                                                                                                                           Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-30-2002

Manchester Equip Co v. Amer Way Moving
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-1081




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Recommended Citation
"Manchester Equip Co v. Amer Way Moving" (2002). 2002 Decisions. Paper 624.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/624


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                                               NOT PRECEDENTIAL

                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                           __________

                          No. 02-1081
                           __________

                MANCHESTER EQUIPMENT CO., INC.,
                                              Appellant

                               v.

            AMERICAN WAY MOVING & STORAGE CO., INC.,
         predecessor corporation to HTS Selling Corp.;
        LOUDERBACK TRANSPORTATION CO., INC., predecessor
         corporation to HTS Selling Corp.; HTS SELLING
                  CORP., successor corporation
                           __________

        ON APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF DELAWARE
                   D.C. Civil No. 99-cv-00351
        District Judge: The Honorable Gregory M. Sleet
                           __________

           Submitted Under Third Circuit LAR 34.1(a)
                       September 27, 2002
                           __________

        Before: BARRY, AMBRO, and GARTH, Circuit Judges

             (Opinion Filed: September 30, 2002   )
                          ____________

                            OPINION
                          ____________


BARRY, Circuit Judge
     This is a bailment negligence action. The District Court granted summary
judgment in favor of the defendants. Manchester Equip. v. American Way Moving &
Storage Co., 176 F. Supp. 2d 239 (D. Del. 2001). We have jurisdiction over this appeal
pursuant to 28 U.S.C. 1291 and our review of the District Court’s grant of summary
judgment is de novo. In performing our review, we must view the record in the light most
favorable to appellant and determine whether genuine issues of material fact exist and, if
not, whether appellees are entitled to judgment as a matter of law. Sheet Metal Workers’
Int’l Ass’n v. Herre Bros., 201 F.3d 231, 239 (3d Cir. 1999). We will affirm.
     The material facts are undisputed and, because the parties are familiar with these
facts, we will discuss them only as necessary to resolve the issues presented.
     At bottom, this case is about a computer equipment distributor that was defrauded
of $496,250.00 in computers by a sophisticated con-artist, and now seeks compensation
from another victim of the fraud -- specifically, the warehouse that temporarily stored the
computers. In or about late May or early June 1997, Manchester Equipment Co., Inc.’s
President, Barry Steinberg, was telephoned by a "David Lancaster," who identified
himself as a Vice-President of Time-Warner, Inc. Time-Warner had been one of
Manchester’s established customers, and Lancaster indicated that he wished to purchase a
large quantity of computers for a special promotional event.
     Having never dealt with Lancaster before, Manchester’s Sales Manager, William
Breen, made a few telephone calls to various contacts in the Time-Warner corporate
family, as well as to a colleague at Toshiba, to confirm Lancaster’s identity. All of these
contacts confirmed Lancaster’s existence, and one Time-Warner employee advised Breen
that Lancaster worked out of an office at 75 Rockefeller Plaza in New York City.
     Shortly thereafter, Manchester received a purchase order, dated June 4, 1997, from
Lancaster requesting that Manchester ship the computers to the "Time/Warner
Distribution Center" at 700 A Street in Wilmington, Delaware. Not being familiar with
this address, Breen again contacted a friend at Time-Warner, who confirmed that the
address was legitimate. Satisfied that it was dealing with a bona fide order, Manchester
shipped $496,250.00 worth of computers to 700 A Street in Wilmington.
     In the interim, Lancaster contacted American Way Moving & Storage Company, a
warehouse located at 700 A Street in Wilmington, i.e., there was no "Time/Warner
Distribution Center" located at the address given to Manchester. Lancaster explained that
he was a Time-Warner executive in need of some warehouse space on a month-to-month
basis for some of his office equipment, and that his drivers would pick up the equipment
shortly after its delivery. American Way agreed to rent a portion of its warehouse and
was informed to expect a shipment soon thereafter.
     As promised, three shipments of computers from Manchester to "Time Warner
Dist. Ctr." arrived at American Way in mid-June, and the warehouse personnel stored the
shipments in Lancaster’s rented space. Lancaster’s drivers promptly appeared and took
possession of the computers. It is undisputed that American Way had no knowledge that
Lancaster had not paid Manchester for the computers at the time they were released to the
pick up drivers; indeed, Manchester and American Way had never communicated with
each other.
     Lancaster’s scam was finally revealed when Manchester’s invoices, mailed to
Lancaster’s alleged office at 75 Rockefeller Plaza, were returned as "undeliverable." As
it turned out, "David Lancaster" was an imposter and Manchester was left unpaid for its
half a million dollars worth of computers. Manchester thereafter sought to recoup what it
could. Time-Warner presumably because its agents incorrectly confirmed that
Lancaster and the Time Warner Distribution Center were legitimate agreed to pay
Manchester $185,000.00. Manchester also sued companies within the shipping chain,
including American Way, to recover the remaining funds.
     Manchester contends that American Way breached its "bailment duty" by
neglecting to take "reasonable and appropriate measures of identification and
verification" before turning over the computers to Lancaster’s drivers. Appellant’s Br. at
3. American Way asserts it did not owe a duty to Manchester because there was no
contract between the parties, that it did not breach any such duty, and that Manchester is
estopped from asserting its claims because its own lack of care resulted in its loss. In
granting American Way summary judgment, the District Court agreed that because there
was no express or implied contract creating a duty between Manchester and American
Way, there was consequently no bailment relationship (since such a relationship is
typically based on a contract), and Manchester was, in any event, estopped due to its own
carelessness.
     Before us, Manchester concedes that it had no express or implied contract with
American Way, but contends that American Way’s acceptance of the computers created
an "involuntary" or "constructive" bailment, which was breached when American Way
surrendered the computers without obtaining proper identification despite the fact that the
bills of lading were made out to "Time Warner Distribution Center" instead of to "David
Lancaster." Similarly, Manchester claims that American Way’s estoppel defense fails
because it did not reasonably rely on Lancaster’s representations, particularly since the
bills of lading were addressed to "Time Warner Distribution Center."
     A fundamental underpinning of Manchester’s contentions is that a bailment
relationship was created between it and American Way when the warehouse accepted
delivery of the computers. The problem for Manchester, however, is that the undisputed
record dictates that, as a matter of law, there was no such relationship. At the time it
received the shipments, it is undisputed that American Way had no way of knowing that
Lancaster had failed to pay for Manchester’s computers. Instead, American Way had
every reason to believe that the computers, as represented, belonged to Time-Warner and
that Lancaster, as Time-Warner’s agent, was authorized to take possession of them.
Moreover, American Way had no information suggesting that Manchester had any
remaining interest in the computers. Accordingly, the only bailment relationship created
regarding the computers was between American Way and Lancaster; indeed, American
Way and Lancaster had a contract creating such a relationship.
     But even assuming, arguendo, that there was a bailment relationship created
between Manchester and American Way, Manchester’s claim fails, as a matter of law, for
want of proximate cause. Put simply, given the undisputed facts, a reasonable jury would
be compelled to find that the proximate causes of Manchester’s injuries were Lancaster
and Manchester’s own conduct. Manchester chose to ship nearly half a million dollars of
computers to 700 A Street in Wilmington, i.e., American Way’s address, without
attempting to contact the warehouse and wanted the computers delivered to Lancaster. In
this regard, American Way did precisely what Manchester desired -- it delivered the
computers undamaged to David Lancaster.
     Manchester places great weight on the fact that the bills of lading were made out to
"Time/Warner Distribution Center" at 700 A Street, and that American Way surrendered
the computers to Lancaster’s agents notwithstanding this designation of a corporate entity
"distribution center." American Way, however, cannot be faulted for accepting a
shipment made out to its address and then delivering that shipment to a perceived Time-
Warner executive and his agents when Lancaster had just established an account on
behalf of Time-Warner and had indicated that a delivery was imminent. As such, any
breach of duty claim fails on the merits.
     For the foregoing reasons, we will affirm the December 11, 2001 order of the
District Court granting summary judgment to appellees.

TO THE CLERK OF THE COURT:
     Kindly file the foregoing Opinion.
                                   /s/ Maryanne T. Barry
                                   Circuit Judge
