The opinion of the court was delivered by: Newman, Senior Judge of the United States Court of International Trade, sitting by designation:
OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff Novelty Textile Mills, Inc. ("Novelty") is a
Connecticut Corporation with an office and place of business
located at 1440 Broadway, New York, New York. Novelty is
engaged in the business of manufacturing and selling
specialty textiles. Defendant Central Transport ("Central")
is a Michigan Corporation doing business in New York. Central
is engaged in business as a common carrier transporting
merchandise in interstate commerce by motor vehicle. Although
jurisdiction is predicated on diversity of citizenship
pursuant to 28 U.S.C. § 1332, the Court's rule of decision is
drawn from 49 U.S.C. § 10730 and 11707 (1982 & Supp. V. 1987).
Central agreed to transport certain goods — rolls of Nomex
Raschel Cloth ("Nomex") — under bill of lading No. 00957 for
the account of Novelty from Westmont Industries, Inc.
("Westmont") of East Stroudsburg, Pennsylvania to Point Blank
Body Armor, Inc. ("Point Blank") in Freeport, New York. Novelty
Invoice No. 11184 indicates 1,195 yards of the material were to
be delivered to Point Blank at a price of $29.50 per yard for a
total of $35,252.50. Plaintiff's Exhibit 4 ("PX n").*fn1
The bill of lading, made out by Westmont, described the
cargo merely as "woven synthetic piece goods." PX 5.
Significantly, Central's rate scheme under the tariff
schedule provided no classification for the Nomex other than
woven synthetic piece goods. Tr. 106, 112.*fn2 Westmont did
not declare any value for the goods on the bill of lading,
see PX 5, and neither Novelty nor Westmont ever apprised
Central of the
extraordinary nature of the material. Tr. 61.
Defendant admits that while the fabric was in its
possession a liquid contaminant spilled on the Nomex, thereby
damaging the material. However, defendant contends it is not
liable for the loss because: (1) plaintiff misclassified the
goods on the bill of lading, i.e., did not declare any value on
the bill of lading, and at no time apprised defendant that the
material was an expensive fabric; and (2) the goods were
properly cleaned and the contaminant removed by using hot
water, which eventually resulted in no damage to the material.
Moreover, defendant maintains that assuming arguendo the
material was damaged, plaintiff failed to prove that it
properly mitigated damages and hence defendant should not be
held liable for speculative damages.
As noted, Novelty is a manufacturer and processor of
textiles. The cloth in this case, Nomex, is a flame retardant
mesh material which was especially prepared by Novelty for
sale to Point Blank and ultimately to the United States Army
to be used as vests for tank drivers. Nomex by design is
extremely difficult to cut and is, in fact, used in ballistic
fabrics, "to stop a knife or bullet. . . ." Trial Transcript
at 42. ("Tr. x")
Since the material was intended for use by army personnel,
Novelty was required, as part of the sale to Point Blank, to
supply test reports from a government approved laboratory
certifying that the fabric met all military specifications.
Tr. 43. It was essential that the material be flame retardant
for wear by tank drivers. Indeed, the military had changed
its specifications from nylon — military specification
MIL-C-8061 (which sells from $4 to $5 per yard) to Nomex —
military specification MIL-C43989 (which sells for $29.50 per
yard, see PX 1) precisely because the Nomex was flame
retardant. "[P]revious vests were made of nylon and under the
heat of . . . fire in the tank nylon melts and it becomes like
lava, and if it gets on the skin it [causes] a terrible burn
and can't be taken off. . . ." Tr. 40.
Upon receiving the material from Dupont, Novelty warped and
knitted it.*fn3 After examining the knitted material,
Novelty packaged it and sent it to the finisher where the
material was scoured to remove any impurities and also heat
set. The finisher, Westmont, was also a government-approved
laboratory which certified that the material met all the
required military specifications. Westmont processed the
material and shipped it to Point Blank. Tr. 45.
During the transport from Pennsylvania to Freeport, New
York, and while under the control of defendant, the goods
were damaged by contact with a contaminant foreign substance,
requiring the return of the goods to Westmont. Stipulated
Fact 7. ("SF n").
The chief dispute between the parties at this point was
whether the contaminant could be safely removed. However,
Central never informed Westmont, nor is it clear, that
Central was aware of the exact nature of the contaminant.
Arthur Feinberg, president of Novelty Textiles, testified
that Central sent a letter (he was uncertain) either to
Novelty or Westmont stating merely that the contaminant could
easily be removed with hot water. Tr. 64.
Concerning the contaminant and proper method of cleaning
the Nomex, defendant introduced the deposition testimony of
John Dougherty, president of ASW Environmental Consultants, a
general testing laboratory. Dougherty testified:
We tried rinsing the material with various
solvents, organic solvents, which was not
successful. It did not — it was not affected at
all. We then took a portion of the contaminant off
the material, submitted it and ran an infrared
analysis on that to determine what it was. . . .
[T]he infrared analysis indicated it was some type
of polymer. . . . [G]iven that we tried probably
one of the [best] polymer solvents which is simply
water, and hot
water took the [contaminant] off the base
material with no apparent damage to the base
Tr. 93 (Deposition of John Dougherty at 7.)
Although Dougherty blandly testified that the contaminant
could be removed with hot water, he could not, however,
guarantee 100% removal because he had not been able to
pinpoint the exact nature of the contaminant. Id. at 96.
Furthermore, Dougherty had no idea that the base material was
Nomex, although he had heard of Nomex; and neither was he aware
that the base material was intended for use by the United
States military nor that Nomex is supposed to be flame
retardant. Without knowledge of both the base material and the
contaminant, it is impossible to determine whether there has
been complete removal of the contaminant from the base
material. Id. Indeed, Dougherty further conceded that he did
not test the contaminant to determine whether it was a
flammable or non-flammable material. Id. at 96-97.
Plaintiff insists that unless 100% of the contaminant is
removed, the base material would not be suitable for its
intended purpose, i.e., as a fire retardant tank vest,
especially when the contaminant may have been itself flammable.
Because Nomex is used to manufacture products that protect the
lives of army soldiers, the enormous potential liability in the
form of products liability and personal injury actions,
plaintiff argues, would be too great to consider selling
contaminated material to the Army. Tr. 4, 59-60.
Consequently, plaintiff's underwriter attempted to
liquidate the goods and employed M.F. Bank & Company
("Bank"), whose business is salvage and appraisal work for
insurance companies, to determine the salvage value of the
contaminated fabric. Glenn H. Davis, a field representative
for Bank, inspected the goods at the Westmont facility in
Pennsylvania. Davis, whose experience has been eight and one
half years in the appraisal business, examined the rolls and
estimated that the salvage value would be very low: five to
ten percent of the initial reported value of $29.50 per yard.
In a letter dated January 23, 1987 Davis explained his
The limited uses of this type of material along
with the chemical involvement and the high-price
structure makes the salvage potential of this
stock very low.
The involved material is deemed for military use,
and in this writer's [Davis'] judgment, would not
pass the ...