Kirschenbaum v. Spraggins

• Citation: 752 F.Supp.2d 728
• Decision Date: 13 October 2010
• Docket Number: Civil Action No. 08–4569.
• Parties: Annie Lu KIRSCHENBAUMv.Cary L. SPRAGGINS et al.
• Court: U.S. District Court — Eastern District of Louisiana

752 F.Supp.2d 728

Annie Lu KIRSCHENBAUM

v.Cary L. SPRAGGINS et al.

Civil Action No. 08–4569.

United States District Court, E.D. Louisiana.

Oct. 13, 2010.

Glen Scott Love, Stephen Dale Cronin, Valerie A. Judice, Guglielmo, Marks, Schutte, Terhoeve & Love, Christopher Dean Glisson, McGlynn, Glisson & Koch, APLC, Baton Rouge, LA, for Annie Lu Kirschenbaum.Mark Emerson Hanna, Bradley, Murchison, Kelly & Shea, LLC, John Emerson Galloway, Galloway, Johnson, Tompkins, Burr & Smith, Terrill W. Boykin, Kriste Louise Talton Utley, Lori Allen Waters, Shaundra Marie Westerhoff, Boykin, Ehret & Utley, New Orleans, LA, Jonathan Patrick Hobbs, McCranie, Sistrunk, Patrick Christopher Grace, Stephens & Grace, Kimberly G. Anderson, Anderson, Stephens & Grace, Metairie, LA, Lance B. Williams, McCranie, Sistrunk, Covington, LA, John Powers Wolff, III, Kimberly D. Higginbotham, Nancy B. Gilbert, Rebecca Hall Klar, Virginia J. McLin, Keogh, Cox & Wilson, Baton Rouge, LA, for Streamline Integrated Technologies, Inc., N.J. Malin & Associates Incorrectly Named Malin Integrated Handling, TGW-Ermanco, Inc. incorrectly referred to TGW Logistics Group d/b/a TGW-Ermanco, Hartford Lloyds Insurance Company, Cary L. Spraggins.

ORDER & REASONS

ELDON C. FALLON, District Judge.

Before the Court are a Motion for Summary Judgement filed by Third–Party Plaintiff TGW–Ermanco, Inc. (“TGW–Ermanco”) (Rec. Doc. No. 213), a Motion for Summary Judgment filed by Third–Party Defendant Paragon Technologies, Inc. (“Paragon”) (Rec. Doc. No. 204), a Motion for Summary Judgment filed by Third–Party Defendant St. Paul Fire and Marine Insurance Co. (“St. Paul”) (Rec. Doc. No. 205), and a Motion to Bifurcate Trial filed by St. Paul (Rec. Doc. No. 206). The Court, having heard the parties' oral arguments and reviewed the submitted memoranda and applicable law, is ready to rule. For the following reasons, TGW–Ermanco's Motion for Summary Judgment—which reaches only the issue of liability with respect to its claim against Paragon—is GRANTED; Paragon's Motion for Summary Judgment is DENIED; St. Paul's Motion for Summary Judgment is DENIED; and St. Paul's Motion to Bifurcate Trial is DENIED AS MOOT. In addition, the Court concludes sua sponte that summary judgment is to be GRANTED in favor of TGW–Ermanco on the issue of liability with respect to its claim against St. Paul. The Court does not address the amount to which TGW–Ermanco is entitled to receive because none of the parties discussed that issue in their motions.

I. BACKGROUND

This case arises out of injuries that occurred on October 5, 2007 while Annie Lu Kirschenbaum was employed with Neill Corp. On that day, Ms. Kirschenbaum reached for an item that had fallen underneath a conveyor line, and her hair got caught in the conveyor equipment. As a result, she sustained severe and permanent injuries. The conveyor equipment at issue was originally designed and manufactured by Ermanco, Inc., then a subsidiary of Paragon. It was subsequently acquired by Brandt & Hill, which, in 1994, sold and installed it at Neill Corp.'s facilities. In 2007, Streamline Integrated Technologies, Inc. redesigned and reinstalled the equipment at a new Neill Corp. facility.

Two years before Ms. Kirschenbaum was injured—in 2005—TGW–Ermanco, which was then known as Malibu Acquisition, Inc., entered into an Asset Purchase Agreement (“APA”) with Ermanco, Inc. and its parent company Paragon. Pursuant to the APA, TGW–Ermanco acquired “substantially all of the assets and properties held in connection with” Ermanco's business—the design, manufacture, sale, and distribution of conveyor systems and related products. APA at 1 (Rec. Doc. No. 213–4 at 6). As partial consideration for these assets, TGW–Ermanco agreed to assume a limited set of Ermanco, Inc.'s obligations and liabilities, which are referred to in the APA as the “Assumed Liabilities.” Id. § 1.2(c) (Rec. Doc. No. 213–4 at 7). The APA provided that “[e]xcept for the Assumed Liabilities,” TGW–Ermanco was not to “become liable for any obligations, commitments or liabilities of [Ermanco],” including those that would be “imposed upon [TGW–Ermanco] as a successor under applicable [law].” Id.

The APA imposes indemnification obligations on both sides of the transaction. Section 7.1 of the APA provides that Paragon “will indemnify and hold harmless [TGW–Ermanco] for all Adverse Consequences arising from or related to ... (b) any Excluded Liability; ... (d) [Ermanco's] ownership or use of the Purchased Assets or operation of the Business on or before the Closing Date ...; and (e) the enforcement of indemnification rights under this Article.” Id. § 7.1 (Rec. Doc. No. 213–4 at 35–36). In turn, Section 7.2 of the APA provides that TGW–Ermanco “will indemnify and hold harmless [Paragon] for all Adverse Consequences arising from or related to ... (b) any Assumed Liability; ... (c) [TGW–Ermanco's] ownership or use of the Purchased Assets or operation of the Business following the Closing Date ...; and (d) the enforcement of indemnification rights under this Article.” Id. § 7.2 (Rec. Doc. No. 213–4 at 36).

In October 2008, Ms. Kirschenbaum filed suit against TGW–Ermanco and a number of other defendants, seeking to recover damages for the injuries she sustained. With respect to TGW–Ermanco, she asserted a claim under the Louisiana Products Liability Act, alleging design and warning defects. In December 2008, TGW–Ermanco invoked the indemnification provision in the APA, gave notice of Ms. Kirschenbaum's claim to Paragon, and tendered its defense to Paragon. TGW–Ermanco also requested indemnification from Paragon's insurer, St. Paul Fire & Marine Insurance Co. After Paragon and St. Paul each rejected the demands, TGW–Ermanco initiated third-party claims against them.

In June 2010, the Court granted the motions for summary judgment filed by TGW–Ermanco and Brandt & Hill with respect to Ms. Kirschenbaum's claims against them. See Kirschenbaum v. Spraggins, No. 08–4569, 2010 WL 2291455, at *4 (E.D.La.2010). The Court held that there was no genuine issue of material fact as to whether the conveyer equipment was properly manufactured and contained adequate warnings. See id. at *3–*4. The Court thus dismissed with prejudice Ms. Kirschenbaum's claims against TGW–Ermanco and Brandt & Hill. Id. at *4. In August 2010, Ms. Kirschenbaum entered into a settlement agreement with the remaining defendants, and the Court dismissed all of Ms. Kirschenbaum's remaining claims.¹ The remaining claims in this matter are Third–Party Plaintiff TGW–Ermanco's claims against Third–Party Defendants Paragon and St. Paul.

II. PRESENT MOTIONS

TGW–Ermanco and Paragon have filed cross-motions for summary judgment on TGW–Ermanco's claim that Paragon owes indemnification to it.

In its motion for summary judgment and in its opposition to Paragon's cross-motion, TGW–Ermanco asserts that the language of Section 7.1—the APA provision that sets forth Paragon's indemnification obligation—is all-inclusive and that it encompasses the expenses of defending any claim that arises from 1) the operation of the conveyor equipment business before it was acquired by TGW–Ermanco and 2) any obligation and liability of Ermanco, Inc. that TGW–Ermanco did not expressly assume under the APA. TGW–Ermanco argues that the Kirschenbaum claim clearly falls within the ambit of Section 7.1.

In its opposition to TGW–Ermanco's motion and in its own motion for summary judgment, Paragon's principal argument is that Ms. Kirschenbaum sought recovery for TGW–Ermanco's conduct after TGW–Ermanco acquired the conveyor equipment business. Paragon contends that as a result, Ms. Kirschenbaum's claim does not fall within Section 7.1 of the APA. Paragon also asserts that Paragon owes no duty to indemnify TGW–Ermanco because Ms. Kirschenbaum alleged TGW–Ermanco's own negligence and because Section 7.1 does not expressly provide for the indemnification of TGW–Ermanco's own misconduct.

St. Paul—Paragon's insurer—has filed a motion for summary judgment on TGW–Ermanco's claim against it. Beyond echoing the argument that Paragon has no duty to indemnify TGW–Ermanco, St. Paul asserts that TGW–Ermanco has no standing to pursue a claim against it because TGW–Ermanco is not a party to the insurance policy issued by St. Paul to Paragon.

TGW–Ermanco and Paragon have both filed oppositions to St. Paul's motion. TGW–Ermanco points to language in the policy indicating that St. Paul has agreed to pay an indemnitee's defense expenses. Paragon seconds this argument, noting that if Paragon were to be held liable for indemnification, then St. Paul has a duty to pay under the insurance policy.

III. LAW AND ANALYSISA. Standard of Review

A district court can grant a motion for summary judgment only when the “ ‘pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court “will review the facts drawing all inferences most favorable to the party opposing the motion.” Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986). The court must find “[a] factual dispute ... [to be] ‘genuine’ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party ... [and a] fact ... [to be] ‘material’ if it might affect the outcome of the suit under the governing substantive law.” Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir.1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

“If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce...