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United Parcel Service, Inc. v. AIR Transport International LLC

United States District Court, W.D. Kentucky, Louisville

February 11, 2014

UNITED PARCEL SERVICE, INC., et al., Plaintiffs,
v.
AIR TRANSPORT INTERNATIONAL LLC, Defendant.

MEMORANDUM OPINION

CHARLES R. SIMPSON, III, Senior District Judge.

This matter is before the court on the motion of the plaintiffs, United Parcel Service, Inc., United Parcel Service Co., United Parcel Service General Services Co., and United Parcel Service Worldwide Forwarding, Inc. (collectively, "UPS" or the "UPS Plaintiffs") for judgment on the pleadings. (DN 47). The defendant, Air Transport International LLC ("ATI"), has filed a response (DN 52), to which the UPS Plaintiffs have replied (DN 56). Fully briefed, the matter is now ripe for adjudication. For the reasons set forth below, the court will deny the UPS Plaintiffs' motion for judgment on the pleadings (DN 47).

I.

This action between UPS and ATI derives from an underlying action brought by Gary and Peggy DeVaco in the Pennsylvania Court of Common Pleas against each of the UPS Plaintiffs, with the exception of UPS Worldwide (the "DeVaco Action"). In that action, the DeVacos brought several claims against the UPS Plaintiffs to recover for damages allegedly suffered by Gary DeVaco, a mechanic for ATI. ATI and UPS had contracted for ATI to transport some of UPS's overflow of packaging and cargo, and DeVaco was allegedly injured when the ATI truck in which he and another ATI employee were waiting was flipped onto its side and pushed several feet by the jet blast from a taxiing UPS Boeing 747.

In August 2012, UPS filed this action in Jefferson County, Kentucky, Circuit Court seeking to require ATI to defend and indemnify UPS in the DeVaco action pursuant to the indemnification provision contained in the Cargo Aircraft Charter Agreement ("CACA") signed by UPS Worldwide and ATI. Pursuant to the CACA, ATI would serve as an independent contractor and provide "properly crewed, maintained, insured and equipped aircraft... for the carriage of UPS's freight[.]" (Am. Compl., DN 32-1, p. 2). Section 1.4 of the CACA contains the mutual indemnification provisions that are at issue in this action.[1]

According to UPS's amended complaint in this action, the UPS Plaintiffs tendered letters on July 19, 2010, September 16, 2010, and October 8, 2010, in which they demanded that ATI defend and indemnify UPS from DeVaco's claims pursuant to the indemnification provision contained in Section 1.4. Upon receipt of these letters, ATI contacted its lead insurer, Chartis Aerospace Insurance Group ("Chartis"), who then hired the law firm of Salmon Recchezza Singer & Turchi LLP (hereinafter, the "Salmon Firm") to investigate the UPS Plaintiffs' tender letters. The UPS Plaintiffs contend that the Salmon Firm initially recommended that ATI decline the UPS Plaintiffs' tender, but then later advised ATI to accept the tender.

According to the UPS Plaintiffs, ATI accepted the tender by an April 25, 2011 email. The email was sent by the Salmon Firm and states that "ATI will undertake the defense of UPS going forward in this litigation." (Am. Compl., DN 32-19, p. 2). The email was silent as to ATI's alleged duty to indemnify the UPS Plaintiffs. The Salmon Firm entered its appearance in the DeVaco Action on behalf of the UPS Plaintiffs on May 13, 2011.

More than a year later, in a letter dated July 17, 2012, Chartis informed the UPS Plaintiffs that ATI was not obligated to indemnify UPS in the DeVaco Action. The letter further stated that the UPS Plaintiffs were obligated to indemnify ATI pursuant to the CACA. ATI sent a similar letter to the UPS Plaintiffs on August 6, 2012 in which it declared that it was not obligated to indemnify the UPS Plaintiffs and "withdr[ew] its prior acceptance of UPS's tender of UPS's defense in [the DeVaco Action]." (Am. Compl., DN 32-28, p. 2). Further, the Salmon Firm informed the UPS Plaintiffs on August 10, 2012 that it would move to withdraw as counsel for UPS in the DeVaco Action. The UPS Plaintiffs contend that this withdrawal greatly prejudiced them in the DeVaco Action because it occurred after the close of discovery and within a few months of the trial date. In this action, the UPS Plaintiffs seek a declaration that ATI unconditionally accepted the UPS Plaintiffs' tender of indemnity and defense in the DeVaco Action, and that ATI has waived its rights and/or is estopped from disclaiming that obligation. The UPS Plaintiffs also brought a claim against ATI for breach of the CACA.

After the UPS Plaintiffs filed suit against ATI in Jefferson County, Kentucky, Circuit Court, ATI removed the case to this court pursuant to our diversity jurisdiction. ATI also filed an answer and counterclaim against the UPS Plaintiffs. (DNs 1, 3). The UPS Plaintiffs moved to dismiss the counterclaim (DN 11), prompting ATI to file an amended counterclaim in which it sought a declaratory judgment and brought claims against the UPS Plaintiffs for breach of contract and unjust enrichment. (DN 18). The UPS Plaintiffs then moved to dismiss the amended counterclaim (DN 21). This court dismissed the portion of the counterclaim seeking a declaration that the UPS Plaintiffs were obligated to indemnify ATI. (DN 25). We also dismissed ATI's claim for breach of the CACA, but declined to dismiss ATI's claim for unjust enrichment and its request for a declaration that ATI has no duty to defend and indemnify the UPS Plaintiffs in the DeVaco Action. ( Id. ).

The UPS Plaintiffs then filed an amended complaint. (DN 32). ATI answered the amended complaint and asserted several counterclaims against the UPS Plaintiffs. (DN 37). The UPS Plaintiffs moved to strike certain responses contained in ATI's answer (DN 41), but withdrew the motion upon ATI's filing of an amended answer (DN 45). Before the court is the UPS Plaintiffs' motion for judgment on the pleadings. (DN 47).

II.

The standard to be applied for a Rule 12(c) motion for judgment based on the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss based on the complaint. Poplar Creek Dev. Co. v. Chesapeake Appalachia, LLC, 636 F.3d 235, 240 (6th Cir. 2011). Accordingly, in deciding a Rule 12(c) motion, the court must take all of the "well-pleaded material allegations of the pleadings of the opposing party" as true, Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521, 526 (6th Cir. 2006), and may also take into account "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the [pleadings.]" Barany-Snyder v. Weiner, 539 F.3d 327, 332 (6th Cir. 2008) (quoting Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)). However, the court "need not accept the [non-moving party's] legal conclusions or unwarranted factual inferences as true." Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007) (citation omitted). Ultimately, the motion should be granted only where the record clearly demonstrates that "no material issue of fact exists and the party making the motion is entitled to judgment as a matter of law." Rawe, 462 F.3d at 526 (quoting Paskvan v. City of Cleveland Civil Serv. Comm'n, 946 F.2d 1233, 1235 (6th Cir. 1991)).

Courts must treat motions under Rule 12(c) that rely on evidence outside of the pleadings as motions for summary judgment. Fed.R.Civ.P. 12(d). However, there is an exception for documents that a "defendant attaches to a motion to dismiss [which] are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim." Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th ...


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