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CHICAGO PRIME PACKERS, INC. v. NORTHAM FOOD TRADING CO.

May 21, 2004.

CHICAGO PRIME PACKERS, INC., Plaintiff, V. NORTHAM FOOD TRADING CO., et al., Defendants


The opinion of the court was delivered by: GERALDINE SOAT BROWN, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Chicago Prime Packers, Inc. ("Chicago Prime") brought a two count amended complaint against Northam Food Trading Co. ("Northam") and Nationwide Foods, Inc. d/b/a Brookfield Farms ("Brookfield") for breach of contract. [Dkt 22.]*fn1 Chicago Prime and Brookfield subsequently entered into a settlement, and Count II of Chicago Prime's Amended Complaint, which was its claim against Brookfield, was dismissed with prejudice. [Dkt 79, 82.] Thus, the only remaining claim is against Northam for breach of contract.

A bench trial was conducted on December 15, 16 and 17, 2003, and, at the court's request, the parties submitted written post-trial arguments. [Dkt 102.] This court has carefully considered the testimony of the witnesses, the exhibits introduced into evidence and the written submissions of the parties. The following constitutes the court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. To the extent certain findings may be deemed conclusions of law, they shall also be considered conclusions. Similarly, to the extent matters contained in the conclusions of law may be deemed findings of fact, they shall also be considered findings. See Miller v. Fenton, 474 U.S. 104/113-14 (1985). For the reasons set forth below, the court finds that Chicago Prime is entitled to damages in the amount of $178,200.00 plus prejudgment interest in the amount of $27,242.63.

 I. Findings of Fact

  Chicago Prime is a Colorado corporation with its principal place of business in Avon, Colorado. (Stip. ¶ 1.)*fn2 Northam is a Canadian corporation with its principal place of business in Montreal, Quebec, Canada. (Stip. ¶ 2.) Chicago Prime and Northam are wholesalers of meal products. (Stip, ¶¶ 5-6.)

  On March 30, 2001, Chicago Prime contracted with Northam to sell 1,350 boxes (40,500 pounds) of government inspected fresh, blast frozen pork back ribs, which Chicago Prime purchased from Brookfield, a meat processor. (Stip. ¶¶ 7-8; Tr. 26-27, 57.)*fn3 Mike Cline, on behalf of Chicago Prime, and Sandra Burden, on behalf of Northam, negotiated the terms of the contract. (Tr. 26,225.) The agreed upon price for the ribs was $178,200.00. (Stip. ¶¶ 9-10), and payment was required within seven days from the date of shipment (Tr. 28, 256-57). Chicago Prime sent Ms. Burden a sale confirmation (the "Confirmation"), which she signed and returned to Chicago Prime. (Tr. 226, 242-43; Ex. DX-18, Confirmation at 1.) The Confirmation sets forth a description of the ribs, a price term and the date and location of pick-up.*fn4 (Confirmation at 1.) However, the Confirmation does not include a notice term or an inspection term. Chicago Prime also produced an invoice for the sale (the "Invoice"), which states that "[n]o claim will be allowed unless [Chicago Prime] is notified upon receipt of the product." (Ex. JX-1, Invoice at 1.)*fn5 Neither party signed the Invoice. Although Chicago Prime faxed the Invoice to Northam, it admittedly did not transmit the fax until after the ribs had been received by Northam. (Tr. 28, 42-43, 264.)

  On April 24, 2001, Brown Brother's Trucking Company ("Brown Brother's"), acting on behalf of Northam, picked up 40,500 pounds of loin back ribs from B&B Pullman Cold Storage ("B&B"), a cold-storage facility used by Brookfield.*fn6 (Stip. ¶¶ 12-13; Tr. 30, 63, 198.) Chicago Prime never actually possessed the ribs. (Tr. 56, 147.) When Brown Brother's picked up the ribs, it signed a straight bill of lading (the "First Bill of Lading"). (Def.'s Resp. Pl.'s Proposed Findings ¶ 12; Ex. JX-2, First Bill of Lading at 1.) By signing the First Bill of Lading and making no specific notations to the contrary, Brown Brother's acknowledged that the ribs were "in apparent good order," (Id.) However, the First Bill of Lading also indicates that the "contents and condition of contents of packages [were] unknown" at the time of receipt. (First Bill of Lading at 1.)

  On April 25, 2001, Brown Brother's delivered the ribs to Northam's customer, Beacon Premium Meats ("Beacon")-(Def.'s Resp. Pl.'s Proposed Findings ¶ 13.) At the time of receipt, Beacon signed a bill of lading (the "Second Bill of Lading") acknowledging that it had received the ribs "in apparent good order," except for "21 boxes [that] were gouged and [the] meat in [those boxes] show[ed] signs of freezer burn." (Id. ¶ 14; Ex. JX-3, Second Bill of Lading at I.)*fn7 Beacon made a similar notation regarding the condition of the ribs on its receiving log. (Def.'s Resp. Pl.'s Proposed Findings ¶ 16; Ex. JX-4, Receiving Log at 1.)

  Chicago Prime paid Brookfield for the ribs. Under the terms of the contract, Northam was obligated to pay Chicago Prime for the ribs by May 1, 2001. (Tr. 28, 257.) Chicago Prime demanded payment from Northam on May 2, 2001. (Tr. 204.) During her testimony, Ms. Burden admitted that, on May 1, 2001, Northam had no basis on which it could withhold payment to Chicago Prime. (Tr. 257.) In fact, Ms. Burdon thought that a check had been sent to Chicago Prime prior to May 1, 2001, but she subsequently discovered that the check had not been mailed. (Tr. 257.)

  On May 4, 2001, Beacon began "processing" a shipment of pork loin ribs and noticed that the product appeared to be in an "off-condition." (Ex. JX-8, Dr. Maltby's Report at 1.) Beacon contacted Inspector Ken Ward of the United States Department of Agriculture ("USDA") to examine the product. (Id.) Inspector Ward inspected the ribs at the Beacon facility, found that the meat "did not look good," and ordered Beacon to stop processing the product. (Stip. ¶ 16.) Inspector Ward then placed a "U.S. Retained" tag on the product, on which he noted: "yellow, green, temp[erature] abused, spoiled.'" (Ex. JX-9, U.S. Retained Tag; Tr. 287.) Those ribs were then placed in Beacon's freezer. (Slip. ¶ 17.)

  That same day, Chicago Prime and Northam learned of a potential problem with the ribs. (Tr. 44-45, 204, 243; Stip. ¶ 14.) Dave Phillips, the purchasing agent for Beacon, contacted Mr. Cline regarding a potential problem with the meat. (Tr. 38-39, 44-45, 204.) Mr. Cline then contacted Ms. Burden, who in turn contacted Mr. Phillips. (Tr. 38-39, 46, 204, 228, 243-44.)

  Inspector Ward returned to Beacon on May 7 and May 8 and examined the product in both its frozen and thawed state. (Dr. Maltby's Report at 1-2.)*fn8 Mr. Ward also contacted his circuit supervisor, Dr. John Maltby, to conduct an on-site inspection of Beacon and investigate the condition of the meat. (Tr. 275, 278-80.)

  On May 14, 2001, Beacon rejected the shipment of ribs. (Ex. DX-16, Letter from Beacon to Brookfield.) That same day, Ron Sills, President of Chicago Prime, sent a letter to Ms. Burdon indicating that the first complaint made to Chicago Prime about the condition of the ribs was on May 4, 2001 — 10 days after Northam received the product. (Tr. 145, 247; Ex. JX-7(A-B), Letter from R. Sills to S. Burdon.) On May 17, 2001, Ms. Burdon sent an e-mail to Mr. Sills indicating that Northam must investigate the nature of the complaints received. (Tr. 249; Ex, JX-7(E), May 17, 2001 E-mail Correspondence.) In response, Mr. Sills sent Ms. Burden an e-mail denying any responsibility and demanding prompt payment, by wire, in full. (May 17, 2001 E-mail Correspondence.)

  On May 23, 2001, Dr. Maltby conducted an on-site inspection at Beacon's facility. (Stip. ¶ 17; Tr. 279.) Notwithstanding Beacon's rejection of the ribs on May 14, when Dr. Maltby arrived at Beacon on May 23, the Beacon workers were in the process of "reworking" the ribs.*fn9 (Dr. Maltby's Report at 2.) Dr. Maltby reviewed Beacon's shipping records and temperature logs from the relevant time period, examined approximately 20 cases of ribs, and prepared a written report. (Stip. ¶ 17; Def.'s Resp. Pl.'s Proposed Findings ¶ 33; Tr. 281-83, 287-88; Dr. Maltby's Report.) In reviewing Beacon's records and logs, Dr. Maltby did not find any "anomalies" or "gaps." (Tr. 282, 287.)

  According to Dr. Maltby's report, Beacon gave him two pallets of frozen ribs untouched by Beacon ("Intact Pallets"), two pallets of ribs that Beacon had tempered and product that Beacon had re-worked. (Dr. Maltby's Report at 2.) Dr. Maltby found that one of the Intact Pallets contained the legend and establishment number 876A over the number 876 and also contained the code date of 0332. (Id.) The 876 number is the establishment number for Brookfield. (Tr. 112-13.) Looking inside one of the Intact Pallet boxes, Dr. Maltby found approximately 8 to 12 ribs stacked both horizontally and vertically, and each rib was wrapped in plastic wrap and frozen together as a unit or frozen individually, (Dr. Maltby's Report at 2.) The individually frozen ribs were the ones that were putrid. (Id.) In another box (presumably from one of the Intact Pallets), Dr. Maltby saw an individually frozen rib that was putrid underneath some other ribs that appeared to be "good" ribs frozen as a unit. (Id. at 2-3.)

  Dr. Maltby then examined samples of thawed product that Beacon had attempted to re-work in its frozen state. (Id. at 3.) Among those ribs, Dr. Maltby found putrid, green, slimy ribs that had passed through the re-working process. (Id.) Dr. Maltby also looked at some of the product that was condemned by Inspector Ward and reported that, "[e]ven though it was frozen, the product was obviously putrid as it was green, slimy and had an offensive odor even frozen." (Id.) Dr. Maltby found no signs of temperature abuse because "there was no purge or blood soaked boxes throughout the entire load." (Id. at 2.) Dr. Maltby ultimately concluded that the product that he inspected was rotten, that it arrived at Beacon in a rotten condition, and it appeared to be assembled from different locations. (Id. at 3; Tr. 288.) Dr. Maltby also determined that there was no opportunity for salvage and all of the product should be condemned. (Dr. Maltby's Report at 3; Stip. ¶¶ 18-19.)

  On May 23, 2001, the USDA issued a Notice of Receipt of Adulterated or Misbranded Product regarding the 1,350 boxes of pork loin back ribs and the entire shipment was condemned. (Stip. ¶¶ 19-20; Ex. JX-6, USDA Notice at 1.) On May 24, 2001, Northam informed Chicago Prime of the results of Dr. Maltby's inspection. (Stip. ¶ 24; Ex. JX-7(F), May 24, 2001 Fax from S. Burden to M. Cline.) Chicago Prime continued to demand payment for the ribs. (Stip. ¶ 25.) Mr. Cline and Ms. Burdon exchanged e-mail communications regarding the spoiled ribs again on May 29, 2001. (Tr.252; Ex. JX-7(K), May 29, 2001 E-mail Correspondence.) On June 18, 2001, Northam advised Chicago Prime ...


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