Citations
- 776 F. Supp. 2d 375
Full opinion text
MEMORANDUM AND OPINION
LEE H. ROSENTHAL, District Judge.
This opinion addresses the following motions:
1. Shippers Stevedoring moved for partial summary judgment that the one-year statute of limitations in the Carriage of Goods at Sea Act (“COGSA”) bars Crompton Greaves’s claims, or alternatively, limits its damages to $500.00. (Docket Entry No. 65). Crompton Greaves responded, (Docket Entry No. 69), and Shippers Stevedoring replied, (Docket Entry No. 70).
2. Shippers Stevedoring moved to strike exhibits submitted by Crompton Greaves in response to Shippers Stevedoring’s motion for summary judgment, (Docket Entry No. 71). Crompton Greaves responded, (Docket Entry No. 80), and Shippers Stevedoring replied, (Docket Entry No. 82).
3. Shippers Stevedoring moved for summary judgment on all of Crompton Greaves’s claims, (Docket Entry No. 74). Crompton Greaves responded, (Docket Entry No. 87); Shippers Stevedoring replied, (Docket Entry No. 95); Crompton Greaves surreplied, (Docket Entry No. 106); and Shippers Stevedoring responded to the surreply, (Docket Entry No. 111).
4. Shippers Stevedoring moved for an adverse inference instruction against Crompton Greaves, (Docket Entry No. 77). Crompton Greaves responded, (Docket Entry No. 85), and Shippers Stevedoring replied, (Docket Entry No. 103).
5. Crompton Greaves moved for summary judgment on liability, (Docket Entry No. 76). Shippers Stevedoring responded, (Docket Entry No. 84).
6. Crompton Greaves moved to sever Shippers Stevedoring’s third-party complaint against Union Pacific Railroad, (Docket Entry Nos. 75, 90). Union Pacific joined the motion, (Docket Entry No. 91), and Shippers Stevedoring responded, (Docket Entry No. 83).
7. Union Pacific moved for summary judgment on Shippers Stevedoring’s claims, (Docket Entry No. 99). Shippers Stevedoring responded, (Docket Entry No. 104), and Union Pacific supplemented, (Docket Entry No. 107).
Based on the motions, responses, and replies; the summary judgment record; and the applicable law, this court rules as follows:
• Shippers Stevedoring’s motion for partial summary judgment that COGSA’s one-year statute of limitations bars Compton Greaves’s claims or that COGSA limits damages to $500.00 is denied. (Docket Entry No. 65).
• Shippers Stevedoring’s motion to strike is denied. (Docket Entry No. 71).
• Shippers Stevedoring’s motion for summary judgment on Crompton Greaves’s claims is denied. (Docket Entry No. 74).
• Shipper Stevedoring’s motion for an adverse inference instruction is denied. (Docket Entry No. 77).
• Crompton Greaves’s motion for partial summary judgment on liability is denied. (Docket Entry No. 76).
• Crompton Greaves’s and Union Pacific’s motion to sever is denied. (Docket Entries No. 75, 90).
• Union Pacific’s motion for summary judgment that its damages are limited to $25,000.00 is granted. The motion that Shippers Stevedoring does not have standing and that Shippers Stevedoring’s claims are barred by limitations provision in Union Pacific’s bill of lading is denied. (Docket Entry No. 99).
The parties’ arguments and the reasons for this court’s rulings are discussed in detail below.
I. Background
This dispute arises from the shipment of a power transformer from India to the United States. Crompton Greaves is an Indian corporation that manufactures and sells power transformers. (Docket Entry No. 19, Amended Complaint, at 1). Shippers Stevedoring is a Texas corporation that provides stevedoring services at the Port of Houston, Texas. Crompton Greaves alleges that Shippers Stevedoring is responsible for damaging a transformer that Crompton Greaves manufactured and shipped from India to Arizona through the Port of Houston. The basis for Crompton Greaves’s claims are recordings from a Shock-log device. A Shock-log records “shocks” during transport by measuring force waves. (Docket Entry No. 74, Ex. A., Sandeep Chakravarty Depo. at 30). The Shock-log recorded shocks on March 7, 2007 and March 13, 2007, while the transformer was in Shippers Stevedoring’s custody.
Shippers Stevedoring has also filed a third-party complaint for indemnification and contribution against Union Pacific Corporation, the rail company that transported the transformer from the Port of Houston to Arizona. The basis for Shippers Stevedoring’s claims against Union Pacific is a fourth shock recorded on March 31, 2007, when the transformer was in Union Pacific’s custody.
Crompton Greaves manufactured the transformer for sale to Pauwels America, its wholly-owned American subsidiary. Pauwels America in turn contracted to sell the transformer to Tucson Electric Company for use at a power station in Arizona. Pauwels America and Tucson Electric agreed that title to the transformer would remain with Crompton Greaves until delivery. (Docket Entry No. 65, Ex. 1, San-deep Chakravarty Depo. at 21-22).
Crompton Greaves manufactured the transformer at its Bhopal, India plant. Sandeep Chakravarty, a regional vice president and Crompton Greaves’s designated corporate representative, testified that Crompton Greaves specially designed the transformer “to withstand various transportation and other forces.” (Docket Entry No. 87, Ex. 2, Sandeep Chakravarty Depo. at 107). Crompton Greaves also affixed the Shock-log to the transformer before it was shipped. Viswanathan Shivakumar, a deputy manager at the Bhopal plant, testified that before shipping the transformer, Crompton Greaves performed electrical-function tests recommended by the Institute of Electrical and Electronic Engineers (IEEE) and the American National Standards Institute (ANSI), professional organizations that set industry testing standards. (Docket Entry No. 74, Ex. 1, Viswanathan Shivakumar Depo. at 63-66). Shivakumar testified that these tests showed that the transformer functioned properly before shipment. Shivakumar also testified that he personally attached, set, and calibrated the Shock-log on the transformer before the shipment. (Docket Entry No. 87, Ex. 1, Viswanathan Shivakumar Depo. at 89, 98-99). Shippers Stevedoring asserts that Crompton Greaves also attached a second shock recorder, a Logee 10, to the transformer. Shippers Stevedoring bases this in part on testimony by Shivakumar that the transformer had multiple “shelves” designed to hold shock recorders. (Docket Entry No. 77, Ex. D, Viswanathan Shivakumar Depo. at 142-43). Crompton Greaves asserts that there was only one shock recorder attached, and Shivakumar’s testimony is consistent.
Crompton Greaves hired National Shipping Company of Saudi Arabia (NSCSA) to ship the transformer from the Port of Mumbai, India to the Port of Houston, Texas. To prepare for shipment, the transformer was placed on a mafi trailer. A mafi trailer is a shorter version of a flatbed trailer with hard wheels. Once on the mafi trailer, the transformer was chained down and covered with a tarp. (Docket Entry No. 65, Ex. 1, Sandeep Chakravarty Depo. at 88, 97; Ex. 2). It was then loaded onto NSCSA’s vessel, the M/V Saudi Diriyah, for shipment to the Port of Houston. (Id.). Crompton Greaves asserts that the transformer was not damaged from the time it left the Bhopal plant until it arrived at the Port of Houston.
NSCSA issued a bill of lading for the shipment. The front of the bill of lading described the shipper, consignee, cargo, and cargo’s intended voyage. The bill of lading listed Crompton Greaves as the shipper and Pauwels America as the consignee. The cargo was described as “1 uncrated main unit and 39 wooden cases” and a “Power Transformer, South Loop Substation.” Houston, Texas was the port of discharge and Biehl & Company Lines Services in Houston, Texas was the “place of delivery.” Box 14, titled “For Transshipment to,” was blank. (Docket Entry No. 69, Ex. 2, Bill of Lading).
The back side of the bill of lading detailed rights, liabilities, and responsibilities. Section 3 set out the “Carrier’s Liability.” Subsection 3(b) stated: “TRADES TO OR FROM THE UNITED STATES: shall be subject to the United States Carriage of Goods Act [“COGSA”] of 1936 ... which shall also apply to cargo on deck.” (Id.). Section 4 of the bill lading contained a “Himalaya Clause,” extending the bill of lading’s liability limitations to subcontractors. Subsection 4(c) stated:
If an action for loss or damage to the Goods is brought against the ship managers, operator, insurer, servant, independent contractor, or subcontractor of the carrier or underlying carrier, including terminal operators, stevedores, carpenters, and watchmen, such persons shall be entitled to avail themselves of the defenses and limits of liability for which the Carrier is entitled to invoke under the contract.
(Id.). Finally, Section 5 described the carrier’s responsibilities. Subsection 5(a), titled “Port to Port Shipment,” stated:
The Carrier shall be liable for goods from the time the Goods have passed over the Vessel’s [ramp] at time of loading at the Port ... until the time the Goods have passed over the Vessel’s [ramp] at the time of discharging at the Port of Discharge.... For goods to or from U.S. Ports, the Carrier shall be liable from the time the good are received at the loading port until the time the goods have been delivered to the Merchant at the Port of Discharge.
(Id.)-
Crompton Greaves employed Alomex, an interstate-freight forwarder, “to handle the inland portion of the carriage of the transformer,” and employed Vision Logistics to coordinate the railcar transport. (Docket Entry No. 69, at 3). On February 8, 2007, Alomex emailed an invoice to Crompton Greaves. The invoice stated, “From delivered free on mafi, unlashed at the port of Houston, till offloaded at Sahuarita, AZ we can give you a lump sum price of USD 145,800.00.” (Docket Entry No. 69, Ex. 4). Alomex in turn informed Shippers Stevedoring that it was expecting the shipment on the M/V Saudi Diriyah and instructed Shippers Stevedoring to arrange to transfer the transformer to a railcar. (Id., Ex. 5).
The M/V Saudi Diriyah arrived at the Port of Houston on March 1, 2007 and began discharging cargo at the Barbour’s Cut Terminal the next day. Shippers Stevedoring served as the stevedores for the discharge. Captain W. Rego, a surveyor, was hired by Pauwels America and attended the discharge at its direction. Rego’s report notes no incidents. (Docket Entry No. 65, Ex. 10, Vericlaim Report, at 5).
After discharge, Shippers Stevedoring drove the transformer to its terminal at the Port of Houston and parked it in an open yard. (Id., Ex. 6, Scott Butler Depo. at 20, 49). The transformer remained there until March 12, 2007, when it was loaded onto a railcar. (Id., Ex. 8, Derlin Marsh Depo. at 100-01). On March 7, 2007 at approximately noon, the Shock-log on the transformer recorded the first shock. Shippers Stevedoring claims that on March 7, the transformer was idle in the yard. Every Shippers Stevedoring employee who has been deposed denied moving the transformer between March 7 and March 12. Internal records produced by Shippers Stevedoring do not note any attempts to move the transformer during that time.
Captain Rego and Dale Schabel, a Pauwels America representative, were at the Shippers Stevedoring yard on March 7 to check the cargo. Chakravarty testified that they inspected the cargo in the morning. (Docket Entry No. 74, Ex. A, 215, 217). Captain Rego testified that he took pictures of the transformer and that Schabel noticed some minor damage on the exterior. (Docket Entry No. 74, Ex. C, Captain Rego Depo. at 63-64). One photograph taken by Captain Rego shows a transformer equipped with two shock recorders. Captain Rego testified that he was not sure whether that photograph was of the transformer at issue in this litigation. (Docket Entry No. 85, Ex. 1, Captain Rego Depo. at 52). Captain Rego and Schabel did not check the Shock-log or perform an internal inspection of the transformer. Captain Rego’s report did not describe any significant damage to the transformer, though it did note damage to crates shipped with the transformer. (Docket Entry No. 65, Ex. 10, Vericlaim Report, at 5). Captain Rego testified that he did not see anyone working on the transformer.
Crompton Greaves claims that the Shock-log data is consistent with Shippers Stevedoring moving the transformer on March 7, 2007 and causing damage. Crompton Greaves bases its claim on evidence that Shippers Stevedoring expected the railcar to arrive on March 8, 2007 and tried to move the transformer on March 7 to prepare. Derlin Marsh, Shippers Stevedoring’s Barbour’s Cut Terminal manager, testified that he was tracking the rail-car sent to pick up the transformer on Shippers Stevedoring’s online account with the Port Terminal Railroad. (Docket Entry No. 87, Ex. 10, Derlin Marsh Depo. at 75-78). A timeline produced by Shippers Stevedoring incorporates data from the Port Terminal Railroad account. The timeline shows a March 8 arrival date for the railcar. (Docket Entry No. 69, Ex. 1, Shippers Stevedoring Timeline). Crompton Greaves also notes that there were Shippers Stevedoring personnel at the yard on March 7 who could have moved the transformer. Scott Butler, Shippers Stevedoring’s corporate representative, testified that in addition to Marsh, a walking foreman authorized to move the transformer to the rail siding was at the yard. (Docket Entry No. 87, Ex. 9, Scott Butler Depo. at 101-02). Shippers Stevedoring denies that its employees moved the transformer on March 7.
The Union Pacific railcar did not arrive until March 12, 2007, the date the Shock-log recorded two more shocks. On that date, Shippers Stevedoring loaded the transformer onto the railcar using two cranes. Shippers Stevedoring alleges that its personnel drove the mafi about one-hundred feet to a rail line and loaded the transformer onto Union Pacific’s railcar without incident. (Docket Entry No. 65, Ex. 6, Scott Butler Depo. at 55). Captain Rego, who also attended the March 12 loading, noted in his report that the transformer “was carefully loaded into position with no shocks.” (Id., Ex. 10, Vericlaim Report, at 6). On March 13, 2007, the transformer left on Union Pacific’s railcar.
Vision Logistics had hired Union Pacific to transport the transformer from the Port of Houston to Tucson. On March 14, 2007, Vision Logistics and Union Pacific agreed to a bill of lading. The bill of lading identified Vision Logistics as the shipper and Tucson Electric as the consignee. (Id., Ex. 1, Union Pacific Bill of Lading). Vision Logistics entered the information about the transformer’s transport on Union Pacific’s computer to create the bill of lading. (Docket Entry No. 99, Terry Sheldon Aff.). Union Pacific has provided screen shots of the electronic form Vision Logistics used. One box on the electronic form allows the shipper to select a tariff for the transport. (Id., Ex. 2). The transformer was carried under UP Tariff 4467, which is governed by the Exempt Circular UP 16-series. (Id., Ex. 3, UP Tariff 4467). The bill of lading, UP Tariff 4467, and Exempt Circular UP 16-series together formed the contract for carriage.
Item 16 of UP Exempt Circular 16 requires all claims against the carrier to be filed with the carrier within 9 months of the delivery date. See 49 C.F.R. § 1005.2 (“a claim for ... damage ... to cargo shall not be voluntarily paid by a carrier unless filed ... with [the carrier]” and allowing the time limit for such writing to be established in the bill of lading). Item 124 from UP Exempt Circular 16 requires lawsuits based on the transport be filed within 18 months from the expected date of delivery. (Id., Ex. 9). Finally, Item 3000 of UP Tariff 4467 caps liability for damage at $25,000.00 per car. (Id., Ex. 3).
Union Pacific transported the transformer to Arizona by rail. On March 31, 2007, while the transformer was on Union Pacific’s railcar, the Shock-log registered a fourth shock event. On April 8, 2007, the transformer arrived in Arizona and was unloaded. (Docket Entry No. 87, Ex. 8, Timeline). Two days later, Gautam Mazumder, a Crompton Greaves supervising engineer, downloaded the Shock-log’s data and turned it off. (Docket Entry No. 76, Ex. 2, Sandeep Chakravarty Depo. at 51). The data showed four shock events, one on March 7, two on March 13, and one on March 31, 2007. (Id., Ex. 8, Mazumder Report; Docket Entry No. 87, Ex. 2, San-deep Chakravarty Depo. at 215).
On April 19, 2007, the transformer was tested and did not work. (Docket Entry No. 74, Ex. A, Sandeep Chakravarty Depo. at 67). The next day, Crompton Greaves conducted its first internal inspection of the transformer in Arizona and found loose pieces of insulation at the bottom of the transformer tank, as well as other damage. (Docket Entry No. 87, Ex. 2, Sandeep Chakravarty Depo. at 77). Chakravarty testified that at first, Crompton Greaves, Tucson Power, and a consulting company hired by Tucson Power considered the damage to be minor and repairable. (Docket Entry No. 87, Ex. 2, Sandeep Chakravarty Depo. at 108). Crompton Greaves shipped the transformer to the Edison ESI facility in Westminister, California for repair. (Id., 222). Edison inspected the transformer and informed Crompton Greaves that it would have to be rebuilt. Chakravarty testified that at this point, Crompton Greaves had incurred approximately $750,000.00 in expenses and that Pauwels America had paid most of those. (Id., 145); (Docket Entry No. 74, Ex. A, Sandeep Chakravarty Depo. at 141— 42).
Because Edison did not have the capability to rebuild the transformer, Crompton Greaves and Tucson Power decided to ship it to a plant in Canada for rebuilding. (Docket Entry No. 74, Ex. A, Sandeep Chakravarty Depo. at 219-20). The transformer was rebuilt and shipped back to Tucson. (Id., 49). In total, Crompton Greaves alleges that it incurred $2,749,858.76 in damages. Captain Rego testified that the commercial value of the transformer at the time it was damaged was its invoice price, $1,264,135.00.
On March 19, 2009, Crompton Greaves filed this suit against Shippers Stevedoring. Its complaint asserted claims for negligence, including under res ipsa loquitur; breach of contract; and breach of bailment obligations. On February 24, 2010, Shippers Stevedoring filed a third-party complaint against Union Pacific for indemnity or contribution. (Docket Entry No. 61).
Shippers Stevedoring has filed two motions for summary judgment. The first argues that Shippers Stevedoring is entitled to the liability limitations under the Himalaya Clause in NSCSA’s bill of lading because the cargo was not delivered until March 8, 2007, when the steamship release issued, or until March 13, 2007, when the transformer left the Port of Houston. (Docket Entry No. 65). The motion also argues that under COGSA, Crompton Greaves’s claims are barred by the statute of limitations or limited to $500.00. Crompton Greaves responded, (Docket Entry No. 69), and Shippers Stevedoring replied, (Docket Entry No. 70). Shippers Stevedoring also moved to strike evidence Crompton Greaves attached to its response, (Docket Entry No. 71). Crompton Greaves responded, (Docket Entry No. 80), and Shippers Stevedoring replied, (Docket Entry No. 82).
In its second motion for summary judgment, Shippers Stevedoring argues that it is not liable to Crompton Greaves for negligence or breach of contract. (Docket Entry No. 74). Alternatively, Shippers Stevedoring argues that the constructive-loss doctrine limits Crompton Greaves’s damages. Crompton Greaves responded, (Docket Entry No. 87); Shippers Stevedoring replied, (Docket Entry No. 95); Crompton Greaves surreplied, (Docket Entry No. 106); and Shippers Stevedoring responded to the surreply, (Docket Entry No. 111).
Shippers Stevedoring has also moved for an adverse inference instruction against Crompton Greaves based on evidence that there was a second shock recorder but neither it nor data from it has been produced. (Docket Entry No. 77). Shippers Stevedoring argues that because Crompton Greaves has not produced data from the second shock recorder, an adverse inference that the data from the second shock recorder would have shown that there were no shocks is appropriate. Crompton Greaves responded, (Docket Entry No. 82), and Shippers Stevedoring replied, (Docket Entry No. 84).
Crompton Greaves has also moved for partial summary judgment on liability. It argues that Shippers Stevedoring had an implied contract for bailment of the transformer on March 7 and March 13, 2007, creating a presumption of negligence that Shippers Stevedoring has not rebutted. (Docket Entry No. 76). Shippers Stevedoring responded, (Docket Entry No. 84).
Union Pacific and Crompton Greaves have also moved to sever Shippers Stevedoring’s claims against Union Pacific on the basis that it has not had an opportunity to conduct discovery and that Shippers Stevedoring joined Union Pacific too late. (Docket Entries No. 75, 90). Shippers Stevedoring responded. (Docket Entry No. 83). Union Pacific has also moved for summary judgment that Shippers Stevedoring lacks standing because it was not a party to the bill of lading. Alternatively, Union Pacific argues that the bill of lading bars Shippers Stevedoring’s claims or limits liability to $25,000.00. (Docket Entry No. 99). Shippers Stevedoring responded, (Docket Entry No. 104), and Union Pacific supplemented, (Docket Entry No. 107).
Each motion is analyzed below.
II. The Motion to Strike
Shippers Stevedoring moved to strike Exhibits 2, 4, 8, attached to Crompton Greaves’s response to Shippers Stevedoring’s motion for partial summary judgment. (Docket Entry No. 69). This court did not consider Exhibits 2 and 8, making the motion to strike those exhibits moot. Exhibit 4 contains emails between Crompton Greaves and Alomex about the transformer’s shipment. Shippers Stevedoring moved to strike on the basis that these emails “are not relevant to this court’s determination of ‘delivery’ and the contents of the emails are hearsay.” (Docket Entry No. 71, at 2).
The emails between Crompton Greaves and Alomex are properly considered on summary judgment. Sandeep Chakravarty, Crompton Greaves’s regional vice-president of sales to Latin America and the Caribbean, testified that the February 8, 2007 email was the invoice from Alomex for inland transport and established the terms and conditions of the transport. (Docket Entry No. 80, Ex. A, Sandeep Chakravarty Depo. at 170-71). Crompton Greaves’s agreement with Alomex is relevant. Crompton Greaves argues that because Shippers Stevedoring operated under this agreement as Alomex’s agent it cannot claim defenses and liability limitations under NSCSA’s bill of lading. A contract is not hearsay because it has independent legal significance. See Kepner-Tregoe, Inc. v. Leadership Software, Inc., 12 F.3d 527, 540 (5th Cir.1994) (“Signed instruments such as wills, contracts, and promissory notes are writings that have independent legal significance and are not hearsay.”); Everest Indem. Ins. Co. v. Allied Int’l Emergency LLC, Civ. No. 4:08-CV678-Y, 2009 WL 2030421, at *2 (N.D.Tex. July 14, 2009) (“A contract is not hearsay.”). Because a contract is not hearsay, to be admissible it need only be authenticated. Everest Indem., 2009 WL 2030421, at *2. “The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Fed. R. Ev. 901(a). “The standard for authenticating evidence is low and may be satisfied ‘by evidence sufficient to support a finding that the matter in question is what its proponent claims.’ ” United States v. Carroll, No. Crim. A. 99-88, 2000 WL 45870, at *3 (E.D.La. Jan. 20, 2000) (quoting United States v. Arce, 997 F.2d 1123, 1128 (5th Cir.1993)); see also United States v. Jackson, 625 F.3d 875, 881 (5th Cir.2010) (“[The Fifth Circuit] does not require conclusive proof of authenticity before allowing the admission of disputed evidence.... [Rule 901] merely requires some evidence which is sufficient to support a finding that the evidence in question is what its proponent claims it to be.”).
Shippers Stevedoring’s motion to strike is denied.
III. The Summary Judgment Motions
A. The Legal Standard
Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Crv. P. 56(e). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).
If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by “ ‘showing’ — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” See Celotex, 477 U.S. at 325, 106 S.Ct. 2548. While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant’s case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005) (citation omitted). “A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir.2009) (quotation omitted). “If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant’s response.” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir.2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)).
When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party’s claim. Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir.2007). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’ ” Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir.2008).
B. Shippers Stevedoring’s Motion for Summary Judgment under COG-SA
Shippers Stevedoring argues that it is entitled to judgment that COGSA defenses and liability limitations in the Himalaya Clause in NSCSA’s bill of lading apply. Crompton Greaves responds that under the Himalaya Clause, these defenses and liability limitations are only available to agents or subcontractors of NSCSA. Crompton Greaves argues that the evidence shows that Shippers Stevedoring was Alomex’s agent or subcontractor. Shippers Stevedoring responds that because the alleged damage occurred before “delivery” under the bill of lading, it can assert the bill of lading’s defenses and liability limitations, regardless of whether it was NSCSA’s agent or subcontractor. Shippers Stevedoring also responds that the contention Alomex hired and instructed Shippers Stevedoring is refuted by evidence that Vision Logistics gave Shippers Stevedoring instructions.
COGSA governs bills of lading “from the time when the goods are loaded on to the time when they are discharged from the ship.” COGSA § 1(e), 49 Stat. 1207 (1936), reprinted in note following 46 U.S.C. § 30701; Kirby, 543 U.S. at 29, 125 S.Ct. 385. During this “tackle to tackle” period, as a default rule, the carrier’s liability is limited to $500.00 per package, “or in the case of goods not shipped in packages, per customary freight unit,” unless a higher value has been “declared by the shipper before shipment and inserted in the bill of lading,” or the carrier and shipper have agreed to a higher limit by contract. COGSA § 5, 49 Stat. 1207 (1936), reprinted in note following 46 U.S.C. § 30701. Under COGSA, contracting parties may extend the period during which the liability limit applies to include “the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship.” Id., § 7, reprinted in note following 46 U.S.C. § 30701 (“Nothing contained in this chapter [this note] shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea.” (alterations added by Pub. L. 109-304, Oct. 6, 2006, 120 Stat. 1485)).
Crompton Greaves argues that Shippers Stevedoring is not entitled to take advantage of the otherwise enforceable limitations on liability in the bill of lading. The Himalaya Clause, section 4(c) of the bill of lading, limits the liability of “the ship managers, operator, insurer, servant, independent contractor, or subcontractor of the carrier or underlying carrier, including terminal operators, stevedores, carpenters, and watchmen.” (Docket Entry No. 69, Ex. 2, Bill of Lading (emphasis added)). A Himalaya Clause is interpreted like any other contract term. Kirby, 543 U.S. at 31, 125 S.Ct. 385. This Himalaya Clause is clear and unambiguous and is interpreted based on its plain meaning. See id. at 31-32,125 S.Ct. 385; Henley v. Edlemon, 297 F.3d 427, 430 & n. 5 (5th Cir.2002) (describing federal law of contract interpretation).
Under the plain meaning of this Himalaya Clause, COGSA defenses and liability limitations are available only if Shippers Stevedoring can show that it was a manager, operator, insurer, servant, independent contractor, or subcontractor of NSCSA. See Dewanchand Ramsaran Indus. Ltd. v. Ports Am. Tex., Inc., Civ. A. No. H-08-1274, 2010 WL 707380, at *6-7 (S.D.Tex. Feb. 24, 2010). Shippers Stevedoring does not argue, or produce or identify summary-judgment evidence, that it was NSCSA’s subcontractor. Crompton Greaves has submitted an email in which Alomex — who Crompton Greaves claims was responsible for the inland transport— instructed Shippers Stevedoring to coordinate the transfer of the transformer from the M/V Saudi Diriyah to a railcar for inland shipment. (Docket Entry No. 69, Ex. 5). Shippers Stevedoring argues that evidence submitted by Crompton Greaves shows that Vision Logistics also provided instructions to Shippers Stevedoring. But this evidence does not show that Shippers Stevedoring acted as NSCSA’s subcontractor.
Shippers Stevedoring is not entitled to summary judgment on the basis that COG-SA’s one-year statute of limitations bars Crompton Greaves’s claims or that COG-SA limits Shippers Stevedoring’s damages to $500.00. The motion for summary judgment on these grounds is denied.
C. Shippers Stevedoring’s Motion for Summary Judgment on all Claims
In its second motion for summary judgment, Shippers Stevedoring argues that it is entitled to judgment that it is not liable to Crompton Greaves for negligence or breach of contract. (Docket Entry No. 74). Alternatively, Shippers Stevedoring argues that the constructive-loss doctrine limits Crompton Greaves’s damages.
1. Negligence
Shippers Stevedoring argues that it is entitled to summary judgment on Crompton Greaves’s negligence claim because there is no evidence of causation. Shippers Stevedoring argues that the March 7 shock recording provides only “speculative” evidence that Shippers Stevedoring’s negligence caused damage to the transformer. Crompton Greaves responds that the March 7 Shock-log recording and expert testimony that the Shock-log was properly functioning creates a fact issue as to Shippers Stevedoring’s negligence.
In Texas, the elements of negligence are that: (1) the defendant owed the plaintiff a duty of care; (2) the defendant breached the duty; and (3) the defendant’s breach proximately caused injury to the plaintiff. IHS Cedars Treatment Ctr. v. Mason, 143 S.W.3d 794, 798 (Tex.2004). Shippers Stevedoring argues only that Crompton Greaves has not produced suffident evidence that Shippers Stevedoring proximately caused the injury. A plaintiff can prove causation by direct or circumstantial evidence. Alza Corp. v. Thompson, No. 13-07-00090-CV, 2010 WL 1254610, at *8 (Tex.App.-Corpus Christi Apr. 1, 2010, no pet.) (citing Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004)). “The question of causation is a fact question for the jury, and the jury has broad latitude to infer causation from the circumstances surrounding an accident, especially when it is not possible to produce direct proof of causation.” Id. (citing Farley v. MM Cattle Co., 529 S.W.2d 751, 755 (Tex.1975)). “The plaintiff need not exclude all possibility that the accident occurred other than as he alleges. Rather the plaintiff is only required to convince the jury by a preponderance of the evidence that the accident occurred as alleged.” Id. (citing Farley, 529 S.W.2d at 756; Renfro Drug Co. v. Leiois, 149 Tex. 507, 235 S.W.2d 609, 621 (1950)). But “[t]o raise a genuine issue of material fact ... the evidence must transcend mere suspicion. Evidence that is so slight as to make any inference a guess is in legal effect no evidence.” Ridgivay, 135 S.W.3d at 601.
Crompton Greaves has produced sufficient circumstantial evidence to create a fact issue as to whether Shippers Stevedoring caused the damage to the transformer. Shippers Stevedoring has admitted that the transformer was in its custody on March 7, 2007, when the Shock-log registered the first shock. In response to a request for admission, Shippers Stevedoring admitted that it “discharged, that is unloaded the goods in question, at the Port of Houston on or about March 1, 2007,” and that the “cargo in question was in [Shippers Stevedoring’s] custody from March 2, 2007 through March 11, 2007.” (Docket Entry No. 76, Ex. 7). Crompton Greaves has also produced circumstantial evidence raising a fact issue as to whether Shippers Stevedoring dropped the transformer in a failed attempt to move it for railroad transport. Crompton Greaves’s expert, Dr. David Hullender, testified that only “something ... big,” such as a drop, could have created the force registered on the Shock-log. (Docket Entry No. 87, Ex. 6, Dr. David Hullender Depo. at 27). Dr. Hullender further testified that based on the registered force, “in all probability, it did get dropped.” (Id., 27-28). A timeline produced by Shippers Stevedoring shows that it expected the railcar to arrive on March 8. (Id., Ex. 8, timeline; Ex. 10, Derlin Marsh Depo. at 76). Another Crompton Greaves expert, Edmund Feloni, testified that based on the railcar’s expected arrival date, “it would make sense that [Shippers Stevedoring was] preparing to move it.” (Id., Ex. 8, Edmund Feloni Depo. at 174). There were Shippers Stevedoring personnel at the yard on March 7 authorized to move the transformer. Scott Butler, Shippers Stevedoring’s corporate representative, testified that on March 7, Shippers Stevedoring’s walking foreman was at the yard and authorized to move the transformer to the rail siding. (Id., Ex. 9, Scott Butler Depo. at 101-02).
Shippers Stevedoring argues that testimony from Captain Rego, Pauwels’s marine surveyor, that he inspected the transformer on March 7 and did not see anyone working around it establishes that Shippers Stevedoring did not attempt to move the transformer on that date. Dale Schabel, a representative from Pauwels was also present for the inspection. The first shock event was recorded at 23:51 hours 13 seconds, a little past noon. (Docket Entry No. 87, Ex. 2, Sandeep Chakravarty Depo. at 214-15). The evidence, however, is that Rego and Schabel inspected the transformer “in the morning hours.” {Id., 215). Shippers Stevedoring points out that Captain Rego took a photograph of a transformer at 12:41 p.m. (Docket Entry No. 95, Ex. 3, Forensic Expert Report, at 2). But there is evidence that this photograph was not of the transformer at issue. Rego and Schabel also inspected cargo stored in “a distant Shippers warehouse which blocked [any] view of the location of the transformer,” and the 12:41 photograph shows this cargo. (Docket Entry No. 106, Ex. 4, Captain Rego. Depo. at 164-65). Captain Rego’s first photograph of the transformer was taken at 1:28 p.m., approximately an hour and ten minutes after the shock event’s time. Captain Rego’s testimony and photographs do not show that, as a matter of law, Shippers Stevedoring did not damage the transformer.
Shippers Stevedoring argues that Crompton Greaves’s evidence is insufficient under the Texas Supreme Court’s decision in Marathon Corporation v. Pitzner, 106 S.W.3d 724 (2003). In Marathon, an air conditioning repairman sued a motorcycle dealership after he fell from the roof of a building the dealership rented. Id. at 725-26. The repairman did not recall the accident. He relied on evidence that the premises did not comply with building and mechanical codes and expert testimony to prove negligence. The dealership violated the codes because the air conditioning units did not have a 30-inch workspace in front of their access panels and because the units did not have a power disconnect on the roof so that all electrical power to the units could be shut off by someone working on the roof. Id. at 727-28. One expert testified that, based on testimony from the repairman who completed the repairs after the accident, the plaintiff “had almost finished repairing a freon leak.” Id. at 728. The expert testified that after repairing a freon leak, repairmen usually restart the air conditioning unit by connecting two low-voltage lines. The expert speculated that if the air conditioning unit had been turned off downstairs — which was possible because the building was not in code compliance— the plaintiff would have reached inside the air conditioning units access panel to push a black bar that could bypass the control circuit and start the unit. The expert testified that “[although it was common for repairmen to do this ... it could result in an electrical shock or flash.” Id. There was, however, no evidence that the air conditioning unit had been turned off downstairs. A second expert testified that “the lack of space between the units caused [the plaintiff] to reach into the access panel at an angle that made it more likely that he would come into contact with a high-voltage wire.” Id. at 728-29. The court, noting that the experts’ testimony piled “speculation on speculation and inference on inference,” reversed the jury verdict in favor of the plaintiff because “the circumstances ‘could give rise to any number of inferences, none more probable than the other.’ ” Id. at 729 (citing Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 392 (Tex.1997)). For example, the court reasoned, because the plaintiffs injuries were also consistent with an assault and battery and because there was no ladder at the scene — supporting an inference that someone else was present at some point— it was equally plausible that the plaintiff was attacked. Id. The court concluded that “ ‘in cases with only slight circumstantial evidence, something else must be found in the record to corroborate the probability of the fact’s existence or nonexistence.’ ” Id. (quoting Hammerly Oaks, 958 S.W.2d at 392).
Marathon is distinguishable. The Marathon plaintiff presented competing liability theories and there was another theory that was equally plausible but did not involve negligence by the defendant. The court found that there was insufficient evidence to sustain the jury’s verdict. Crompton Greaves has presented evidence supporting only one theory: that Shippers Stevedoring damaged the transformer by dropping it while trying to load it onto the rail line on March 7, 2007. The shock recording is circumstantial evidence that the transformer was dropped on that date. The expected March 8 arrival of the railcar provides circumstantial evidence that Shippers Stevedoring attempted to move the transformer on March 7. This evidence provides the “something else” corroborating the probability that Shippers Stevedoring moved the transformer on March 7. This evidence creates a fact issue as to negligence.
2. Breach of Contract and Bailment
Shippers Stevedoring argues that it did not have an express contract with Crompton Greaves and that as a matter of law the evidence is insufficient to establish an implied contract for bailment. Shippers Stevedoring emphasizes that the evidence shows that it did not have control over the transformer on March 7 because it was not authorized to move the transformer until it received a “steamship release,” which did not occur until March 8. Shippers Stevedoring also emphasizes that under NSCSA’s bill of lading, it did not have control of the transformer on March 7 because “delivery” did not occur until the transformer was given a steamship release or until it was delivered to Union Pacific for transport. Crompton Greaves responds that in a request for admission, Shippers Stevedoring admitted that it had custody of the transformer on March 7, 2007, the date of the first shock, and that this admission shows an implied bailment.
A bailment relationship does not create a specific cause of action but instead allows the bailor to choose the form of relief for breach, such as an action for breach of contract or an action for conversion. See Int’l Freight Forwarding, Inc. v. Am. Flange, 993 S.W.2d 262, 269 (Tex.App.-San Antonio 1999, no pet.); see also Prime Products, Inc. v. SSI Plastics, Inc., 97 S.W.3d 631, 638 (Tex.App.-Houston [1st Dist.] 2002, pet. denied) (a bailment claim is not a separate cause of action from a breach of contract claim). A bailment relationship generally requires:
(1) a contract, either express or implied;
(2) delivery of property to the bailee; and
(3) acceptance of the property by the bailee. Russell v. Am. Real Estate Corp., 89 S.W.3d 204, 210 (Tex.App.-Corpus Christi 2002, no pet.); see also Smith v. Radam, Inc., 51 S.W.3d 413, 417 (Tex.App.-Houston [1 Dist.] 2001, no pet.) (a bailment relationship results from a contract under which bailed goods are delivered by the bailor and accepted by the bailee for a specific purpose). An implied bailor-bailee relationship may give rise to an implied bailment contract. Smith, 51 S.W.3d at 417. In an implied bailment, it is not necessary that delivery and acceptance be formal. Russell, 89 S.W.3d at 211. Knowingly taking property into possession or control may establish an implied bailment. Id. The creation of a bailment requires that possession and control over an object pass from the bailor to the bailee. All-right Auto Parks, Inc. v. Moore, 560 S.W.2d 129, 130 (Tex.Civ.App.-San Antonio 1977, writ ref d n.r.e.).
Crompton Greaves has submitted sufficient circumstantial evidence to support an implied bailment. Shippers Stevedoring knowingly accepted the transformer when it was discharged from the M/V Saudi Diriyah on March 1, 2007 and that the transformer was in Shippers Stevedoring’s custody when the first shock event was recorded. Russell, 89 S.W.3d at 211 (“In general, knowingly taking property into possession or control is a sufficient acceptance and may suffice to establish an implied bailment.”); see also Berlow v. Sheraton Dallas, 629 S.W.2d 818 (Tex. App.-Dallas 1982) (finding evidence that a hotel accepted delivery of a package intended for a guest and stored it for one month sufficiently supported the jury’s finding of an implied bailment). In response to a request for admission, Shippers Stevedoring admitted that it “discharged, that is unloaded the goods in question, at the Port of Houston on or about March 1, 2007,” and that the “cargo in question was in [Shippers Stevedoring’s] custody from March 2, 2007 through March 11, 2007.” (Docket Entry No. 76, Ex. 7). There is also record evidence that Shippers Stevedoring knew it was unloading cargo belonging to Crompton Greaves. Compare Hoye v. Like, 958 S.W.2d 234, 237 (Tex.App.-Amarillo 1997, no pet.) (finding that bailment over cattle did not exist where there was no evidence that the caretaker of cattle knew the cattle’s owner). Crompton Greaves hired Alomex to handle the inland portion of the transformer’s transport. Alomex sent Shippers Stevedoring an email instructing it to receive the cargo and to coordinate its transfer to a railcar. (Docket Entry No. 76, Ex. 5). Attached to the email was a packing list identifying Crompton Greaves as the “exporter/manufacturer/producer” of the transformer. (Docket Entry No. 72, Ex. 3, Packing List, at p. 16). This evidence supports a finding that a bailment existed.
Shippers Stevedoring argues that no bailment existed because it was not in privity with Crompton Greaves and had only contracted with Alomex. Shippers Stevedoring also points to testimony by Chakravarty that “the custody of or the responsibility of Alomex began on the date and the time the goods were offloaded from the ship” and that Alomex had “custody and control” over the transformer while it was at the Port of Houston. (Docket Entry No. 95, Ex. 1, Sandeep Chakravarty Depo. at 187, 192). Shippers Stevedoring argues that under this court’s decision in Suzlon Wind Energy Corp. v. Shippers Stevedoring Co., 662 F.Supp.2d 623 (S.D.Tex.2009), privity is required for a bailment.
In Suzlon, Suzlon Wind Energy sued Shippers Stevedoring after fire damaged a nacelle (part of a wind turbine generator) while Shippers Stevedoring was performing “hot work.” Id. at 633. Suzlon filed a cross-claim against Andrews Boom Repair, Inc. (“ABR”), a third-party defendant, which had performed welding work for Shippers Stevedoring. Suzlon argued that there was an implied bailment between it and ABR, created when ABR accepted delivery of the nacelle and began working on it. Id. at 655. ABR responded that the nacelle was never in its custody or control and that it could not have formed an implied bailment with Suzlon because ABR was not even aware that Suzlon existed. Id. at 655-56. This court found that no bailment existed because there was no evidence that ABR knew it was assuming the responsibilities of bailee or that ABR knew it was taking possession, custody, or control of the nacelle by performing hot work, and there was no evidence that ABR knew of Suzlon’s existence. Id. at 656. The issue in Suzlon was not whether ABR was in privity with Suzlon. Instead, the issue was whether there was sufficient circumstantial evidence to find that ABR had accepted property it knew belonged to Suzlon or that ABR had custody, control, or possession of the property when it performed welding work. There was no evidence showing that when ABR began welding, it understood that it was also assuming custody, control, or possession of Suzlon’s nacelle. To the contrary, the evidence showed that ABR was only hired to perform welding work. There was also no evidence that ABR knew that the nacelle belonged to Suzlon.
The facts of the present case are different. Crompton Greaves has submitted evidence that Shippers Stevedoring knew that the transformer belonged to Crompton Greaves; that Shippers Stevedoring knowingly accepted the property from the MfV Saudi Diriyah; and that Shippers Stevedoring had custody of the transformer from its discharge until its placement on the railcar.
Shippers Stevedoring also argues that it did not have control of the transformer on March 7 because NSCSA did not issue the steamship release until March 8. But even assuming that Shippers Stevedoring lacked authorization to move the transformer before March 8, this does not demonstrate the absence of an implied bailment. Under Texas law, custody of the bailor’s property is sufficient to support an implied contract for bailment. See Russell, 89 S.W.3d at 210 (“In general, knowingly taking property into possession or control is a sufficient acceptance and may suffice to establish an implied bailment.”). The decision in Soto v. SeaRoad In'tl, Inc., 942 S.W.2d 67 (Tex.App.Corpus Christi, no pet.), is instructive. In Soto, a South Korean textile company hired the plaintiff, Sea-Road International, to handle the inland transportation of a fabric order placed by the Textile Corporation. Sea-Road received the fabric and, at Textile’s request, forwarded the shipment to the defendant, Luciana Soto, who had a warehouse in Brownsville, Texas. Sea-Road ordered Soto to “check with Sea Road Int’l before releasing any merchandise.” Id. at 69. The goods were damaged in Soto’s warehouse. On appeal, Soto argued that because he did not have formal contact with Sea-Road, no bailment relationship was created. The appellate court rejected his argument. It found that Soto’s acceptance of the goods with specific instructions for its release, combined with expert testimony that such instructions are understood in the industry as obligatory, provided sufficient evidence of a bailment. Id. at 72. Because of this, “formal communication ... was not necessary.” Id. In the present case, there is similar evidence. Shippers Stevedoring accepted custody of the transformer with specific instructions to hold it until a railcar arrived and to load the transformer onto the railcar. That Shippers Stevedoring lacked authority to move the transformer to the railcar until NSCSA released it does not provide a basis for summary judgment.
3. Damages
Shippers Stevedoring seeks summary judgment that the doctrine of constructive total loss, which limits recovery for damage to goods to their fair market value before damage. Applied here, the doctrine limits Crompton Greaves’s damages to the fair market value of the transformer on the date it was damaged ($1,264,135.00) less the amount Crompton Greaves recovered by selling salvage materials from the transformer ($198,000.00). Shipper Stevedoring also argues that Crompton Greaves does not have standing to recover the $748,428.76 incurred for shipping the transformer to Edison because Pauwels America paid these expenses.
Crompton Greaves responds that it may recover the costs it incurred in good faith to mitigate its damages, even if the cost of repairs exceeded the transformer’s value before the damage. Crompton Greaves also argues that even though Pauwels America paid for the shipment to Edison, Crompton Greaves ultimately incurred those damages because it bore the risk of loss and because it is Pauwels America’s parent company.
a. Constructive total loss
“ ‘The purpose of compensatory damages ... is to place the injured person as nearly as possible in the condition he would have occupied if the wrong had not occurred.’ ” Transcon. Gas Pipe Line Corp. v. Societe D’Exploitation du Solitaire, 299 Fed.Appx. 347, 350 (5th Cir. 2008) (quoting Pizani v. M/V Cotton Blossom, 669 F.2d 1084, 1088 (5th Cir.1982)). “Market value is the primary method of valuation in cases involving damages to personal property.” Braden v. Kirkland, No. 09-04-077 CV, 2004 WL 2365176, at *2 (Tex.App.-Beaumont Oct. 21, 2004, no pet.). “If the property has a market value, a plaintiffs damages are measurable as the difference in market value immediately before and after the injury.” Id. (citing Pasadena State Bank v. Isaac, 149 Tex. 47, 228 S.W.2d 127, 128 (1950)). “If the property has no market value and can be replaced, replacement costs are the proper measure of damages.” Id. But “different factual situations may require the application of a different measure of damages.” Samuel v. KTVU P’ship, No. 08-02-00010-CV, 2003 WL 22405384, at *1 (Tex. App.-El Paso Oct. 22, 2003, pet. denied). And “[a] plaintiff may elect repair damages instead of valuation damages.” Id. (citing Central Freight Lines, Inc. v. Naztec, Inc., 790 S.W.2d 733, 734 (Tex.App.-El Paso 1990, no writ)). “A plaintiff must prove the costs of repair were reasonable and necessary.” Id. (citing 2 Fat Guys Inv., Inc. v. Klaver, 928 S.W.2d 268, 273 (Tex.App.-San Antonio 1996, no writ)).
In both contract and tort cases, a plaintiff has a duty to mitigate damages. Formosa Plastics Corp., USA v. Kajima Intn’l, Inc., 216 S.W.3d 436, 459 (Tex.App.-Corpus Christi 2006, pet. denied). “The concept of mitigation requires the plaintiff to exercise reasonable care in minimizing its damages.” Id. (citing Great Am. Ins. Co. v. N. Austin MUD, 908 S.W.2d 415, 426 (Tex.1995)). The duty raises only if “it can be done with ‘trifling expense or with reasonable exertions.’” Id. (quoting Gunn Infiniti v. O’Byrne, 996 S.W.2d 854, 857 (Tex.1999)). The defendant has the burden to show that the plaintiff did not use ordinary care in reducing or avoiding its damages. Id. (citing Moulton v. Alamo Ambulance Serv., 414 S.W.2d 444, 450 (Tex.1967)).
A fact issue exists as to the market value of the transformer when it was allegedly damaged. Shippers Stevedoring argues that the market value as of March 2007 was $1,264,135.00. Shippers Stevedoring bases the market value on the Crompton Greaves’s January 25, 2007 invoice for the sale of the transformer. The invoice shows that Tucson Power ordered the transformer on August 31, 2006. The record does not show whether the price was negotiated when the transformer was ordered or at a later date. There is evidence, however, that beginning in 2006, the transformer’s market value continuously increased. Crompton Greaves’s expert, Edmund Feloni, testified that the cost of producing transformers increased beginning in 2006 through 2007. He testified that “in some cases,” the costs “almost doubled or tripled,” due in part to price increases for commodities such as copper. (Docket Entry No. 87, Ex. 7, Edmund Feloni Depo. at 145A6). Feloni’s testimony creates a fact issue as to whether Crompton Greaves’s damages are limited to the invoice price. Shippers Stevedoring is not entitled to summary judgment that Crompton Greaves’s damages are limited to $1,264,135.00 less the amount it obtained through salvage.
Shippers Stevedoring has only moved for summary judgment that Crompton Greaves’s damages are limited to $1,264,135.00 less the amount it obtained through salvage. In their briefing, the parties vigorously dispute whether Crompton Greaves may recover both the $748,428.76 for initial repair costs and the additional $2,749,858.76 for rebuilding the transformer in Canada. Neither party has produced cases discussing whether, under Texas law, damages in excess of the market value can be recovered. Crompton Greaves cites the Seventh Circuit’s decision in Toledo Peoria and Western Ry. v. Metro Waste Sys., Inc., 59 F.3d 637 (7th Cir.1995). In Toledo, Toledo Peoria and Western Railway (“Toledo Railway”) sued Metro Waste Systems for negligence. A Metro Waste Systems dump truck struck four Toledo Railway locomotives while crossing railroad tracks in disregard of warning signs. Id. at 638. Toledo Railway shipped the four locomotives to Texas for repair. Three were repaired for less than the replacement cost. Before repairs on the fourth locomotive were completed, the repair shop went into bankruptcy. Id. at 638-39. Toledo Railway paid the bankruptcy trustee $74,000.00, the total cost of the partial repairs performed, to retrieve the fourth locomotive. Toledo Railway received a $40,000.00 estimate for completing the repairs. Because Toledo Railway had already invested $74,000.00 which, with the additional $40,000.00, was still less than the replacement cost at the time of the accident, Toledo Railway shipped the locomotive to the second repair shop. Id. at 639. The second repair shop determined that repair would cost yet an additional $40,000.00. At that point, Toledo Railway decided to scrap the engine. At trial, Toledo Railway sought damages both for the repair costs incurred and for the fair market value of the locomotive. The district court ruled that Toledo Railway could not present any evidence of the repair costs because under Illinois law Toledo Railway’s damages were capped at the replacement value. Id. The Seventh Circuit reversed. It reasoned that a strict application of Illinois’s replacement cap conflicted with the duty to mitigate damages. Id. at 640. Because Toledo Railway made reasonable, good faith efforts to mitigate damages, it could recover “both the costs of attempted but good faith repairs and the diminished value of property” even though it had inadvertently increased the damages. Id. at 640. Holding otherwise, the court reasoned, would discourage plaintiffs from mitigating damages. Id. at 640-41.
Toledo does not support Crompton Greaves’s full damage claim. In that case, once Toledo Railway knew that the combination of the repair costs already incurred with the expected additional repair costs would exceed the engine’s fair market value at the time of damage, the decision was made not to pursue additional repairs and instead to seek replacement damages. The court found that Toledo Railway had acted consistent with its duty to mitigate damages. In the present case, by contrast, there is no evidence as to whether Crompton Greaves decided to incur the costs to rebuild the transformer because those costs, combined with the $748,428.76 already incurred, would be less than the transformer’s fair market value when it was damaged. Under Toledo, Crompton Greaves would be entitled to damages for both the initial repair costs and the costs of rebuilding the transformer only if they were less than the transformer’s fair market value when it was damaged. Crompton Greaves has not produced this evidence.
Texas law, like Illinois law, requires plaintiffs to mitigate damages, Formosa Plastics Corp., 216 S.W.3d at 459. But the parties have not cited authority on whether under Texas law,1 a plaintiffs damages are capped at the fair market value of the property at the time it was damaged or whether pursuing additional repairs when the party knows that the combined cost of repairs already incurred and of expected repairs exceeds the fair market value at the time of damage is reasonable. Shippers Stevedoring cites Fifth Circuit admiralty decisions holding that when the cost of repairs exceeds the fair market value of a vessel, a plaintiffs damages are capped by the vessel’s fair market value. See King Fisher Marine Serv. Inc. v. NP Sunbonnet, 724 F.2d 1181, 1185 (5th Cir.1984) (“It is fundamental that when a vessel is lost or damaged ‘the owner is entitled to its money equivalent, and thereby to be put in as good a position pecuniarily as if his property had not been destroyed.’ To further this policy courts have long held that where a vessel is a total loss the measure of damages is the market value at the time of the loss.” (internal citations omitted)); Ryan Walsh Stevedoring Co. v. James Marine Servs., Inc., 792 F.2d 489, 491 (5th Cir.1986) (“The legal principles are well settled: A vessel is considered a constructive total loss when the cost of repairs is greater than the fair market value of the vessel immediately before the casualty.”); Tug June S v. Bordagain Shipping Co., 418 F.2d 306, 307 (5th Cir. 1969) (“Where the injured vessel is not a total loss and repairs are practicable, restitution is the rule of damages in a collision case. An injured shipowner is entitled to be placed in the same position he occupied before the collision. The damages assessed should be sufficient to restore the vessel to the condition in which she was at the time the collision occurred.”). These cases, however, do not address whether under Texas law, a plaintiff who reasonably but unsuccessfully tries to mitigate damages through repairs can recover the full cost of his repairs even though it might exceed the f