and seeking to recover damages for its business interruption. The trial court granted IBM’s and ICC’s motions for summary judgment based on applying the state’s version of the Uniform Commercial Code (UCC). TCA appealed, arguing that it should be able to assert tort claims and recover consequential damages based on the economic-loss doctrine.