Inter “K” N.V. v. UPS Supply Chain Solutions, Inc.

Inter “K” N.V. (Inter K) (plaintiff) imported numerous cases of cigarettes and transported them to an Arizona warehouse owned by UPS Supply Chain Solutions (UPS) (defendant) to sell to Alfredo Puchi (defendant) for an agreed price of approximately $167,000. During this process, Inter K filled out a customs form, CF 7512, which allowed federal customs officials to supervise the cigarettes during their transit to the warehouse. This form stated that Inter K was the consignee, i.e., recipient, of the cigarettes once they reached the UPS warehouse and listed the warehouse address. Inter K’s attorney later testified that this was done specifically to make it clear that the cigarettes belonged to Inter K unless and until Puchi paid for them. Inter K gave the form to UPS. When the cigarettes arrived at the Arizona warehouse, UPS internally identified Inter K as the owner of the cigarettes. However, Puchi gave UPS a letter stating the cigarettes could be released to him and filled out a different customs form, and UPS released the cigarettes to Puchi without getting approval from Inter K. Puchi then began selling the cigarettes but paid Inter K only $10,000. Inter K sued UPS and Puchi in state court, alleging that they had each breached their respective contracts. After extended litigation, the trial court granted summary judgment to Inter K on its claim against UPS and ordered UPS to pay damages. UPS appealed to the Arizona Court of Appeals.