Court Opinion

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Opinions of the United
1998 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

7-10-1998

Robert Burton Assoc v. Preston Trucking Co
Precedential or Non-Precedential:

Docket 97-5363

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Recommended Citation
"Robert Burton Assoc v. Preston Trucking Co" (1998). 1998 Decisions. Paper 157.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/157

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Filed July 10, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 97-5363

ROBERT BURTON ASSOCIATES, INC.

v.

PRESTON TRUCKING COMPANY, INC.,

       Appellant

On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 96-00745)

Argued May 21, 1998

BEFORE: SLOVITER, GREENBERG, and GIBSON,*
Circuit Judges

(Filed: July 10, 1998)

       Gerard F. Smith (argued)
       Law Offices of Gerard F. Smith
       One Broadway
       Suite 201
       Denville, NJ 07834

       George Carl Pezold
       Augello, Pezold & Hirschmann
       120 Main St.
       Huntington, NY 11743

        Attorneys for Appellee
_________________________________________________________________

*Honorable John R. Gibson, Senior Judge of the United States Court of
Appeals for the Eighth Circuit, sitting by designation.
       Paul D. Keenan
       David S. Garber (argued)
       Buchanan Ingersoll
       500 College Road East
       Princeton, NJ 08540

        Attorneys for Appellant

OPINION OF THE COURT

GREENBERG, Circuit Judge.

This matter comes on before the court on defendant-
appellant Preston Trucking Company Inc.'s appeal from an
order of May 22, 1997, denying reconsideration of an order
for summary judgment entered in this matter on March 25,
1997, in favor of plaintiff-appellee, Robert Burton
Associates Inc. Burton, a shipper, brought this action
against Preston, a carrier, under the Carmack Amendment
for loss of merchandise in transit.1 Preston concedes that it
is liable to Burton and thus only damages are in dispute.

The district court set forth the facts and the legal issue
involved in its amended letter opinion of March 18, 1997,
as follows:

        The basic facts in this matter are not in dispute.
       Preston picked up eighty-one cases of cigarette papers
       from Burton's warehouse in West Caldwell, New Jersey,
       on or about December 28, 1994. Those eighty-one
       cases were not delivered to Burton's customer, Anpesil
       Distributors, Inc., ("Anpesil") in Jersey City, New
       Jersey. Neither Burton nor Preston can account for the
       whereabouts of the shipment. A replacement shipment
       of eighty-one cases of cigarette papers was delivered to
       Anpesil and Burton received payment in full.

        Preston concedes that it failed to deliver the goods.
       Therefore, the only dispute is whether Burton's
       damages in this case should be the market value of the
       goods or the replacement cost of the goods.
_________________________________________________________________

1. The Carmack Amendment as applicable to this appeal now appears at
49 U.S.C. S 14706 but previously was codified at 49 U.S.C. S 11707.

                                  2
Preston points out, in harmony with the district court's
findings, that Anpesil paid an invoice price for the
replacement goods which was for "the same exact price that
Burton intended to charge for the earlier shipment." Br. at
4. Moreover, the "replacement shipment included identical
products in the identical quantities to the products that
were contained in the lost shipment" and Burton's cost to
"purchase, procure, warehouse, ship and generally in an
all-encompassing manner service the needs of Anpesil on
[the replacement] invoice . . . was 17,591.41."2 Br. at 4-5
(internal quotation marks omitted). Finally, Preston asserts
that Burton had a sufficient quantity of replacement goods
on hand both to replace the lost goods and to fill all its
orders from all its customers.

Burton's entire statement of facts in its brief is the
following:

        Appellee, Robert Burton, is a distributor of cigarette
       papers. Defendant, Preston Trucking is a motor
       common carrier. Appellee, Robert Burton, Inc., had
       sold 81 cases of cigarette papers to one of its
       customers, Anpesil Distributors, who tendered the
       goods to Preston for delivery to the customer and
       Preston lost and failed to deliver the goods. As a result,
       the customer did not pay for the goods. Plaintiff sued
       under the `Carmack Amendment' 49 U.S.C. S 11707,
       now 49 U.S.C. S 14706, for breach of contract of
       carriage and the District Court properly awarded
       damages in the amount of the invoice price. The
       damages awarded is in the amount of $55,928.99.

Br. at 1-2.3 Thus, Burton does not deny that Preston has
stated the facts accurately.

The district court in its letter opinion noted that Preston
argued that Burton's replacement cost is the appropriate
measure of damages. The court, however, rejected this
_________________________________________________________________

2. The actual amount was $17,591.47, app. at 212, but as a matter of
convenience we use the figure of $17,591.41 which Preston advances.

3. The invoice amount actually was for $55,928.88, app. at 209, but the
court entered judgment for $55,928.99. In the circumstances, as a
matter of convenience we will use the latter figure.

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measure of damages as it regarded it as being "more
suitable when a consignee sustains the loss and is forced
to go into the open market at destination to procure a
replacement for the lost or damaged property," citing
Chicago M. & St. Paul Ry. Co. v. McCaull-Dinsmore Co., 253
U.S. 97, 100, 40 S.Ct. 504, 505 (1920).

The district court then pointed out that Burton asserted
that it was entitled to the market value of the goods. The
court indicated that market value damages are awarded on
the theory that an award of replacement costs does not
compensate the plaintiff for "what he would have had if the
contract [of delivery] had been performed," quoting Polaroid
Corp. v. Schuster's Express, Inc., 484 F.2d 349, 351 (1st
Cir. 1973) (internal quotation marks omitted).

The court then said that "[p]laintiff is, in effect, a lost
volume seller, as it could have sold the replacement
shipment to a separate customer to gain a profit had the
first shipment not been lost by defendant." The court then
reached the following conclusion:

        It is defendant's burden to come forward and show
       that special reasons exist why the market value rule
       should not be applied. See Eastman Kodak Co. v.
       Westway Motor Freight, Inc., 949 F.2d 317, 319 (10th
       Cir. 1991). Defendant has failed to shoulder its burden
       in this case. Defendant has not shown that plaintiff
       could not have earned a profit on two shipments: The
       shipment of the lost goods, had they been delivered,
       and the shipment of the replacement goods to a second
       buyer.

Accordingly, the court entered judgment against Preston for
$55,928.99, the invoice value of the original (as well as of
the second) shipment. Preston then moved for
reconsideration but by order entered May 22, 1997, the
district court denied this motion. Preston then appealed.
While, as we have indicated, Preston concedes that it is
liable to Burton, it contends its liability is limited to
Burton's replacement costs for the 81 cases of cigarette
papers rather than for the invoice value of the lost
shipment.

                                4
Preliminarily we address a point Burton did not mention
in its brief. As we noted above, Preston asserts that Burton
did not lose any sales by reason of the loss of the original
Anpesil shipment as (1) Burton replaced that shipment and
Anpesil paid the full price for the second shipment; and (2)
Burton filled all the orders of all its other customers as it
had sufficient inventory to do so. Burton's attorney at oral
argument suggested that Preston's assertions were not
accurate and read from portions of a deposition, which
were not included in the appendix, which he contended
supported his argument.

In a post-argument submission which Burton's attorney
filed with our authorization, he acknowledged that the
foregoing portions of the deposition were not submitted to
the district court. But in the submission he referred to a
certification of a Burton employee, Carl Ioos, submitted on
the summary judgment proceedings which indicated that
after the loss of the 81 cases of cigarette paper"there was
a drastic decline in sale of our goods in the market." The
certification then indicated that what apparently happened
was that Burton's goods had been stolen and wereflooding
the market "at significantly reduced prices." Accordingly,
Ioos claimed that it was "highly probable" that Burton lost
sales because the goods stolen from it were competing with
Burton's products.

Inasmuch as Burton did not make this argument in its
brief, we might be justified in disregarding the certification.
See Laborers' Int'l Union v. Foster Wheeler Corp., 26 F.3d
375, 398 (3d Cir. 1994). But we are reluctant to do so
because, as we indicated above, the district court held that
Burton "could have sold the replacement shipment to a
separate customer to gain a profit had the first shipment
not been lost by defendant." Inasmuch as the Ioos
certification supports that conclusion, the district court
might well have been considering it when it wrote its
opinion. Thus, in seeking an order affirming the district
court Burton arguably, albeit rather obliquely, has
preserved the argument based on the Ioos certification. See
Long v. Sears Roebuck & Co., 105 F.3d 1529, 1544 (3d Cir.
1997), cert. denied, 118 S.Ct. 1033 (1998). Accordingly, we
will exercise our discretion and will consider the Ioos
certification.

                               5
On the merits we will affirm the judgment on liability but
will vacate the judgment on damages and will remand the
case to the district court for further proceedings. Initially in
addressing the merits, we point out that we do not doubt
that ordinarily when the carrier is responsible for the loss
of the goods in transit, the shipper is entitled to recover the
contract price from the carrier. See, e.g., John Morrell & Co.
v. Burlington Northern, Inc., 560 F.2d 277, 280 (7th Cir.
1977). Yet the Supreme Court has recognized that the"test
of market value is at best but a convenient means of getting
at the loss suffered. [Thus] [i]t may be discarded and other
more accurate means resorted to, if, for special reasons, it
is not exact or otherwise not applicable." Illinois Cent. R. R.
Co. v. Crail, 281 U.S. 57, 64-65, 50 S.Ct. 180, 181 (1930).
Of course, the carrier has the burden of proof to
demonstrate that a court should deviate from the market
value rule. See Eastman Kodak Co. v. Westway Motor
Freight, Inc., 949 F.2d 317, 319 (10th Cir. 1991).

Preston may be able to meet that burden. Burton
contracted with Anpesil to sell it 81 cases of cigarette
papers for $55,928.99. It is undisputed that Anpesil paid
Burton $55,928.99. Thus, Burton cannot claim that
Anpesil did not pay it the contract price. Rather, Burton's
direct monetary damages by reason of the loss of the
original shipment were caused by its need to ship 162
cases of cigarette papers. These damages were the
additional expenses it incurred by reason of the loss of the
goods in transit, i.e., $17,591.41. Consequently, if Preston
pays Burton $17,591.41, in one sense Burton will be whole,
as it will have received the direct benefit of its bargain with
Anpesil.

But in view of the Ioos certification the foregoing analysis
is not complete. While it is true that Anpesil accepted and
paid for the second shipment and that Burton was able to
fill the orders of its other customers, according to the
certification Burton lost sales by reason of the loss of the
first shipment. Preston denies that the certification is
accurate and it points to portions of the record to support
its views. Yet in the procedural posture of this case, which
is on appeal from an order for summary judgment, we
cannot resolve this factual dispute. Accordingly, there is a

                               6
dispute as to material facts which requires us to remand
the case to the district court for further proceedings to
determine if Burton lost sales by reason of the loss of the
81 cases of cigarette papers.

On the remand Preston, as the carrier, will have the
burden of proof to demonstrate that its loss of the 81 cases
of cigarette papers did not cause Burton any loss of sales.
If it satisfies that burden, the district court will enter
judgment in favor of Burton against Preston for $17,591.41
because awarding Burton the invoice price for the lost
shipment would grant it in an unjustified windfall. But if
Preston cannot establish that Burton did not lose any sales
by reason of the loss of the goods, the district court will
enter judgment against Preston for $55,928.99, the invoice
price. If the district court finds that Burton lost sales by
reason of the loss of the merchandise it should not attempt
to quantify the inherently uncertain amount of the loss.
Thus, unless Preston establishes that Burton did not lose
any sales by reason of the loss of the 81 cases of cigarette
papers, it will not have demonstrated that the court should
deviate from the market value rule.

In the circumstances, we will affirm the order of
summary judgment entered on March 25, 1997, as to
liability but will vacate the order with respect to the
calculation of damages and will remand the case to the
district court for further proceedings to calculate damages
in accordance with this opinion. The parties will bear their
own costs on this appeal.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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