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Tokio Marine & Nichido Fire Insurance Co., Ltd. v. Danzas Corp.

United States District Court, N.D. Illinois, Eastern Division

May 15, 2018

TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD, a/s/o NISSAN MOTOR CO., LTD., and NISSAN MOTOR CO., LTD., Plaintiff,
v.
DANZAS CORPORATION, d/b/a DHL GLOBAL EXPRESS FORWARDING, and AIR EXPRESS INTERNATIONAL USA, INC., d/b/a DHL GLOBAL FORWARDING, Defendants. DANZAS CORPORATION, d/b/a DHL GLOBAL EXPRESS FORWARDING, and AIR EXPRESS INTERNATIONAL USA, INC., d/b/a DHL GLOBAL FORWARDING, Third-Party Plaintiffs, CARGO AIRPORT SERVICES USA, LLC d/b/a CONSOLIDATED AVIATION SERVICES a/k/a CONSOLIDATED AVIATION SERVICES, Third-Party Defendant.

          OPINION AND ORDER

          SARA L. ELLIS United States District Judge.

         Plaintiff Tokio Marine & Nichido Fire Insurance Co, Ltd. (“Tokio”), as the subrogee of Nissan Motor Co., Ltd. (“Nissan”), sued Defendants/Third-Party Plaintiffs Danzas Corporation d/b/a DHL Global Express Forwarding and Air Express International d/b/a DHL Global Forwarding (collectively, “DHL”) alleging that as a result of mishandling on the part of DHL, a shipment of lithium ion batteries (the “Batteries”) that Nissan contracted with DHL to ship from O'Hare International Airport in Chicago to Narita International Airport in Tokyo, Japan, was damaged to the point that the shipment was a total loss. DHL answered Tokio's complaint and filed its own third-party complaint against Third-Party Defendant Cargo Airport Services USA (“CAS”), alleging that any damage to the Batteries was the result of CAS' negligence as the ground handler in preparing the batteries for shipment. DHL brings claims for negligence, breach of contract, contribution, and indemnification against CAS. CAS now moves for judgment arguing that DHL's claims are time-barred pursuant to Article 35 of the Convention for the Unification of Certain Rules for International Carriage by Air (the “Montreal Convention”), May 28, 1999 (entered into force on Nov. 4, 2003), S. Treaty Doc. No. 106-45, 1999 WL 33292734 (2000), which bars actions for damages arising out of airfreight transactions, unless the action is brought within two years from the conclusion of the shipment in question. Id. Art. 35. Because the Montreal Convention's two-year limitations period does not apply to claims for contribution or indemnification the Court denies the motion with respect to these claims.

         BACKGROUND

         On March 7, 2015, Nissan contracted with DHL to ship the Batteries from the United States to Japan. DHL took possession of the Batteries on March 7, 2015, and delivered them to Japan, arriving on some subsequent date.[1] Tokio alleges that the Batteries arrived damaged and completely unusable. Its subrogor, Nissan, filed an insurance claim with Tokio for the full value of the damaged Batteries, which Tokio paid. Tokio then brought suit against DHL to recover the value of the damaged Batteries. On May 8, 2017, DHL filed the present Third-Party Complaint against CAS as the ground handler seeking contribution and indemnification for any damages DHL may ultimately owe to Tokio and also alleging CAS breached its contract with DHL and was negligent in its handling of the Batteries. DHL asserts that any liability it may face related to damage to the Batteries is directly and entirely attributable to CAS' improper handling and preparation of the Batteries for shipment.

         LEGAL STANDARD

         “A motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure is governed by the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6).” Adams v. City of Indianapolis, 742 F.3d 720, 727-28 (7th Cir. 2014). A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

         ANALYSIS

         CAS moves for judgment on the pleadings on the Third-Party Complaint arguing that because all of the claims relate to the handling of an international airfreight shipment of cargo, they are governed by the terms of the Montreal Convention, and that pursuant to the Montreal Convention, a party must bring all claims for damages within two years of the completion of the shipment in question. The Montreal Convention states, “The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination[.]” Montreal Convention, Art. 35. CAS argues that this bar[2] applies to DHL's Third-Party Complaint and therefore, the Court must dismiss it. DHL responds that this bar does not apply to claims for contribution and indemnification and that CAS has not adequately established that it is a covered entity under the Montreal Convention.[3]

         Very few courts have addressed this issue head on, with the Ninth Circuit being the only circuit court to do so. In Chubb Insurance Company of Europe S.A. v. Menlo Worldwide Forwarding, Inc., the Ninth Circuit held that Article 35 does not apply to claims for contribution and indemnification. 634 F.3d 1023, 1028 (9th Cir. 2011). Just as here, Chubb dealt with a third-party complaint by a contract carrier against one of the agents involved in the actual transportation of the cargo. The court found Article 35 to be a narrow limitation on actions applying only to the “right to damages.” Id. at 1026.

         Because neither Article 35 nor the rest of the Montreal Convention expressly defines the “right to damages, ” the court engaged in a textual analysis, and determined that when the Montreal Convention is read as a whole, “its contours become clear.” Id. The court determined that the “right to damages” in Article 35 “is the cause of action under the Montreal Convention by which a passenger or consigner may hold a carrier liable for damage sustained to passengers, baggage, or cargo.” Id. A claim for contribution or indemnification is not such a claim; it is derived from such a claim, but is not such a claim itself. Id.

         The court in Chubb went on to note that the Montreal Convention expressly states that its limitations on damages shall not “prejudice the question whether a person liable for damage in accordance with its provisions has a right of recourse against any other person.” Montreal Convention, Art. 37. The court reasoned that to avoid a conflict between the text of Article 35 and Article 37, the time bar in Article 35 cannot apply to suits between carriers seeking contribution and indemnification. Chubb, 634 F.3d at 1027.

         The Ninth Circuit also noted that Article 45 specifically notes that if an action for damages is brought against only one carrier when more than one carrier is involved in a shipment, the carrier against whom the action for damages was brought “shall have the right to require the other carrier to be joined in the proceedings, the procedure and effects being governed by the law of the court seized on the case.” Id. (quoting Montreal Convention, Art. 45). This article clearly provides that in a situation such as in the present case where the plaintiff sues only the contract carrier but some other carrier may also be liable, the contract carrier must be allowed to join the third-party carrier to the suit and such joinder will be governed by the local rules of that court, not the rules of Article 35. Id.

         This Court agrees with the above analysis from the Ninth Circuit. It is clear that when read as a whole, the Montreal Convention does not require a party to bring claims for indemnification and contribution within the two-year limitations period in Article 35.

         CAS argues that the Court should not follow the decision in Chubb, stating that it was wrongly decided. CAS asserts that the Ninth Circuit opinion has three major flaws: first it improperly equated the singular “damage” with the plural “damages;” second, it misidentified a Canadian trial level court as the Ontario Supreme Court of Canada when declining to follow prior cases interpreting the predecessor to the Montreal Convention, the Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, (the “Warsaw Convention”) 49 Stat. 3000, T.S. No. 876 (1934), reprinted in 49 ...


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