AMERICAN NATIONAL FIRE INSURANCE COMPANY, as subrogee of Tabacalera Contreras Cigar Company v. YELLOW FREIGHT SYSTEMS, INCORPORATED
No. 02-1639, 02-1741
United States Court of Appeals, Seventh Circuit
Decided April 10, 2003
325 F.3d 924
[REDACTED] If we find that counsel‘s alleged deficiency did not prejudice the defendant, we need not consider the first prong of the Strickland test. Matheney v. Anderson, 253 F.3d 1025, 1042 (7th Cir. 2001). We follow this course since Raines has failed to prove he suffered prejudice as a result of his counsel‘s performance. More precisely, Raines has not offered a shred of evidence that supports his claim. As we have noted, a “mere allegation by the defendant that he would have insisted on going to trial is insufficient to establish prejudice.” Barker v. United States, 7 F.3d 629, 633 (7th Cir.1993) (quoting United States v. Arvanitis, 902 F.2d 489, 494 (7th Cir.1990)). Raines offers no evidence, other than his averment that but for trial counsel‘s advicе, he would have gone to trial. Such an emaciated argument is unpersuasive. A defendant is required to establish through objective evidence that a reasonable probability exists that he would have gone to trial. McCleese v. United States, 75 F.3d 1174, 1179 (7th Cir.1996). Moreover, the defendant‘s sole assertion that he would have proceeded to trial cannot carry the burden to show prejudice under Strickland. See, e.g., Arango-Alvarez v. United States, 134 F.3d 888, 893 (7th Cir.1998); United States v. Arvanitis, 902 F.2d 489, 495 (7th Cir.1990); Gargano v. United States, 852 F.2d 886, 891 (7th Cir. 1988). The law on this issue is clear and straightforward and because Raines has failed to meet his burden, we reject his ineffective assistance claim.
CONCLUSION
For the foregoing reasons, we AFFIRM the sentences of each appellant.
[REDACTED]
Argued Oct. 16, 2002.
Decided April 10, 2003.
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H.N. Cunningham, III, (argued), Roberts, Cunningham & Stripling, Dallas, TX, for Defendant-Appellant.
Before COFFEY, RIPPLE and WILLIAMS, Circuit Judges.
RIPPLE, Circuit Judge.
American National Insurance Company (“National Insurance“), as subrogee of Tabacalera Contreras Cigar Company (“Tabacalera“), brought this action under the Carmack Amendment,
I
BACKGROUND
Tabacalera imports cigars from the Dominican Republic. In April 1998, it imported a shipment of 200,000 cigars contained in 118 cardboard boxes from the Dominican Republic to Dee‘s Cold Storage in Oconomowoc, Wisconsin. Yellow Freight picked up the shipment in Miami and took it to Wisconsin. When Yellow Freight‘s driver picked up the shipment in Miami, he noted that some of the cardboard box tops were “set down” or “crunch[ed],” but he did not consider the cartons sufficiently damaged to indicate that any of the cigars were damaged. Trial Tr. at 306, 297. He saw no indication that any of the cartons werе wet. He signed a clean bill of lading and loaded the shipment on his truck.
When the shipment was delivered to Tabacalera at Dee‘s Cold Storage, the top and bottom boxes in the shipment were wet, and many were crushed. Yellow
After a bench trial, the district court determined that National Insurance had made out a prima facie case under the Carmack Amendment, which allows a shipper to recover from a carrier for actual loss caused by the carrier. The court further concluded Yellow Freight had failed to rebut the prima facie case because it had not established any of the excepted causes that relieve the carrier of liability under the Carmack Amendment. See Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964) (explaining that the Carmack Amendment has the effect of “co-dif[ying] the common-law rule that a carrier is liable for damage to goods transported by it unless it can show that the damage was caused by (a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods” (internal quotation marks and citations omitted)); see also Allied Tube & Conduit Corp. v. S. Pac. Transp. Co., 211 F.3d 367, 369 n. 2 (7th Cir.2000). The district court held that National Insurance was entitled to the value of all of the damaged cartons, despite the inconsistency between the shiрping list and adjuster‘s reports.1 The court also awarded National Insurance damages for freight, taxes, fees and insurance on the entire shipment. With respect to prejudgment interest, the district court originally awarded National Insurance compound interest from the date Tabacalera received the damaged shipment, but, upon motion by Yellow Freight, the court modified the judgment, awarding simple, rather than compound, prejudgment interest from the date of subrogation, the date National Insurance paid Tabacalera for its loss.
II
DISCUSSION
A. The District Court‘s Findings
Yellow Freight contends that several of the district court‘s determinations cannot stand. Specifically, it challenges the court‘s determinations (1) that the cigars were delivered to Yellow Freight in good condition; (2) that the prima facie case was not rebutted; and (3) that the damaged cartons were part of the shipment of 118 cartons. Two basic principles must guide our review of these submissions. First, in reviewing a bench trial, the district court‘s findings of fact “shall not be set aside unless clearly erroneous.”
1. The Condition of the Cigars Upon Delivery
[REDACTED] This lawsuit arises under the Carmack Amendment,
Pursuant to this statute . . . the shipper establishes a prima facie case when it shows (1) delivery in good condition; (2) arrival in damaged condition; and (3) the amount of damages. Upon such a showing, the burden shifts to the carrier to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.
Yellow Freight submits that the district court‘s finding of “delivery in good condition” should be set aside because the court impermissibly relied on the failure of Yellow Freight‘s driver to note any exceptions to the bill of lading. Yellow Freight further contends that the bill of lading cannot establish the “good condition” of the cigars because the bill of lading stated that Yellow Freight had received “the property described above in apparent good order, except as noted (contents and condition of contents of packages unknown).” Plaintiff‘s Ex.3.
[REDACTED] Although “a bill of lading, on its own, may not necessarily establish a prima facie case that an еntire shipment was received in good order,” Allied Tube, 211 F.3d at 371, a bill of lading is certainly some evidence of that condition. See id. Indeed, in its conclusions of law, the district court specifically stated that: “A carrier‘s bill of lading noting no exceptions (i.e., no indication of damage) regarding the condition of the shipment constitutes some evidence that the shipment was received in good condition.” R.35 at 21.
[REDACTED] Moreover, a “statement in the bill of lading as to ‘apparent good order’ [is] prima facie evidence . . . that, as to parts which were open to inspection and visible, the goods were in good order at the point of origin.” Hoover Motor Express Co. v. United States, 262 F.2d 832, 834 (6th Cir. 1959). In conformity with this principle, the district court found that the cartons (not the cigars themselves) were open to inspection and thus the bill of lading was prima facie evidence that the cartons themselves (but not the contents) were in apparent good order.
In two cases where a bill of lading stated that the shipment was received in “apparent good order, but that the contents and condition” of the cargo itself was unknown, Faribault Woolen Mill Co. v. Chicago, Rock Island & Pacific Railroad Co., 289 N.W.2d 126, 129 (Minn.1980), and Reider v. Thompson, 197 F.2d 158 (5th Cir.1952), the courts found that
[w]hen packages are received by the carrier in acknowledged good external condition but are delivered by the carrier in a damaged or stained condition which could reasonably and logically be found to indicate that the discovered damage or deterioration of the contents resulted from the cause indicated by the condition of the external package, theretofore received in good condition, the trier of facts may infer from these circumstances that damage to the contents was occasioned by the negligencе of the carrier in the respect indicated by the changed external condition of the package.
Reider, 197 F.2d at 161; see also Faribault, 289 N.W.2d at 129 (same). In Faribault, the court quoted the Reider district court‘s statement on remand that
“[w]hen a consignment is received by a common carrier in external good order and condition and delivered by it in damaged condition, with the external covering of the goods so damaged as to account for the damage to the contents,
the consignee need not prove the internal good order of the goods at the time of receipt by the carrier, and the presumptive liability of the carrier is established.”
Faribault, 289 N.W.2d at 129 (quoting Reider v. Thompson, 116 F.Supp. 279, 280 (E.D.La.1953)).
Here, there was testimony by the Yellow Freight driver that some of the tops were “set down,” but that the containers were dry, that the use of used cardboard boxes is not unusual, and that he did not consider the cartons to be damaged to an extent that would indicate that any of the freight was damaged. See Trial Tr. at 306, 294-97. The driver signed a clean bill of lading without noting any problems to the containers.
On the other hand, there was multiple testimony that, when the cartons were delivered to Dee‘s Cold Storage for Tabacalera, water came out of the trailer, the top and bottom cartons were wet, some of the cartons on the bottom had disintegrated, and many boxes were crushed. See id. at 37-8, 193-98, 271.
Given this evidence, and in light of the case law, the district court certainly was entitled to find that the cargo, damaged upon arrival at its destination, previously had been delivered to Yellow Freight in good condition. National Insurance thus established a prima facie case under the Carmack Amendment.
2. Rebuttal Under the Carmack Amendment
[REDACTED] Under the Carmack Amendment, after a shipper has made out a prima facie case, “the burden shifts to the carrier to show both that it was free from nеgligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.” Allied, 211 F.3d at 369. The excepted causes are “acts of God, the public enemy, the act of the shipper himself, public authority, or the inherent vice or nature of the goods.” Id. at 369-70 n. 2.
[REDACTED] Yellow Freight submits that the evidence establishes that the damage was caused by “the act of the shipper himself,” specifically, by the shipper‘s improper packaging of the cigars in used cardboard boxes rather than in crates. We believe, however, that the evidence entitled the district court to conclude that an exception to liability on this basis was not available to Yellow Freight. The record shows that Tabacalera had received millions of cigars packaged in the same manner that were undamaged. See Trial Tr. at 171-72. Moreover, the damage found by the district court was, to a large extent, water damage. Yet, there was no evidence that the water damage had been caused by packing the cigars in used cardboard boxes. See R.35 at 10-11. Rather, the testimony indicated that the water entered “through one of the seams on the left side” of Yellow Freight‘s truck. Id. at 11; Trial Tr. at 196-97.
Even if the used cardboard boxes contributed to the extent of the damage once the cartons were wet, Allied requires that, in order to rebut the prima facie case, Yellow Freight also must show that it was not negligent. It cannot make that showing. The water damage was attributable entirely to Yellow Freight‘s negligence. The district court correctly determined that Yellow Freight had failed to rebut National Insurance‘s prima facie case.
3. Whether The Damaged Cigars Were Part of the Shipment
[REDACTED] Yellow Freight next submits that a comparison of the packing list with the inventory compiled by National Insurance‘s adjuster demonstrates that the cigars in at least 45 of the 59 cartons claimed to be damaged were not part of
Despite this supposed discrepancy, we are not left with a definite and firm conviction that a mistake was made. Yellow Freight simply has not carried the burden of demonstrating that the district court‘s view of the evidence has no basis in the record. As pointed out by National Insurance, Yellow Freight solicited no evidence to show that the measurements of National Insurance‘s adjuster were incorrect. Nor did it submit any evidence that the measurements stated on the invoice were correct. Yellow Freight offered no evidence of how the preparer of the bill of lading in the Dominican Republic measured the cigars or recorded the measurements. Indeed, the only testimony concerning the identity of the cigars was from a Mr. Flaxman, who helped with the damage assessment of the cigars. He stated those charged with the task separated out the 118 boxes, checked the invoice numbers, and “verified” that the boxes inspected “did, in fact come off that trailer that had the 118 cartons.” Trial Tr. at 66.
In summation, the district court committed no error in concluding that the cigars were delivered to Yellow Freight in good condition, that the damage was not caused by the packaging, and that the damaged cigars were part of the 118 carton shipment at issuе. Therefore, National Insurance was entitled to recover under the Carmack Amendment.
B. Award of Taxes, Fees, Freight and Insurance
[REDACTED] Yellow Freight submits that the district court erred in awarding National Insurance recovery for taxes, fees, freight charges and insurance for the damaged shipment.
[REDACTED] The Carmack Amendment,
[REDACTED] The Supreme Court‘s “ordinary measure of damages” in Carmack Amendment cases is meant to put the shipper back in the position it would have been in had the carrier properly performed, including recovery for lost profits:
[T]he ordinary measure of damages in cases of this sort is the difference between the market value of the property in the condition in which it should have arrived at the place of destination and
its market value in the condition in which, by reason of the fault of the carrier, it did arrive.
Gulf, Colorado & Santa Fe Ry. Co. v. Texas Packing Co., 244 U.S. 31, 37, 37 S.Ct. 487, 61 L.Ed. 970 (1917).2 When this measure is employed, the shipper is still obligated to pay freight to the carrier and will not be allowed to recover freight in his damages. The reasoning for this rule is straightforward: The price of the freight, as well as all necessary costs to the shipper such as insurance and taxes, will be figured into the market rate at destination. By receiving the market rate of the goods had they been undamaged less the market rate received in their damaged condition, the shipper has received exactly what he would have received had the carrier performed non-negligently.
This basic rule of damages for cases involving the carriage of goods was explained by Judge Wallace of the Second Circuit:
Presumably the cost of trаnsportation to the place of destination is an element of the market value of the goods at that place; and when the shipper recovers their market value, or upon the basis of their market value at that place, he obtains full indemnity. As the shipper thus gets the benefit of the transportation, the carrier should not lose the freight.
The Oneida, 128 F. 687, 692 (2d Cir.1904) (Wallace, J., concurring) (joining fully the court‘s opinion, but writing separately to explain the court‘s rationale); see also The M.S. Californian, 82 F.2d 283, 283 (2d Cir.1936) (noting that the “sale price” — the market value at destination — “included cost, insurance, and freight“).
Although written before the passage of the Carmack Amendment and in the context of admiralty law, Judge Wallace‘s explanation of why freight should be allowed under some calculations of damages and not under others is helpful. He explained why a shipper should not recover freight when the measure of damages is the “general rule” for cases of goods lost or damaged by the carrier. The Oneida, 128 F. at 692 (Wallace, J., concurring). Judge Wallace‘s “general rule” is the same as that adopted by the Supreme Court for Carmack Amendment cases, namely,
the carrier is liable to the shipper for [the] market value [of the lost goods] at the point of destination, less the amount of the freight charges due for their transportation; and the same rule applies where the goods are merely damaged, and are delivered in their damaged condition, with the qualification that the value of the goods in their damaged condition is to be deducted.
Id.; compare id., with Gulf, Colorado & Santa Fe Ry. Co., 244 U.S. at 37 (“[T]he ordinary measure of damages in cases [under the Carmack Amendment] is the difference between the market value of the property in the condition in which it should havе arrived at the place of destination and its market value in the condition in which, by reason of the fault of the carrier, it did arrive.“).
However, there are instances when freight may be recovered. The typical case is when the entire shipment is destroyed or useless,3 but also when the measure of damages used is the shipper‘s cost (as determined by his cost, the invoice
[T]he rule apparently is that, under bills of lading providing that loss or damage shall be computed at the value or cost of the goods or property at the time and place of shipment, the carrier is not entitled to have the amount of the freight deducted from the value as ascertained under the contract, or, in other words, that the freight, if paid, should be added to the value at the time and place of shipment.
Annotation, Validity and Effect of Provision in Carrier‘s Contract as to Time, Method, or Place of Valuation of Property for Purposes of Determining Amount of Damages, 83 L.Ed. 867, 877 (1939).
[REDACTED] The reason for including freight in the measure of damages when the shipper‘s cost (or the market value at place of shipment) is employed as the starting point is that the Carmack Amendment allows recovery of lost profits under the ordinary measure of damages. When the shipper‘s costs are used, however, the profit is unknown. We can assume, however, that the shipper at least would have been able to recover in the market at destination his freight, taxes, fees and insurance in addition to the price he paid for the commodity. Thus these items can be recovered (or added to the value) when the measure of damages is the cost to the
shipper less the value of the damaged goods.
A rule allowing freight to be recovered when the value is determined by the shipper‘s cost (or the value at the place of shipment) but not allowing freight to be recovered when value is determined by the market rate if undamaged at destination comports with the Carmack Amendment decisions. For example, in Pennsylvania Railroad Co. v. Olivit Brothers, 243 U.S. 574, 37 S.Ct. 468, 61 L.Ed. 908 (1917), the Supreme Court stated:
[I]t was agreed at the trial that the proper measure of damages was to be computed upon the basis of the value of the property at the place and time of shipment and that such measure should be read into all of the bills of lading. As plaintiff further says, to recover the damages sustained by it based upon this value, plaintiff must receive from defendant the difference between this value and the proceeds of the sale, and the freight paid. In this we concur, and therefore there was no error in including in the recovery such freight.
Id. at 586, 37 S.Ct. 468 (emphasis added); Allied Tube, 211 F.3d at 369 n. 1 (noting that the damages were “the cost of the shipment . . . plus Allied‘s shipping costs . . . minus the shipment‘s salvage value“); see also Albion Elevator Co. v. Chicago & N.W. Transp. Co., 254 N.W.2d 6, 18 (Iowa 1977) (“[W]here a shipper, as here, receives only the point of shipment value of the lost commodity rather than its destination value, a measure of damages which permits him to recover freight charges paid on the lost portion of the shipment as
In this case, the district court did not use the regular measure, which in and of itself is not problematic. See Illinois Cent. Ry. Co. v. Crail, 281 U.S. 57, 64, 50 S.Ct. 180, 74 L.Ed. 699 (1930).6 Had the regular measure been used, National Insurance would hаve paid freight but would have received the market value of the entire shipment of cigars undamaged in Wisconsin less the market value of the cigars that were salvageable in Wisconsin. National Insurance would thus have recovered the freight, taxes, insurance and fees for the cigars that were destroyed, but would have still paid freight, etc., for those cigars that were salvageable.
If National Insurance had received the market value of the entire shipment at the place of shipment plus the entire freight paid less the market value of the salvageable cigars in Wisconsin, then National Insurance would have recovered its freight on the cigars that were not salvageable, but would have paid for the freight of the cigars that were salvageable because the
[REDACTED] The district court followed neither of these well-trodden paths. Rather, it awarded National Insurance the cost to the shipper of the cigars destroyed or damaged. Of the original shipment of 200,000 cigars, for which the shipper paid two dollars per cigar, or $400,000, the district court found that 110,206.5 cigars were damaged or destroyed. It thus awarded damages for the cost to the shipper of the damaged cigars of $220,413. Additionally, it awarded taxes, broker‘s fees, freight and insurance paid for the entire 200,000 cigar shipment for a total of $8,841. Under this award, National Insurance recovers the freight and charges for the near 90,000 cigars that were not damaged.8 Although the shipper can recover “all damages resulting from” the carrier‘s negligence, Pastime Amusement, 299 U.S. at 29, 57 S.Ct. 73, the shipper cannot recover more than “the injury suffеred.” Crail, 281 U.S. at 63, 50 S.Ct. 180.
We believe that existing precedent on the measure of damages requires that National Insurance be allowed to recover the freight, taxes, fees and insurance only for the portion (55.1%) of the shipment of cigars that was damaged. See Albion Elevator, 254 N.W.2d at 18 (finding that permitting shipper “to recover freight charges paid on the lost portion of the shipment” was necessary to compensate him for the “full actual loss” where he received “only the point of shipment value of the lost commodity” (emphasis added)).
C. Date from which Prejudgment Interest Accrues
[REDACTED] The district court awarded prejudgment interest to National Insurance, accruing from the date that National Insurance paid Tabacalera. National Insurance cross-appeals and submits that, as the subrogee, it is entitled to prejudgment interest from the date of the injury to Tabacalera.
[REDACTED] The basic purpose of prеjudgment interest is to put a party in the position it would have been in had it been paid immediately. It is designed to ensure that a party is fully compensated for its loss. See City of Milwaukee v. Cement Div. Nat‘l Gypsum Co., 515 U.S. 189, 195, 115 S.Ct. 2091, 132 L.Ed.2d 148 (1995); Reyes-Mata v. IBP, Inc., 299 F.3d 504, 508 (5th Cir.2002). Consequently, prejudgment interest typically accrues from the date of the loss or from the date on which the claim accrued. See West Virginia v. United States, 479 U.S. 305, 311, 107 S.Ct. 702, 93 L.Ed.2d 639 n. 2 (1987); Guides Ltd. v. Yarmouth Group Prop. Mgmt., 295 F.3d 1065 (10th Cir.2002). If Tabacalera, the insured, had been litigating this claim, it would have received prejudgment interest from the date that its injury occurred, the
[REDACTED] It is settled that, as a general rule, an insurer steps into the shoes of the insured and “acquires no greater or lesser rights than those of the insured.” Westchester Fire Ins. Co. v. Gen. Star Indem. Co., 183 F.3d 578, 583 (7th Cir.1999); Am. Nat‘l Bank & Trust Co. of Chi. v. Weyerhaeuser Co., 692 F.2d 455, 461 (7th Cir. 1982). However, there is a limitation on the rights of a subrogee that must be taken into account: The right of subrogation is generally one of indemnification; consequently, a subrogee “is entitled to indemnity to the extent only of the money actually paid by him to discharge the obligation . . . or the value of the property applied for that purpose.” Maryland Cas. Co. v. Brown, 321 F.Supp. 309, 312 (N.D.Ga.1971); see Milan v. Kausch, 194 F.2d 263, 265 (6th Cir.1952) (“It is the general rule in subrogation that the subrogee is to be reimbursed only to the extent of the amounts paid in discharge of the obligation assumed by the subrogee.“); Lexington Ins. Co. v. Baltimore Gas & Elec. Co., 979 F.Supp. 360, 362 (D.Md. 1997); Utica Mut. Ins. Co. v. Denwat Corp., 778 F.Supp. 592, 594 (D.Conn.1991) (noting that under “traditional principles” а subrogee action “is truly one of indemnification“); see also
[REDACTED] For example, in applying this rule, several courts have disallowed payment of punitive damages to the subrogee insurance companies, even though the subrogor could have received such damages. See Utica Mut. Ins. Co., 778 F.Supp. at 594; Colo. Farm Bureau Mut. Ins. Co. v. CAT Cont‘l, 649 F.Supp. 49, 52 (D.Colo.1986); Maryland Cas. Co., 321 F.Supp. at 312.9
National Insurance paid for the property damage to the cigars caused by Yellow Freight. It does not appear that it paid for Tabacalera‘s loss of its use of money from the time of the damaged shipment until the time of the insurance payment. Because National Insurance, as subrogee, is only entitled to indemnity for its payment to Tabacalera, we believe that the district court did not err in computing prejudgment interest from the date that National Insurance paid Tabacalera‘s claim.10
D. Simple Prejudgment Interest
[REDACTED] On cross-appeal, National Insurance also submits that the district court erred in awarding simple rather than compound prejudgment interest.
[REDACTED] As a general rule, the decision whether to award compound or simple prejudgment interest is left to the discretion of the trial court. See Gorenstein Enters., Inc. v. Quality Care-USA, Inc., 874 F.2d 431, 437 (7th Cir.1989); EEOC v. Kentucky State Police Dep‘t, 80 F.3d 1086, 1098 (6th Cir.1996) (holding in ADEA action that district court did not abuse its discretion by awarding compound rather than simple prejudgment interest); Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1555 (Fed. Cir.1995) (holding in patent litigation that district court did not abuse its discretion by awarding simple rather than compound prejudgment interest). Nevertheless, noting that “[p]rejudgment interest is an element of complete compensation,” we have stated that “compound
The district court originally awarded National Insurance compound prejudgment interest. See R.35 at 28. Yellow Freight then moved for a modification of the judgment. See R.43. Without explanation, the district court “[i]n an exercise of its discretion” modified its award, “award[ing] simple interest (not compound interest).” R.49 at 2.
[REDACTED] We believe that, absent special circumstances, compound, not simple, interest ought to be awarded in Carmack Amendment cases. As we stated in Amoco Cadiz, compound interest ought to be the norm in federal matters, and we see no reason why this approach ought not govern in Carmack Amendment cases. Indeed, because “the purpose of the Carmack Amendment is to compensate shippers whose goods are damaged while in the possession of a carrier,” Oscar Mayer Foods Corp. v. Pruitt, 867 F.Supp. 322, 328 (D.Md.1994), compound interest seems particularly appropriate. Compound interest generally more fully compensates a plaintiff and so comports with the purpose of the Carmack Amendment.
[REDACTED] Under these circumstances, we cannot allow the award of simple interest to stand without an explanation from the district court. Because the district court did not explain its rеasoning for changing the award to simple interest, we do not know why it believed that simple interest is appropriate here. Our unease is particularly great because the only reason given by Yellow Freight during its argument to the district court was that it should be required to pay only simple prejudgment interest because “the traditional, common-law rule is that prejudgment interest is not compounded.” R.43 at 2 (citing the
For the foregoing reasons, we affirm the district court‘s decision as to all matters except the award of freight, taxes, insurance and fees, and the award of simple rather than compound interest. National Insurance is only entitled to recovery for freight, taxes, fees and insurance for the portion of the shipment that was damaged. Furthermore, on remand, the district court must explain its rationale for changing its award from compound to simple interest or, in light of this opinion, award compound interest to National Insurance from the day it paid the claim and became subrogated to its insured‘s cause of action against Yellow Freight. National Insurance may recover its costs of this appeal.
AFFIRMED in part, REVERSED in part, and REMANDED
[REDACTED]
al Circuit explained that “the determination whether to award simple or compound interest is a matter largely within the discretion of the district court” and ”Rite-Hite has not persuaded us that the court abused its discretion in awarding interest at a simple rate.” Id. However, we do believe that, at least in a federal question case, a district court must explain why it believes it appropriate to deviate from the norm of compound interest, the measure that most completely fulfills the purpose of prejudgment interest of ensuring “complete compensation.” West Virginia v. United States, 479 U.S. 305, 310, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987). There well may be countervailing considerations in a particular case that would make compound interest, or even any interest, inappropriate. For instance, if the prevailing party has caused unreasonable delay in the proceedings and thus artificially delayed the rendition of judgment, a district court might be well within its discretion to deny interest or to deny at least compound interest for some of the period before rendition of judgment.
Notes
Id. at 51 (emphasis added and citations omitted). Thus, the case stands merely for the proposition that when damages are measured by the ordinary rule, then recovery of freight should not be allowed. As previously discussed above, this is so because the shipper already received compensation for his freight paid by receiving the market value at destination. In W.A. Stackpole, the First Circuit explained that it was borrowing its rule of no recovery of freight from maritime law, and while it was “not aware of any cases applying this rule of maritime law in cases involving the carriage of goods on land . . . we see no reason why that rule should not apply on land as well as at sea.” Id. (citing to Judge Learned Hand‘s statement of the rule in admiralty in Alcoa Steamship Co. v. United States, 175 F.2d 661, 663 (2d Cir.1949)). However, the rule that when damages are computed by the “loss at the value or cost of the property at the place of shipment” then, consequently, “the shipper should not lose the amount paid for freight” has been called “a rule which has long been established in the admiralty courts.” The Oneida, 128 F. at 691-92; see also The Asuarca, 13 F.2d 222, 223 (S.D.N.Y.1924) (“In consеquence of what seems to have long been the law of this circuit, I hold that libelant‘s damages should be the invoice value of the damaged goods plus the freight paid thereon“); Anchor Line v. Jackson, 9 F.2d 543, 545 (2d Cir.1925) (Judge Learned Hand noting that normally when invoice price is the measure, prepaid freight “becomes part of the value” recoverable; but not allowing recovery of freight because of a contractual provision disallowing recovery in the bill of lading).[n]o clear, fully reasoned authority has been cited to us, nor have we found any, to support the general proposition that the lawful holder of a bill of lading is entitled to prepaid freight in addition to his ordinary damages as measured above. Indeed, to allow recovery of prepaid costs of cartage in addition to damages measured by the ‘ordinary’ yardstick as stated above would more likely than not . . . give the shipper more than recovery for his full actual loss, damage or injury at the expense of the carrier.
Illinois Cent. R.R. Co. v. Crail, 281 U.S. 57, 64-65, 50 S.Ct. 180, 74 L.Ed. 699 (1930).There is no greater inconvenience in the application of the one standard of value than the other and we perceive no advantage to be gained from an adherence to a rigid uniformity, which would justify sacrificing the reason of the rule, to its letter. The test of market value is at best but a convenient means of getting at the loss suffered. It may be discarded and other more aсcurate means resorted to if, for special reasons, it is not exact or otherwise not applicable.