Fishman Org., Inc. v. Frick Transfer, Inc., CIVIL ACTION NO. 11-cv-04598
| Decision Date | 17 April 2013 |
| Docket Number | CIVIL ACTION NO. 11-cv-04598 |
| Parties | THE FISHMAN ORGANIZATION, INC. Plaintiff v. FRICK TRANSFER, INC. Defendant |
| Court | U.S. District Court — Eastern District of Pennsylvania |
DAVID R. STRAWBRIDGE
On December 6, 2012, the Court presided over a non-jury damages trial to determine the appropriate sum to compensate plaintiff, The Fishman Organization, Inc. ("Plaintiff" or "Fishman"), for the harm it suffered as a result of the breach of a bailment contract it had entered into with the defendant, Frick Transfer, Inc. ("Defendant" or "Frick"). The trial was limited to determining the damages given the July 24, 2012 order of Eduardo C. Robreno, D.J. which granted summary judgment in favor of Fishman on its breach of bailment contract claim. (See Docs. 20 and 21.) Pursuant to the agreement of the parties, we proceeded only on that claim and on Frick's counterclaim for breach of contract against Fishman with respect to unpaid rent. (See Tr. at 3:6-20.) We were advised that Counts II and III, the negligence claims, were or would be dismissed.1 Following the trial, the parties requested an opportunity to file Proposed Findings of Fact and Conclusions of Law once the transcripts were ready. We granted that request. (Doc. 42). The record having beenprepared, and the parties' submissions having been filed and duly considered, the matter is now ripe for a ruling. Based upon our review of the testimony offered at trial, the parties' submissions, and for the reasons articulated below, the Court awards Fishman $161,994.24 in damages plus prejudgment interest at the rate of 6% per annum less the credits due to Frick in the amount of $47,347.20 for Fishman's unpaid rent2 and $2,200 for the restitution paid to date by Daniel Lewandowski.
Given that we write only for the parties and that our concern is damages only, we dispense with much of the background which is well known to the parties and not now in any real dispute. We know that Fishman had stored a substantial quantity of product, Aqua Di Gio Man EDT Spray 100ml (the "Product"), with Frick at Frick's warehouse at 1326 Tatamy Road, Easton, Pennsylvania ("Tatamy"). (AFF ¶¶2,3,6.) We also know that the Product was stolen and that the thief has been identified and criminally prosecuted. (AFF ¶¶ 10,12.) As we consider the extent of the Fishman's loss, we assess the factors which go to the core of the damage question - namely quantification or count and pricing. We then discuss the questions raised with respect to credits and prejudgment interest.
On July 29, 2004, plaintiff purchased 240 cartons of the Product from a Spanish distributor. (AFF ¶2.) The purchase price in U.S. dollars was $164,045.42. Id. In addition, plaintiff paid $1,996.58 in freight charges, $549.68 for customs processing and $500.00 for a customs bond for a total of $167,091.68. Id. The Product was delivered to a Frick warehouse on 24th Street (Wilson Park) in Easton. (AFF ¶2.) The record is clear and we find as a fact that there were delivered to that warehouse 5760 units, gathered into 240 cartons of 24 units each. In September 2006, Frick moved all then existing Fishman inventory, including the Product to a new location on Tatamy Road, also in Easton. Fishman continues to store goods there "to the present time." (AFF ¶4.)
In the last part of August 2006, in connection with the anticipated move, Mrs. Fishman, the company's President took an inventory of the Product. (See AFF ¶6; Tr. at 26:15-27:17.) She offered testimony supported by inventory documents, that there were 5,688 units of the Product at Wilson Park at that time and that all of it was moved to the Tatamy facility. (Tr. at 68:6.) We accept this as credible and also accept her testimony that the shortfall of 72 units from the July 29, 2004 delivery was accounted for by Fishman using some of the product as samples in their marketing efforts. (Tr. at 90:11-19.)
Prior to the discovery of the theft in September 2010, however, Fishman never provided Frick with this or any other specific inventory, description or statement of either the quantity or the value of the Product, regardless of whether it was stored at either Wilson Park or Tatamy Road. (AFF ¶16, 17.) It is also the case that Frick never asked Fishman to provide any such inventory, description or statement of value of any of these stored goods.Id.
On September 23, 2010, Ms. Fishman visited the Tatamy location and discovered that the Product was missing. (Tr. 71:12-72:2.) What was unknown to her at the time was that on or about May 2010, Steven Lewandowski, the brother of Frick employee, Daniel Lewandowski ("Daniel"), had called Frick and told them that Daniel was selling some of the Product on eBay and on the boardwalk. (AFF ¶ 9.) After some delay, the local police undertook an investigation which led to criminal charges brought by the Northampton County District Attorney against Daniel for receiving stolen property. (AFF ¶12.) In working up the charges the investigating detective traced some 140 cases, of 24 count each, as having been sold by Daniel on eBay. (AFF ¶14.) While there was credible evidence of Daniel being responsible for the theft of the entire lot, the District Attorney took a more conservative approach and charged him not with theft, but with receiving stolen property for the quantity established by the eBay records or 3,360 individual pieces. (See Tr. at 53:9-56:12.) Frick urges us to conclude that this represents the entirety of the Product stolen. This we decline to do.
We are rather, convinced by the un-contradicted evidence that none of the Product was removed by or at the direction of Fishman once it got to Tatamy in August-September 2006. (Tr. at 74:6-7; 75:15-76:10.) We are also persuaded by the police investigation, which disclosed that the further disposition of the Product by Daniel was not limited to eBay sales. (Tr. at 50:9-52:11.) Some of it had been given to family and friends as Christmas gifts and some had been sold on the boardwalk. Id. Further, Daniel himself testified in his deposition, relevant portions of which were accepted as trial evidence, that between June2007 and September 2009 he systematically stole carton after carton of the Product until there was none left. (P-PFF ¶ 4; Tr. at 107:19-108:8.) Thus, we conclude from this evidence that 5,688 units of Fishman's Product were stolen from the Frick Tatamy warehouse. We now turn to the question of pricing.
The evidence offered with respect to pricing has some limitations. Plaintiffs argue that the proper valuation of the Product is $290,088, based upon a price they expected to get from a customer in the Philippines. (P-PCL ¶ 6.) Defendant, on the other hand, urges us to value the Product based upon plaintiff's $164,045.42 purchase price. (D-PFF ¶ 8.) We will consider both positions.
Fishman claims that it is entitled to lost profits as they introduced evidence that showed that they would have sold the Product to a third party at a price of $51 per piece or $290,088. (P-PCL ¶6.) At trial, Jerry Fishman testified that he anticipated receiving $51 per bottle for the Product from one interested customer in the Philippines. (Tr. at 22:11; 31:2-7.) Upon cross examination, however, Mr. Fishman conceded that he had no documentation or other supporting evidence confirming that such negotiations were in fact under way. (Tr. at 39:18-20.) Further, the evidence established that despite the fact that the Product was said to be the best-selling men's cologne in the world (Tr. at 71:9-11), none of it had been sold (except by the thief) from the time it was delivered to the first Frick warehouse in the fall of 2004 until Diane Fishman's discovery of the thefts in September 2009. (See Tr. at 31:8-23.)
Frick maintains that "Fishman's claim for damages in the amount of $290,088 iswithout factual support in the record [and] is speculative at best." (D-PCL ¶13.) It argues, rather, that the Product should be valued according to Fishman's "demonstrated purchased [sic] cost at [the] time of delivery. . ." (D-PCL ¶ 8.) At trial, documents were accepted into evidence which established that Fishman paid 135,360 euros, or $164,045.42 U.S. dollars, for 5,760 units of the Product from the Spanish supplier in June 2004. (AFF ¶2; P-1 at 1.) As Detective Taylor testified, this led to a simple calculation of dividing that sum by the number of units to establish a price per bottle of $28.48. (Tr. at 53:15-25.)
In considering these positions, we first set out the law pertaining to lost profits. Both parties agree that Pennsylvania law governs, as "[t]he measure of damages for breach of a contract is determined by the law of the place of performance," and the place of performance of the contract in dispute was Pennsylvania. Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941) (citing Restatement, Conflict of Laws § 372); (Tr. 112:1-9). Pennsylvania law "distinguishes between general damages - those ordinary damages that flow directly from the breach; and special or consequential damages - those collateral losses, such as expenses incurred or gains prevented which result from the breach." LBL Skysystems (USA), Inc. v. APG-America, Inc., 319 F.Supp.2d 515, 523 (E.D. Pa. 2004) (quoting McDermott v. Party City Corp., 11 F.Supp.2d 612, 624 (E.D. Pa. 1998)) (internal quotations omitted); see also Delahanty v. First Pennsylvania Bank, N.A., 464 A.2d 1243, 1258 (Pa. Super. 1983). Lost profits are considered a form of consequential damages. In re Partners Group Fin., LLC, 394 B.R. 68, 80 (Bankr. E.D. Pa. 2008). To recover damages for lost profits in a breach of contract action, the plaintiff bears the burden of establishing that such damages (1) are calculable with reasonable certainty; (2) were proximately causedby the breach of contract; and (3) were reasonably foreseeable. Id. (citing Company Image Knitware, Ltd. v. Mothers Work,...
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