Defense Counsel Journal - International Association of Defense ...

The Global Supply Chain Page 423of credit for shipment and $163,265.95for lost profits on confirmed customerorders and potential customer orders thatOxford was unable to deliver because ofdefects in the merchandise.The court concluded that the goodsTexpor delivered to Oxford underpurchase orders were materially defectiveand not of “first quality” as the contractspecified. 39 Turning to the issue ofdamages, the court held that Oxford wasentitled to damages for lost profits in theamount of $111,112.78. The court notedthat Oxford had met is burden of proof inestablishing the damages by providingcomputerized printouts of orderconfirmations and cancellations, asummary of confirmed customer orders,and a tabular analysis of price per itemsold on confirmed customer orders andacquisition cost of such items. However,the court declined to award Oxford anydamages for potential orders because,“Oxford presented no evidence, however,of such prospective sales, and the courtwill not speculate in attempting to assessthem.” 40The obligation to provide evidencesupporting damages applies equally in thecontext of a claim for insurance coverage.An insurer has the right to seekinformation relevant to a claim. InAmerex Group v. Lexington InsuranceCompany, 41 Amerex was in the businessdistributing outerwear in the UnitedStates and acted as an intermediarybetween its wholesale customers andoverseas clothing manufacturers. Thecompany stored clothing in its warehouse39 Id. at 1106.40 Id. at 1108.41 678 F.3d 193 (2nd Cir. 2012).in Avenel, New Jersey. The warehouseutilized a large rack system thatfacilitated inventory storage andorganization. This rack subsequentlycollapsed, activating the warehouse'ssprinkler system, which flooded thepremises. The water not only damagedAmerex's merchandise, but also renderedits computer system inoperable for “oneto three weeks,” and prevented Amerexfrom making promised deliveries. Thedamages associated with the collapseincluded lost merchandise, cancellation oforders, late charges for orders fulfilled,and lost business income.At the time of the loss, Amerex wasinsured under three separate policies, afirst primary was issued by Fireman'sFund Insurance Company in the amountof $2.5 million and second and thirdpolicies were issued by appellees, andprovided insurance in excess of theFireman's Fund policy. Each excesspolicy had a liability limit of $5 million,for a total of $10 million beyond thecoverage provided by Fireman's Fund.The excess insurance policies containedsubstantially identical clauses thatallowed either party to insist in writing onthe appointment of an appraisal panel todetermine the extent of losses associatedwith any claim. The appraisal clause didnot specify any time limit for makingsuch a demand, and instead focused onthe procedure used to appoint the Panel.Two years after the rack collapse,Amerex submitted its proof of loss toFireman's Fund and the excess insurers,claiming total damages of $8.8 million.Fireman's Fund paid the full amount of itspolicy; Amerex then sought coveragefrom the excess insurers for the remaining$6.3 million. The excess insurers