Delchi Carrier Spa v. Rotorex Corp.

71 F.3d 1024 (2nd Cir. 1995)

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Nature of the Case

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Facts

Rotorex (D) agreed to sell compressors to Delchi (P) to use in its portable room air conditioners. The products were scheduled to go on sale in the summer of 1988. Rotorex sent a sample compressor and written performance specifications before the contract was entered into. The compressors were to be delivered in three shipments all prior to May 15, 1988. D sent the first shipment, and it was paid for by letter of credit and was to arrive on April 20^th. The second shipment was sent, and it was to arrive by May 9^th, and it too was paid for by LOC. While the second shipment was still on route, it was discovered that the first lot did not conform to the sample model and written specifications. P informed D that 93% of the compressors were rejected. Several unsuccessful attempts were made to cure, but P finally asked D to replace the units. P canceled the contract on May 23, 1988. P did mitigate some of its damages but was unable to obtain 100% mitigation and suffered a loss in sales volume for 1988. P sued under CISG for breach of contract and the failure to deliver conforming goods. The Judge granted a motion for partial summary judgment holding D liable for breach of contract. Eventually, the judge awarded P damages of $1,248,331.87. This included consequential damages for lost profits, expenses incurred in attempting to remedy the nonconformity, the cost of expedited shipments from other sources and the costs of handling and storing the rejected units. The court denied P’s claims for shipping, customs, and incidentals, the cost of obsolete insulation and tubing that only worked with D units, the cost of tooling for D units and the labor costs of an idle production line at P. The court contended that these unallowed costs would result in a double recovery. D appealed and P counter-appealed. D claimed it did not breach and that the court improperly calculated the damages award. P claimed it was entitled to out-of-pocket expenses.