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Tax Airfreight, Inc. v. Lidar Services International, Inc.

United States District Court, E.D. Wisconsin

May 25, 2018

TAX AIRFREIGHT, INC., Plaintiff,
v.
LIDAR SERVICES INTERNATIONAL, INC., et al., Defendants.

          DECISION AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS

          NANCY JOSEPH, UNITED STATES MAGISTRATE JUDGE

         Tax Airfreight, Inc. filed a complaint for declaratory judgment against Lidar Services International Inc., LSI Leasing Inc., Lidar Services, LLC (collectively “Lidar”), SDV Logistics Canada Inc., SDV (USA) Inc., and General Electric Company (“GE”). GE has filed a motion to dismiss the complaint for a lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Lidar also moves to dismiss, adopting and incorporating the arguments and authorities cited by GE. SDV Logistics Canada also joins GE's motion to dismiss. For the reasons that follow, the defendants' motions to dismiss are granted.

         BACKGROUND

         Lidar contracted with SDV Logistics Canada for the shipment of helicopter parts from Alberta, Canada to Jefferson, Wisconsin. (Compl. ¶ 4, Docket # 1.) The equipment was shipped in two crates and one pallet and the shipment was split into two legs: Alberta to O'Hare Airport, Chicago and O'Hare to Jefferson, Wisconsin. (Id.) Tax Airfreight entered into a delivery contract with SDV (USA) whereby Tax Airfreight agreed to transport the equipment for the second leg of its trip from O'Hare to Jefferson, Wisconsin. (Id. ¶ 5.) The equipment arrived in Chicago on October 21, 2014. (Id.) One of the crates was subsequently mis-shipped to a GE recycling facility during delivery to Jefferson and ultimately destroyed. (Id. ¶ 6.) Lidar is a Canadian company based in Calgary, Alberta. (Id. ¶ 7.)

         SDV (USA) issued a Delivery Order to Tax Airfreight for the shipment of the equipment by Tax Airfreight to its final destination. (Id. ¶ 25., Exh. F.) The Delivery Order expressly incorporates SDV (USA)'s Terms and Conditions into the order. (Id. ¶ 26.) SDV (USA)'s Terms and Conditions explicitly state that “[t]hese terms and conditions of service constitute a legally binding contract between the ‘Company' and the ‘Customer.'” Customer is defined as the shipper, Lidar, while Tax Airfreight is defined as a “third party.” (Id. ¶ 27, Exh. G.) SDV (USA)'s Delivery Order with Tax Airfreight, which operates as the Bill of Lading, was also subject to Tax Airfreight's Terms and Conditions, per the Rate Agreement between SDV (USA) and Tax Airfreight. (Id. ¶ 28.) Tax Airfreight's Terms and Conditions state that “[t]he shipper and Tax Airfreight, Inc., . . . agree as follows.” Shipper is defined as “any and all entities tendering a shipment to Tax Airfreight, Inc., for carriage . . . .” (Id. ¶ 29, Exh. H.)

         Under these terms, SDV (USA) is the shipper, and Tax Airfreight's Terms and Conditions apply for Tax Airfreight's portion of the delivery. (Id. ¶ 30.) Tax Airfreight's Terms and Conditions state:

CARGO LOSS AND DAMAGE: . . . Tax Airfreight, Inc.'s liability for loss, damage, or injury shall be limited to fifty cents ($0.50) per pound or fifty dollars ($50.00) per shipment, whichever is greater, up to one hundred thousand ($100, 000.00) per occurrence, unless a higher value is declared at time of tender to Tax Airfreight, Inc., and the applicable charge of seventy cents ($0.70) per one hundred dollars ($100.00) of value in excess valuation is paid. However, in no event, even declaration of excess value, shall Tax Airfreight, Inc.'s liability exceed two hundred and fifty thousand dollars ($250, 000.00) per occurrence. In cases of loss, damage, or injury of part of consignment the weight to be taken into account in determining Tax Airfreight, Inc.'s liability shall be only the weight of the item or items lost, damaged, or injured. In no case shall Tax Airfreight, Inc., be liable for any type of consequential, special, indirect or incidental damages (including without limitations, lost profits or business opportunity) or punitive or exemplary damages incurred or suffered by the shipper as a result of overage, shortage or damage to shipments transferred.

(Id. ¶ 31, Exh. H.) The Delivery Order prepared by SDV (USA) and presented to Tax Airfreight did not have a higher value declared at the time the order was presented to Tax Airfreight. (Id. ¶ 32.) SDV (USA) declined to declare a higher value and incur an increased shipping rate. (Id. ¶ 33.) Upon discovering that one of the crates was missing, Tax Airfreight tendered payment of $373.00 as reflective of its agreement to pay $0.50 per pound of the missing item shipped. (Id. ¶ 34, Exh. I.)

         On May 22, 2015 Lidar filed a lawsuit against SDV Logistics Canada and SDV (USA) Inc. in the Court of Queen's Bench of Alberta, Canada, Court File No. 1501-05723. (Id. ¶ 18, Exh. A, Docket # 1.) SDV Logistics Canada and SDV (USA) filed the equivalent of a third-party complaint against Tax Airfreight and GE on November 16, 2015 and January 4, 2016, respectively. (Id. ¶ 7.) Lidar then filed an Amended Statement of Claim to add Tax Airfreight and GE as defendants on January 21, 2016. (Id.) On February 12, 2016, Tax Airfreight filed a third-party complaint naming GE and SDV Canada as defendants. (Id.)

         The defendants, including SDV (USA) have made demands upon Tax Airfreight for indemnity and/or judgment and payment of damages in excess of $373.00 in the Canadian lawsuit. (Id. ¶ 35.) Tax Airfreight contends that it owes nothing further to SDV or any other defendant as it offered the defendants the maximum agreed upon liability of $373.00 for the alleged damaged goods. The weight of the damaged goods was 746 pounds multiplied by $0.50 per pound totaling a maximum carrier liability of $373.00. (Id. ¶¶ 36-37.) Tax Airfreight filed the current lawsuit seeking a declaration concerning the application of the limitation of liability clause found in Tax Airfreight's Terms and Conditions, as interpreted pursuant to United States federal law. (Id. ¶ 38.)

         ANALYSIS

         Tax Airfreight seeks relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. (Id. ¶ 1.) The defendants move to dismiss, asking the Court to abstain from exercising its jurisdiction under the Declaratory Judgment Act because of the pending Canadian litigation. (GE's Br. at 5, Docket # 23.) A motion to dismiss based on an abstention doctrine raises the question of whether a court should exercise subject matter jurisdiction. Miller Brewing Co. v. ACE U.S. Holdings, Inc., 391 F.Supp.2d 735, 739 (E.D. Wis. 2005). In reviewing a Rule 12(b)(1) motion, I look both to the allegations in the complaint and to other materials relating to the exercise of jurisdiction. Id. Specifically, I may look to the filings in the Canadian action without converting the motion into one for summary judgment. Id. I must take the plaintiff's allegations as true and draw all reasonable inferences from them in the light most favorable to the plaintiff. Id.

         The issue in this case in not whether the Court has jurisdiction under the Declaratory Judgment Act. It does. Rather, the issue is whether the Court should abstain from exercising its jurisdiction. In Wilton v. Seven Falls Co., 515 U.S. 277 (1995) and Brillhart v. Excess Ins. Co. of Am.,316 U.S. 491 (1942), the Supreme Court held that district courts possess significant discretion to dismiss or stay claims seeking declaratory relief, even though they have subject matter jurisdiction over such claims. Envision Healthcare, Inc. v. PreferredOne Ins. Co.,604 F.3d 983, 986 (7th Cir. 2010) (citing R.R. Street & Co., Inc. v. Vulcan Materials Co.,569 F.3d 711, 713 (7th Cir. 2009)). This is known as the Wilton/Brillhart abstention doctrine. Id. “This discretion arises from the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202 itself, which provides that district courts ‘may declare the rights and other legal relations of any interested party seeking such declaration.'” Id. (quoting 28 U.S.C. § 2201(a)) (emphasis in original). The discretionary nature of the Act led the Supreme Court to hold in Brillhart and Wilton that district courts have substantial discretion in deciding whether to declare the rights of litigants and may, in the sound exercise of their discretion, stay or dismiss an action seeking a declaratory judgment in favor of an ongoing state court case. Id. Although the Supreme Court did not set criteria for when a court ...


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