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Indemnity Insurance Company of North America v. Agility Logistics Corporation

United States District Court, S.D. New York

June 21, 2018

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Plaintiff,
v.
AGILITY LOGISTICS CORPORATION, Defendant.

          OPINION AND ORDER

          J. PAUL OETKEN UNITED STATES DISTRICT JUDGE.

         The Montreal Convention imposes liability on air carriers for “destruction . . . of . . . cargo, ” “loss of . . . cargo, ” or “damage to . . . cargo.” In this case, a carrier transported a jet engine on the wrong type of truck. That mistake required the recipient to do a costly inspection, which ultimately revealed no transport-related damage. This raises the novel question of whether the Montreal Convention allows recovery of inspection costs even though there was no physical damage to any cargo. For the reasons that follow, the answer is no.

         I. Background

         Plaintiff Indemnity Insurance Company of North America is an insurance company. Defendant Agility Logistics Corp. is a shipping company.

         This suit concerns a jet engine shipped from Florida to Germany. GE Capital Aviation Services arranged for Agility to transport the engine, which GE Capital had just refurbished. Agility does not ship anything itself; rather, it arranges shipment with various carriers along the shipping route. (Dkt. No. 45 ¶ 71.) The parties dispute who exactly contracted with whom, but the basic chronology is as follows:

• GE Capital sends an “engine shipment request” to Agility, asking for the engine to be shipped from a company called LCI in Tamarac, Florida, to Lufthansa Technic in Alzey, Germany. (Dkt. No. 29-2.)
• Agility sends a “spot quote” to GE Capital, listing LCI as the “shipper of record” and Lufthansa Technik as the recipient/consignee. (Dkt. No. 29-3.)
• The engine begins its journey. The air waybill exhorts: “All ground transportation must be full air ride.” (Dkt. No. 29-6.) This means that every axle of the truck must have an air-ride suspension.
• The engine arrives safely in Frankfurt Airport. (Dkt. No. 45 ¶ 9.)
• The engine is loaded onto a tractor-trailer in Frankfurt Airport. The tractor-trailer is arranged by Agility's German affiliate, Agility Germany. (Dkt. No. 45 ¶ 12.) But while the trailer has an air-ride suspension, the tractor does not. (Dkt. No. 45 ¶ 16.)
• The engine arrives in Alzey. Lufthansa Technik is not pleased.
• Lufthansa Technik takes apart the engine to check for transport-related defects. The inspection turns up several defects unrelated to transport. There is no evidence that improper transport caused any damage. (Dkt. No. 45 ¶¶ 19-20.)
• Lufthansa Technik bills GE Capital $177, 450.07 for the inspection cost. (Dkt. No. 45 ¶ 21; Dkt. No. 29-12 at 1.)
• Indemnity—GE Capital's insurer—pays GE Capital $127, 450.07 for the inspection bill. (Dkt. No. 29-13.)
• Indemnity sues Agility for the inspection costs.

         Indemnity asserts subject matter jurisdiction under 28 U.S.C. § 1331, because its claims arise under the Montreal Convention, a United States treaty. Both parties now move for summary judgment.

         II. Legal Standard

         Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “On summary judgment, the party bearing the burden of proof at trial must provide evidence on each element of its claim or defense.” CohenLans LLP v. Naseman, No. 14 Civ. 4045, 2017 WL 477775, at *3 (S.D.N.Y. Feb. 3, 2017) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). “If the party with the burden of proof makes the requisite initial showing, the burden shifts to the opposing party to identify specific facts demonstrating a genuine issue for trial, i.e., that reasonable jurors could differ about the evidence.” Clopay Plastic Prods. Co. v. Excelsior Packaging Grp., Inc., No. 12 Civ. 5262, 2014 WL 4652548, at *3 (S.D.N.Y. Sept. 18, 2014). The court views all “evidence in the light most favorable to the non-moving party, ” and ...


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