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GREAT NORTHERN INS. CO. v. DAYCO CORP.

July 15, 1986

GREAT NORTHERN INSURANCE COMPANY, Plaintiff,
v.
DAYCO CORPORATION, Defendant



The opinion of the court was delivered by: POLLACK

MILTON POLLACK, Senior United States District Judge

AMENDED AND SUPPLEMENTAL FINDINGS

 In an opinion dated June 12, 1986, this Court awarded judgment to Dayco Corporation ("Dayco") on its counterclaim against Great Northern Insurance Co. ("Great Northern") for $3,759,523.21, plus interest.

 I. Modification of Damage Award

 Dayco submitted a post-trial brief requesting a modification of the damages awarded.

 4350 belt

 The Court found that the actual cash value of the 4350 belt was approximately $3 to $4 less than Dayco's standard manufacturing cost based on the fact that European competitors had sold the belt at these lower prices.

 Dayco contends that there was no credible or admissible evidence showing that the belt was sold below its unit sales price of $10.57. Dayco asserts that the only evidence introduced at trial that competitors had sold the belt at lower prices was a statement by Edith Reich which was not credible. Further, Dayco contends that there was no evidence which showed that the belts sold by the competitors were comparable to the 4350 belt.

 Great Northern argues that the Court's judgment as to the 4350 belt was proper since an internal Dayco memorandum stated that European competitors were selling the belt for $3 to $4 less than Dayco's cost and Dayco's Director of Accounting admitted that some of the 4350 belts which Dayco shipped to Russia were actually purchased from European competitors for less than Dayco's cost.

 Evaluation

 Great Northern introduced Plaintiff's Exhibit 52 in evidence as proof of the actual cash value of the 4350 belt. The Exhibit is an internal Dayco memorandum, dated February 8, 1980, discussing the production of the 4350 belt. The memorandum states that Dayco is not capable of producing the quantity of belts ordered, and that it will have to purchase 120,000 pieces of the belt from competitors to meet the contract requirements. The memo refers to a statement made by Edith Reich that certain European manufacturers were selling the belt for approximately $5 or $6. No other testimony was introduced to show that the competitors actually sold the 4350 belt at such prices.

 It is questionable whether the statement attributed to Reich in the memo is credible evidence, given Reich's fraud. Moreover, it seems that the statement is hearsay and, as such, is inadmissible as evidence. Thus, there was no reliable proof that European manufacturers sold the 4350 belt for $3 to $4 less than Dayco's standard manufacturing cost.

 However, there was credible evidence introduced which proved that the 4350 belt had an actual cash value lower than Dayco's unit sales price. Ronald Powers, Dayco's Director of manufacturing accounting, testified that Dayco bought approximately half of the 4350 belts which it shipped to Russia from European competitors at a price which was approximately $2 lower than Dayco's standard manufacturing cost. See Transcript at 575-76 (Powers recalled that Dayco purchased one belt -- which he believed was the 4350 belt -- from some European manufacturer at a price which was cheaper than they could manufacture the belt; Powers stated that the belt was purchased from the competitor for approximately $2 less than Dayco's cost); Transcript at 579 (Powers stated that the 4350 belt was manufactured by a competitor, Optibelt, and sold for less than Dayco's cost); Transcript at 583 (Powers stated that he was aware of one manufacturer who could sell one of the belts cheaper than Dayco could manufacture it); Transcript at 587 (Powers stated that Dayco bought the 4350 belt from a competitor for a price less than Dayco standard cost and that approximately 50% of the belts shipped to Russia were bought from competitors).

 This evidence is credible proof that the 4350 belt *fn1" was sold by competitors for $2 less than Dayco's cost. *fn2" On the basis of the above, the actual cash value for the 4350 belt is $7.18. Accordingly, there should be an increase in the ...


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