Eastman Kodak Co. v. Westway Motor Freight, Inc.

• Decision Date: 12 November 1991
• Docket Number: No. 91-1131,91-1131
• Citation: 949 F.2d 317
• Parties: EASTMAN KODAK COMPANY, a New Jersey corporation, Plaintiff-Appellee, v. WESTWAY MOTOR FREIGHT, INC., a Colorado corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 317

949 F.2d 317

EASTMAN KODAK COMPANY, a New Jersey corporation, Plaintiff-Appellee, v. WESTWAY MOTOR FREIGHT, INC., a Colorado corporation Defendant-Appellant.

No. 91-1131.

United States Court of Appeals Tenth Circuit.

Nov. 12, 1991.

Joseph J. Mellon, The Mellon Law Firm, Denver, Colo., for defendant-appellant.

Stephen E. Kapnik, Lohf, Shaiman & Ross, Denver, Colo., for plaintiff-appellee.

Before ANDERSON, TACHA and BRORBY, Circuit Judges.

TACHA, Circuit Judge.

Having previously conceded liability, Defendant-Appellant Westway Motor Freight, Inc. ("Westway") appeals a judgment for damages entered against it by the district court. On appeal, Westway raises three issues. First, appellant argues that the trial court erred in granting judgment in the amount of the full invoice value of the destroyed film. Second, Westway asserts that the trial court erred in denying it a credit against Eastman Kodak Company's ("Kodak") invoice value in recognition of the film's salvage value and savings realized by Kodak. Third, appellant argues that the trial court abused its discretion in calculating and awarding Kodak prejudgment interest at eight percent. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm. ¹

In May 1987, Kodak shipped a load of sensitized photographic material on a truck operated by Westway from a Kodak production facility in Colorado to a Kodak regional distribution center in California. On the bill of lading, the parties agreed that the temperature in the trailer carrying the goods would not rise above fifty degrees Fahrenheit. When the trailer was opened in California, the temperature inside was well above fifty degrees Fahrenheit and most of the photographic material was destroyed.

Kodak brought an action to recover its loss under the Interstate Commerce Act, 49 U.S.C. § 11707 (liability of common carriers under receipts and bills of lading). Because Westway admitted liability, the district court determined only the issue of the proper measure of damages. On a motion for summary judgment, the district court held that Kodak's damages should be determined by measuring the difference between the market value of goods delivered according to the contract specifications and the market value of the nonconforming goods. Taking into account a discount for a seven percent handling charge and the salvage value of the damaged film, the district court entered judgment at trial based on this market value rule. The district court also awarded prejudgment interest in the amount of eight percent.

With regard to the issues determined at trial, we review the district court's conclusions of law de novo. United States ex rel. Bergen v. Lawrence, 848 F.2d 1502, 1505 (10th Cir.), cert. denied, 488 U.S. 980, 109 S.Ct. 528, 102 L.Ed.2d 560 (1988). The district court's findings of fact will only be reversed if they are clearly erroneous. Crawford v. Northeastern Okla. State Univ., 713 F.2d 586, 588 (10th Cir.1983).

We first address Westway's contention that the district court erred by granting Kodak's summary judgment motion that damages be measured under a market value approach. We review summary judgment orders de novo, using the same standards the district court applies. Osgood v. State Farm Mut. Auto Ins. Co., 848 F.2d 141, 143 (10th Cir.1988). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby, 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986).

The district court based its conclusion on the fact that 49 U.S.C. § 11707 grants a remedy for "actual loss," which--as Westway concedes--traditionally is measured by the market value rule. See Chicago, M. & St. Paul Ry. Co. v. McCaull-Dinsmore Co., 253 U.S. 97, 40 S.Ct. 504, 64 L.Ed. 801 (1920). On appeal, Westway contends that this case falls into the exception to the market value approach announced in Illinois Cent. R.R. Co. v. Crail, 281 U.S. 57, 50 S.Ct. 180, 74 L.Ed. 699 (1930). In Illinois Central, the Supreme Court held that the market value measure "may be discarded and other more accurate means resorted to if, for special reasons, it is not exact or otherwise not applicable." In Gold Star Meat Co. v. Union Pac. R.R. Co., 438 F.2d 1270, 1273 (10th Cir.1971), we held that "[t]he burden of proof is on the carrier to show that the market value rule will not result in a just measure of actual damages." Kodak produced evidence that it sells virtually all of its sensitized photographic merchandise shortly after production is completed. This evidence tends to show that any damaged merchandise that could not be sold would result in lost profits.

We agree with the district court that Westway failed to satisfy its burden of proof in demonstrating "special reasons." Westway argues that it produced evidence in the form of affidavits demonstrating special reasons for not applying the market value measure of damages. Testimony in these affidavits suggests that Kodak was able to quickly replace the damaged goods, that Kodak lost neither customers nor sales, and that "Kodak would not have achieved any additional sales of the remaining damaged products but for this incident." However, these assertions--even taken in the light most favorable to Westway--fail to show that Kodak could not have sold and earned profit on two batches of unharmed product. Moreover, despite the district court's allowance of ample time for discovery, Westway failed to offer evidence to rebut Kodak's claim that it sells virtually all of the sensitized photographic products it manufactures. Accordingly, we conclude that Westway did not demonstrate "special reasons" and the district court properly measured damages under the market value rule.

Westway further argues that even if the market value approach is correctly applied to most of the damaged shipment, it should not be applied to the damaged lithographic plates because a specific customer was identified as the purchaser of these plates. Westway contends that the existence of an identified buyer suggests that Kodak could not have made two sales of lithographic plates. We disagree. The record reveals that Kodak did indeed identify specific buyers for the lithographic plates, but this does not prove that Kodak had a limited market for this product. Westway presented no evidence that the lithographic plates were produced for specific customers. Moreover, Westway did not rebut Kodak's assertion that it could sell all of the merchandise it produced. Therefore, we conclude that it...