United States Court of Appeals,
Fifth Circuit.
No. 94-30258.
MINERAIS U.S. INC., EXALMET DIVISION, Plaintiff-Appellant,
v.
M/V MOSLAVINA, her engines, boilers, etc., et al., Defendants,
Turner Marine Bulk, Inc., Defendant-Appellee.
March 6, 1995.
Appeal from the United States District Court for the Eastern
District of Louisiana.
Before REAVLEY, DUHÉ and PARKER, Circuit Judges.
DUHÉ, Circuit Judge:
Defendant Turner Marine Bulk, a New Orleans stevedore,
negligently commingled two lots of ferrochrome that Plaintiff
Minerais U.S. Inc. was importing for resale in the United States.
Minerais had purchased 700 metric tons (MT) high grade ferrochrome
and 1000 MT low grade ferrochrome; 250 MT high grade ferrochrome
escaped damage, and the remaining 450 MT high grade and the 1000 MT
low grade ferrochrome were commingled. None of the combined
material fell within the higher grade, and Plaintiff was forced to
downgrade 450 MT high grade material to low grade for purposes of
resale. This appeal concerns only the issue of damages.
The district court awarded damages based on wholesale values
of the material (i.e., wholesale value of 450 MT high grade
ferrochrome minus wholesale value of 450 MT low grade ferrochrome),
finding that Plaintiff failed to establish the fair market value as
the appropriate measure of damages. Holding that Plaintiff
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adequately established fair market values, we reverse and remand
for application of the market-value rule using retail values as
specified herein.
I. The Market-Value Rule.
The market-value rule requires that damages be calculated
using market values at the time the cargo is discharged. Such a
damage award places the injured cargo owner in the same position it
was in before the damage. The market-value rule makes the cargo
claimant whole by awarding him the difference between the fair
market value of the undamaged cargo and the fair market value of
the cargo as damaged on the date of discharge at the port of
destination. Cook Indus., Inc. v. Barge UM-308, 622 F.2d 851, 854
(5th Cir.1980).
Nothing in Illinois Central Railroad v. Crail compels use of
the wholesale price rather than retail. See Illinois Cent. R.R. v.
Crail, 281 U.S. 57, 64-65, 50 S.Ct. 180, 181, 74 L.Ed. 699 (1930)
("[The market-value rule] may be discarded and other more accurate
means [to measure the loss] resorted to, if, for special reasons,
it is not exact or otherwise not applicable.") (awarding wholesale
value of lost shipment). Illinois Central was a
shortage-in-delivery case, not a damaged-goods case; where cargo
is downgraded but not completely destroyed, this Court has held the
market-value rule to be both a convenient and accurate means of
measuring damages. Cook Indus., 622 F.2d at 855-56. We hold the
rule provides an accurate measure of damages in this case as well.
A. Fair Market Value of Undamaged Cargo.
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In June 1990, when the shipment was discharged in New
Orleans, the average market price of high grade ferrochrome was
$1.15 per pound of contained chromium, according to Metals Week (a
weekly publication), which was found by the district court to be
the most reliable evidence of the market price. Published market
quotations of bulk commodities provide simple proof of market value
and damages so as to support application of the market-value rule.
See 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 10-36 (2d
ed. 1994); see also Amstar Corp. v. M/V ALEXANDROS T., 472 F.Supp.
1289, 1294 (D.Md.1979), aff'd, 664 F.2d 904 (4th Cir.1981).
Further, Minerais' retail sales price in August 1990 corroborated
Metals Week by establishing $1.15 per pound of chromium as the
retail price. The market value of high grade ferrochrome at the
time of the arrival of the shipment was thus adequately established
at $1.15 per pound of chromium.
B. Fair Market Value of Cargo as Damaged.
The 450 MT damaged cargo after commingling was
indistinguishable from the 1000 MT low grade ferrochrome with which
it was mixed. Metals Week did not list a price for low grade
ferrochrome at the time of discharge of the shipment, because there
was no established market for it at the time. Minerais ordered the
low grade to test the market for it. Minerais sold the 1450 MT low
grade product in varying quantities over several months and the
price varied over those few months. The district court declined to
rely on a retail price in part because of the declining market and
in part because it was unclear which resale accounted for the 450
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MT downgraded material.
We hold that the sales price close in time to the discharge
date is nevertheless sufficient to establish the market value of
the downgraded product at the time of discharge. Some of the low
grade material sold at $.99 per pound chromium in June and July
1990 as shown by two invoices (for sales of 160 MT and 400 MT).
These contemporaneous sales provide sufficient evidence from which
to apply the market-value rule. See Standard Oil Co. v. Southern
Pac. Co., 268 U.S. 146, 155, 45 S.Ct. 465, 466-67, 69 L.Ed. 890
(1925) (recognizing "contemporaneous sales of like property in the
way of ordinary business" as one manner of establishing market
value); cf. Holden v. S.S. Kendall Fish, 395 F.2d 910, 913 (5th
Cir.1968) (requiring that damages be calculated at the time of
delivery, because the carrier "is not and should not be the
guarantor of the ups and downs of commodity prices").
We have no reason to factor in the varying prices of low grade
ferrochrome over the ensuing months. Regardless of the fact that
Plaintiff intended to introduce only a limited quantity of low
grade ferrochrome into the United States market, the sale of 560 MT
low grade product for $.99 per pound chromium near the time of
delivery provides adequate proof of the fair market value of all of
the downgraded product (only 450 MT) at the time of discharge.
II. Conclusion.
Applying the general measure of the shipper's recovery, i.e.,
the difference in market values before and after damage to the
damaged cargo, will accurately compensate Plaintiff. Plaintiff
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having provided sufficient evidence of fair market values of both
high and low grade ferrochrome at the time of delivery, we remand
for calculation of damages under the market-value rule using the
June 1990 retail values.
REVERSED and REMANDED.
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