Summary
In Airtran, the City, as indemnitee, asserted an indemnification provision in a separate "use and lease contract" with Airtran, as a basis for precluding claims brought by Airtran against the City for the City's own negligence.
Summary of this case from Fernandez v. GaribayOpinion
03 C 4685
December 15, 2003
On November 1, 1999, Airtran Airways, Inc. and the City of Chicago entered into a use agreement for Airtran to use the airfield at Midway Airport in Chicago. Under the agreement, Airtran:
agrees to defend, indemnify and hold harmless the City, . . . its agents and employees from and against any and all loss, liability, penalties, damages of whatever nature, causes of action, suits, claims, demands . . . including, without limitation, payments of claims of liability resulting from any . . . damage to or destruction of any property, arising out of . . . the Airline's use or occupancy of the Airport and the Leased Premises.
On June 6, 2002, a ground collision occurred between an Airtran Boeing 727 operated by Sharp Aviation, Inc. and a tug operated by Airtran and escorted by the City. On July 7, 2003, Airtran filed a Complaint against the City and Sharp seeking recovery of property damage and lost profits resulting from the collision. Count I alleges breach of contract, and Count II alleges negligence. The City now moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits. Triad Associates, Inc. v. Chicago Housing Authority, 892 F.2d 583, 586 (7th Cir. 1989). In reviewing Airtran's motion, I must accept as true all of its well-pleaded factual allegations and the inferences that can reasonably be drawn from them. The Complaint should be dismissed if Airtran has failed to allege any set of facts upon which relief may be granted. Yeksigian v. Nappi, 900 F.2d 101, 102 (7th Cir. 1990). But I need not accept as true conclusional legal allegations that the facts do not support. Evans v. City of Chicago, No. 01 C 6194, 2001 WL 1654769 (N.D. Ill. Dec. 20, 2001).
The City argues that Airtran cannot maintain either an action for breach of contract or negligence against the City because Airtran has agreed to indemnify the City.
Under Illinois law parties may execute an indemnity agreement that encompasses the indemnitee's own negligence, as long as the agreement's language is clear and unequivocal. This does not mean that a contract must contain an express provision providing for coverage of the indemnitee's own negligence, only that an indemnity provision, if ambiguous, will not be interpreted in this way. To determine whether the contract at issue covers the indemnitee's own negligence, [I] must look at the particular language and the facts surrounding the execution of the contract.Washington Group Int'l, Inc. v. Mason Mfg., Inc., 263 F. Supp.2d 1115, 1118 (N.D. I11. 2003) (citations omitted).
As a general rule, the phrase "any and all loss" is sufficient to include the indemnitee's own negligence. Id. Accordingly, Section 13.01(a)'s use of the phrase "any and all loss" indemnifies the City against any and all loss arising from Airtran's use or occupancy of Midway Airport, including loss arising from the City's negligence as it relates to Airtran's use or occupancy of Midway Airport and thus precludes Airtran from bringing a claim for either breach of contract or negligence against the City. Accordingly, I dismiss Counts I and II against the City.
Although Airtran raises the intriguing question, it fails to prove that Illinois law specifically prohibits an indemnitee (i.e., the City) from using an indemnification provision as a basis for precluding claims brought by the indemnitor (i.e., Airtran) itself. Furthermore, after reviewing this issue, I find no such prohibition on use of an indemnity provision in a two-party suit. See, e.g., Modern Steel Treating Co. v. Liquid Carbonic Industrial/Medical Corp., 698 N.E.2d 710, 713 (III. App. Ct. 1998) ("We do not find it relevant that the suit here only involves the parties to the contract. . . . Although third parties are involved when indemnity is sought under a contract, the indemnity suit itself is always between the parties to the contract and has no bearing on the third party's right to recover.").
For the reasons above, the City's Motion to Dismiss is GRANTED as to Count II, but DENIED without prejudice as to Count I.
I deny the motion as to Count I because it is unclear whether an indemnification clause — traditionally used in the context of tort claims — can be applied to a breach of contract claim Accordingly, the City is hereby granted leave to file a renewed motion seeking dismissal of Count I on the basis of the indemnification clause.