Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-01131/USCOURTS-ca10-91-01131-0/pdf.json

Nature of Suit Code: 450
Nature of Suit: Interstate Commerce
Cause of Action: 

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OFFICE OF THE CLERK 

United States Court of Appeals for the Tenth Circuit 

C-404 United States Courthouse 

1929 Stout Street 

Denver Colorado 80294 

January 23, 1992 

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION 

RE: 91-1131, Eastman v. Westway 

Filed November 12, 1992 by Judge Tacha 

Please be advised of the following corrections on page 

3, last paragraph, of the captioned opinion: 

Line 7, the word all is deleted; line 8, the word the is 

added between with and affidavits,; line 9, the word a is 

changed to no. 

Please make these corrections to your copy. 

Very truly yours, 

ROBERT L. HOECKER, Clerk 

By~~ 

Deputy Clerk 

Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 1 
PUBLISH 

FILED United SW. Coμrtqf Appea\G Tenth Circuit 

UNITED STATES COURT OF APPEALS NOV 12 1991 

TENTH CIRCUIT ROBERT L. HOECKER 

Clerk 

EASTMAN KODAK COMPANY, 

a New Jersey corporation, 

Plaintiff-Appellee, 

v. 

WESTWAY MOTOR FREIGHT, INC., 

a Colorado corporation, 

Defendant-Appellant. 

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No. 91-1131 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. No. 88-K-1765) 

Submitted on the Briefs: 

Joseph J. Mellon, The Mellon Law Firm, Denver, Colorado, for the 

Defendant-Appellant. 

Stephen E. Kapnik, Lohf, Shaiman & Ross, Denver, Colorado, for the 

Plaintiff-Appellee. 

Before ANDERSON, TACHA, and BRORBY, Circuit Judges. 

TACHA, Circuit Judge. 

Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 2 
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 

1 After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

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Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 3 
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 nova. United States~ 

rel. Bergen Y.!.. Lawrence, 848 F.2d 1502, 1505 (10th Cir.), cert. 

denied, 488 U.S. 980 (1988). The district court's findings of 

fact will only be reversed if they are clearly erroneous. 

Crawford Y.!.. 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 nova, using the same standards the district 

court applies. Osgood Y.!.. State Farm Mut. Auto Ins. Co., 848 F.2d 

141, 143 (10th Cir. 1988). Summary judgment is appropriate "if 

all the pleadings, depositions, answers to interrogatories, and 

admissions on file, together with affidavits, if any, show that 

there is a genuine issue as to any material fact and that the 

moving party is entitled to a judgment as a matter of law." Fed • 

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Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 4 
R. Civ. P. 56(c); see Anderson Y..!.. Liberty Lobby, 477 U.S. 242, 

247-48 (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,~~ St. Paul~ Co. Y..!.. McCaull-Dinsmore Co., 

253 U.S. 97 (1920). On appeal, Westway contends that this case 

falls into the exception to the market value approach announced in 

Illinois Cent. R.R. Co. Y..!.. Crail, 281 U.S. 57 (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. Y..!.. 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 

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Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 5 
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 was not error for the 

district court to calculate damages based on the market value of 

the lithographic plates. 

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Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 6 
Westway next contends that even if market value is the 

correct way to measure Kodak's damages, the district court 

incorrectly used Kodak's full invoice price and ignored evidence 

as to the shipment's true market value. At trial, Kodak presented 

evidence that the wholesale price of the destroyed goods was the 

full invoice price. At no time did Westway present evidence that 

this merchandise would have been sold for a specific price, lower 

than that provided by Kodak. Instead, Westway merely offered 

evidence that Kodak sometimes sells this type of film at a reduced 

price. Given the lack of specific evidence that this particular 

shipment of merchandise was to be sold at a reduced price, we 

conclude that the district court correctly measured Kodak's 

damages by utilizing the full invoice price. 

Westway also asserts that the district court erred in 

calculating the credit against Kodak's invoice value in 

recognition of the salvage value of the damaged goods and the 

savings realized by Kodak. The district court credited Westway 

$25,000 for salvage value and $42,613.49 for savings realized. 

Salvage value was calculated as the estimated value of the damaged 

film after potential recovery and recycling. Westway contends 

that because Kodak could have sold the damaged film at a reduced 

price, it failed to mitigate its damages. Thus, Westway argues 

that the sale value of the salvageable film should have been used 

in calculating damages. 

The defendant has the burden to prove that the plaintiff did 

not exercise reasonable diligence in mitigating its damages. See 

Skinner Y.!.. Total Petroleum, Inc., 859 F.2d 1439, 1446 (10th Cir. 

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Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 7 
1988). The aggrieved party need only take reasonable steps under 

the circumstances of the particular case to mitigate its damages. 

See Hidalgo Properties, Inc., Y..!... Wachovia Mortgage Co., 617 F.2d 

196, 200 (10th Cir. 1980). The record demonstrates that Kodak has 

spent considerable resources in developing its reputation in the 

marketplace. The record also reveals that Kodak's reputation 

could be harmed if it was required to sell damaged merchandise in 

order to mitigate damages. Under the circumstances of this case, 

we agree with the district court that it would be unreasonable to 

require Kodak to subject its reputation to potential harm in order 

to mitigate its damages. 2 

Westway also argues that it is entitled to a thirty-seven 

percent credit because Kodak normally grants such a credit to any 

customer who voluntarily returns damaged film. The record shows 

that Westway misconstrues the nature and the purpose of the credit 

Kodak offers. Kodak demonstrated that it offers a thirty percent 

credit to get damaged merchandise back from a seller before the 

film reaches the marketplace. When Kodak retains possession of 

the damaged goods, it does not offer a thirty percent credit. The 

record reveals, in this case, that Kodak has retained possession 

of the damaged product. Thus, we conclude that Westway was not 

entitled to the credit. 

2 We note that in a similar situation the United States 

District Court for the Southern District of Alabama also concluded 

that it would be unreasonable to force a company to mitigate 

damages if such mitigation would harm the company's reputation. 

See Sony Magnetic Products of Am. Y..!... Merivienti 0/Y, 668 F. Supp. 

1505 (S.D. Ala. 1987), aff'd, 863 F.2d 1537 (11th Cir. 1989). 

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Appellate Case: 91-1131 Document: 010110096915 Date Filed: 11/12/1991 Page: 8 
Finally, Westway asserts that the district court abused its 

discretion in awarding Kodak prejudgment interest in the amount of 

eight percent. In U.S. Indus., Inc. Y..!.. Touche Ross~ Co., 854 

F.2d 1223 (10th Cir. 1988), we announced that an award of 

prejudgment interest turns on a two-step analysis. The district 

court must first determine whether the award of prejudgment 

interest will compensate the injured party. Second, even if the 

award of prejudgment interest is compensatory in nature, the 

district court must "still determine whether the equities would 

preclude the award of prejudgment interest." Id. at 1257. 

We must uphold a district court's determination of 

prejudgment interest unless there is an abuse of discretion. See 

Federal Deposit Ins. Corp. Y..!.. Rocket Oil Co., 865 F.2d 1158, 1160 

(10th Cir. 1989). The record clearly demonstrates that the award 

of prejudgment interest will serve to compensate Kodak. Further, 

Westway has failed to provide sufficient reasons as to why t 

equities would preclude a prejudgment award in this case. 

Instead, Westway simply reasserts several of its legal arguments 

related to other issues in the case. Therefore, we conclude that 

the district court did not abuse its discretion in awarding Kodak 

prejudgment interest in the amount of eight percent. 

The judgment of the district court is AFFIRMED. The mandate 

shall issue forthwith. 

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