Opinion ID: 3009823
Heading Depth: 2
Heading Rank: 2

Heading: The Atlantic Mutual Action

Text: While Burlington was relying on Item 2-C of its Rules Memorandum to deny Hyundai’s indemnity claim, it was defending another indemnity action in the District Court for the Western District of Washington brought by Orient Overseas Container Line (OOCL). See Atlantic Mutual v. OOCL, 1992 U.S. Dist LEXIS 13284 (W.D. Wash. 1992). Like Hyundai’s claim, the viability of OOCL’s claim in the Atlantic Mutual action turned on the question whether the general rule for indemnity accrual -- that an indemnity claim does not accrue until the indemnitee’s liability is determined by judgment or payment, id. at -10, and, therefore, that a statute of limitations on an indemnity claim cannot begin to run until such time -- should apply despite Item 2-C of Burlington’s Rules Memorandum, which provided that the time limitation should be measured from the date of delivery. Atlantic Mutual had filed suit against OOCL to recover payments that Atlantic Mutual had made as an insurer to Samsonite Pacific, Ltd. (Samsonite) for damages to a shipment of luggage en route from Taiwan to Denver via Seattle. In response, OOCL had filed a third party claim against Burlington for indemnity for its liability to Atlantic Mutual. 6 Burlington’s denial of OOCL’s indemnity claim was based solely on its contention that the claim was time barred since OOCL had failed to bring suit within the time period specified in Burlington Rules Memorandum 2-C. This provision provided that all suits against BN [Burlington Northern] shall be commenced no later than 1 year after the date of delivery. Id. at . OOCL, which notified Burlington of its claim more than one year after delivery, contended that this contractual limitations period did not alter the general rule governing actions in indemnity. The Washington district court agreed with OOCL and concluded that its cross-claim for indemnification is not barred by the limitations period in Burlington Northern’s Rules Memorandum 2-C. Id. at . In reaching this conclusion, the court relied on the opinion of the Ninth Circuit in States S.S. Co. v. American Smelting & Refining Co., 339 F.2d 66, 70 (9th Cir. 1964), cert. denied 380 U.S. 964 (1965), which it read as concluding that an indemnity claim . . . does not accrue until the indemnitee has made actual payment. Atlantic Mutual at ; see also id. ([A]n action for indemnification accrues at the time of the indemnitee’s payment despite a shorter contractual time limitations period applying to claims between the parties.).