4. The first two lots that MEI purchased from FILA consisted of garments that were to be shipped from Italy into the United States. The first lot contained approximately 351,000 garments and had a purchase price of approximately two million dollars. (Tr. 32) The second lot was substantially smaller, containing approximately 50,000 garments with an invoice value of approximately $ 800,000.00. (Tr. 38)
5. Because MEI was unfamiliar with the process of importation and customs, MEI retained Schenkers to advise and assist MEI in importing the first two FILA lots into the United States. (Tr. 35-36)
6. MEI, through Mr. Stern, first met with the Schenkers regarding the first lot of FILA merchandise sometime during the latter of half of 1984. (Tr. 34) At that time, Mr. Stern requested that Schenkers provide MEI with "comprehensive service" and indicated that MEI would require such services from Schenkers on a continuing basis. (Tr. 36)
7. Schenkers fully performed the requested services for the first two FILA lots and rendered invoices to MEI containing standard contract terms.
MEI paid Schenkers in full for its services. The parties do not dispute their respective conduct with regard to the first two lots.
8. The present dispute arises from the conduct of the parties with respect to the third lot of FILA merchandise purchased by MEI, referred to here as the "export lot." The export lot consisted of first quality, out of season FILA sportswear, similar to that contained in the first two lots of FILA goods. The garments contained in the export lot were manufactured in Italy and imported into the United States by FILA in 1983 and 1984, at which time customs duties had been paid.
9. In December of 1985, M.E.I. agreed to purchase the export lot, which consisted of approximately 60,000 garments, from FILA's California subsidiary for the sum of $ 300,000.00. (Pl. Exh. 1, 2) At the time of the December purchase agreement, the export lot was located in California.
10. The purchase agreement between MEI and FILA regarding the export lot, as stated in telexes dated December 11 and 12, 1985, required MEI to accept that portion of the goods imported into the United States in 1983 and 1984 "in a Free Zone or in Panama". (Pl. Exh. 1, 2) The purpose of this requirement was to enable FILA to reclaim customs duties in the amount of $ 80,000 that it had previously paid on the original importation of the goods. It was the understanding of MEI and FILA that the goods on which FILA had paid import duties in 1983 and 1984, a total of 23,159 pieces of merchandise, would be exported from the United States to enable FILA to reclaim the duties previously paid. (Pl. Exh. 7, 9; Tr. 52)
11. At the time the goods in the export lot were originally imported into the United States by FILA, FILA had paid customs duties based on the original purchase price of the goods. The agreement purported to enable FILA to reclaim the duties originally paid by requiring MEI to accept shipment in a free trade zone or Panama. MEI would then pay customs duties based on the new commercial invoice. Because the unsold seasonal goods would be significantly less costly when MEI accepted them than they were when originally imported, the duties paid by MEI would be substantially lower than the duties previously paid by FILA.
12. In early March of 1986, M.E.I. began consulting with Schenkers for advice and expertise regarding the handling of the export lot, including the U.S. customs aspects of the transaction, the location and consequences of utilizing a foreign trade zone or the United States equivalent of a bonded warehouse, and the drawback of duties by the original importer.
13. MEI contacted Schenkers with respect to these services because Schenkers had been the freight forwarded for the two prior FILA shipments, and MEI believed that it had an ongoing relationship with Schenkers with respect to subsequent shipments. (Tr. 66-67)
14. In March of 1986, Mr. Stern telephoned Schenkers on behalf of MEI and spoke with Ms. Lisa Malwitz, then an assistant import manager for Schenkers. Mr. Stern inquired as to whether there existed in the United States the equivalent of "bonded warehouses" which exist in Europe, and if so, under what conditions such bonded warehouses could be used. (Tr. 58)
15. At this time, Mr. Stern informed Ms. Malwitz that MEI required this information to facilitate a transaction whereby MEI would export certain goods which they had purchased from FILA and which were located in FILA's warehouse in California in order to enable FILA to obtain a duty drawback on the merchandise. (Tr. 63) Mr. Stern told Ms. Malwitz that MEI did not yet know the identity of the country to which the goods would be exported. (Tr. 63-64)
16. During these telephone conversations, Ms. Malwitz told Mr. Stern that if the goods were shipped to a foreign trade zone, the previous importer would then be able to obtain a duty drawback on the goods, even though MEI did not yet know the country to which the goods would ultimately be sent. At the same time, Ms. Malwitz provided Mr. Stern with the address of a foreign trade zone in Long Beach, California. (Tr. 63-64) Subsequently, at a time prior to March 26, 1986, Ms. Malwitz sent MEI a telex confirming the address of the foreign trade zone. (Tr. 59-60; Pl. Exh. 8)
17. On or about March 26, 1986, FILA advised MEI of certain details concerning the 23,159 pieces of clothing in the export lot and the required letter of credit. (Pl. Exh. 7) At this time, MEI advised FILA of the address information for the Foreign Trade Zone, and gave other information regarding financial and other aspects of the transaction. (Pl. Exh. 9)
18. By mid to late March of 1986, MEI had not yet found a buyer for the export lot. At the time, MEI was considering exporting the goods to Great Britain or Australia.
19. On April 10, 1986, Mr. Stern sent Ms. Malwitz a telex referring to Mr. Stern's earlier conversation with Ms. Malwitz and advising her that MEI had arranged to have FILA ship the goods to the foreign trade zone in Long Beach, California. (Pl. Exh. 10) The telex stated that MEI was in the process of opening a letter of credit to FILA, and that FILA was expected to deliver in two weeks time. (Pl. Exh. 10) In the same telex, Mr. Stern requested that Schenkers act as "honest broker" in providing MEI with the details necessary to complete the transaction, such as storage rates and insurance arrangements. (Pl. Exh. 10)
20. Shortly thereafter, Ms. Malwitz responded by sending MEI a telex containing the requested information. Ms. Malwitz also informed MEI that Schenkers was currently looking into arranging for insurance coverage for the export lot with their own insurance company. (Pl. Exh. 11)
21. As of April 11, 1986, MEI had not yet decided upon a buyer for the export lot, and did not yet know where the goods would be delivered. (Tr. 71-72) Sometime during the thirty-day period between mid-April and mid-May of 1986, MEI began to consider selling the export lot to Ladies Apparel, a company located in California. Schenkers knew of Ladies Apparel because it had been involved with Schenkers in the transactions involving the first two FILA lots. (Tr. 72-73) Mr. Hendrick handled the arrangements on behalf of MEI regarding the proposed sale of the export lot to Ladies Apparel. (Tr. 73)
22. During the period of time that MEI was considering selling the export lot to Ladies Apparel, Mr. Hendrick had several phone conversations with Ms. Malwitz in which he explained that MEI was purchasing FILA goods located in the United States and needed confirmation from Schenkers that FILA could re-export the goods and that MEI could then re-import the goods based on the new commercial invoice. (Tr. 236) In these conversations, Mr. Hendrick told Ms. Malwitz that MEI was planning on re-importing the goods into the United States and selling them to Ladies Apparel in California. (Tr. 237-38)
23. Mr. Hendrick subsequently telephoned Schenkers and requested to speak with Ms. Malwitz. Because Ms. Malwitz was unavailable, Mr. Hendrick spoke with Mr. Paul Fifield, a Schenkers customer service representative supervised by Ms. Malwitz. Mr. Hendrick and Mr. Fifield had several telephone conversations during which Mr. Hendrick asked what legalities were involved in enabling a previous importer to obtain a duty drawback on goods currently in the United States and which would be resold in the United States. After these telephone discussions between Mr. Hendrick and Mr. Fifield, Mr. Fifield sent a telex to Mr. Hendrick, an M.E.I. representative, which stated in relevant part:
RE; Various Telephone Discussions - Confirmation of Legalities of Importing FILA Goods After Exportation form [sic] U.S.
Have confirmed with U.S. Customs here in U.S. that it is o.k. to re-import the sportswear goods per our telecon at the new amount of your commercial invoice. Previous importer can claim a duty drawback based on his original importation. Legalities are involved only if you did not buy merchandise abroad, but had purchased them from him here in the U.S.A. As long as you have purchased goods abroad, this shipment will be handled as a normal import, with duties being determined on value of goods per your commercial invoice. (Pl. Exh. 12)
Mr. Fifield had no further conversations with Mr. Hendrick after sending this telex. (Tr. 184)
24. The copy of the telex introduced as Plaintiff's Exhibit 12 does not contain a date and is not an original. It is Schenkers' policy and practice to place dates on all original telex sent by Schenkers to indicate the date that the telex was sent. Schenkers never produced the original Fifield telex, or any other documentation with respect to the MEI transaction, notwithstanding its receipt of document requests and trial subpoenas from MEI. Mr. Fifield testified that Schenkers regularly kept copies of all telexes sent by Schenkers. (Tr. 162-164) Ms. Malwitz testified that she had kept a file on the MEI transactions, and that she had given the file to Schenkers' lawyers.
25. The court finds that the Fifield telex sent to MEI was written after MEI had advised Schenkers that it was considering selling the export lot to Ladies Apparel. The telex was sent at a time when Ms. Malwitz was out of the office, either on vacation or out on sales calls. (Tr. 174-175, 228) According to Schenkers' business records, Ms. Malwitz was on vacation from May 5 through May 9, 1986. At the time that he sent the telex, Mr. Fifield knew that MEI needed the requested information in order to make a decision. (Tr. 169) A letter from Schenkers to MEI dated April 16, 1987, admits that MEI had advised Schenkers of its plans to sell the export lot to Ladies Apparel before the Fifield telex was sent. (Pl. Exh. 25)
26. After Ms. Malwitz returned to the office, Mr. Fifield gave her a copy of the telex that he sent to MEI. (Tr. 175) Ms. Malwitz then checked the substance of the telex with Mr. Fred Aguero, a customs expert at Schenkers, and determined that the information contained in the telex was correct. (Tr. 224) Ms. Malwitz resumed responsibility for the MEI transaction and Mr. Fifield had no further involvement with MEI. (Tr. 176)
27. MEI understood the Fifield telex to mean that MEI, having identified Ladies Apparel as a potential buyer, could ship the goods to a foreign trade zone and then "re-import" them into the United States, paying customs duties based on the new commercial invoice, and enabling FILA to obtain a duty drawback. (Tr. 8081)
28. In late April or early May of 1986, after receiving the Fifield telex, M.E.I. agreed to sell the export lot to Ladies Apparel in reliance on the information contained in the Fifield telex. (Tr. 141, 240) MEI set the price of the export lot based on the cost of the goods, assuming FILA would be able to obtain a duty drawback, plus a profit. (Tr. 240)
29. In early to mid-May of 1986, Mr. Hendrick informed Schenkers of its agreement to sell the export lot to Ladies Apparel, and that the agreement called for the delivery of the merchandise by May 31, 1986. (Tr. 241-242; Pl. Exh. 13) The export lot consisted of summer merchandise which had to be delivered on or about May 31, 1986 in order to be marketed for the 1986 season.
30. In or about the third week of May, 1986, Schenkers advised M.E.I. that there was a problem with MEI's plan to import FILA goods back into the United States after exporting them to a foreign trade zone for the purpose of enabling the previous importer to claim a duty drawback. (Tr. 243) At the same time, Schenkers advised M.E.I. that they were attempting to find a solution to the problem. (Tr. 243)
31. MEI responded to Schenkers with a telex from Mr. Hendrick dated May 23, 1986, which stated in relevant part:
Attn: Lisa Malvitz [sic] and Fred
RE: 22,000 Units to Reimport into the States