Opinion
CIVIL ACTION NO. 3:01-CV-1488-G.
April 30, 2002
MEMORANDUM ORDER
Before the court are the motions of the plaintiff Goldsmith's, Inc. ("Goldsmith's") for (1) summary judgment, (2) to dismiss the counterclaims of the defendant Wall Services, Inc. ("WSI"), (3) to strike or, in the alternative, (4) for a more definite statement. Also before the court is WSI's motion for a continuance. For the following reasons, Goldsmith's motions for summary judgment and to dismiss WSI's counterclaims are granted. Goldsmith's motion to strike and WSI's motion for continuance are denied. Goldsmith's motion for a more definite statement is denied as moot.
I. BACKGROUND
Goldsmith's, a retailer and wholesaler of office furniture and equipment, is a Kansas corporation with its principal place of business in Wichita, Kansas. Plaintiff's First Amended Original Complaint ("Complaint") ¶ 1; Brief in Support of Plaintiffs Motion for Summary Judgment ("Motion for Summary Judgment") at 1.
WSI is a corporation organized under Texas law. Complaint ¶ 2. WSI manufactured, marketed, and installed modular floor to ceiling walls. Id. ¶ ¶ 5, 8. These walls, known as "V-walls," are portable fabric-covered wall panels. Appendix to Plaintiffs Motion for Summary Judgment ("Plaintiff's Appendix"), Exhibit 4, Affidavit of Paul Holden ("Holden Affidavit") at 1. Goldsmith's sold these walls to Scruggs Consulting ("Scruggs"). Id.; Plaintiffs Appendix, Exhibit 2, Affidavit of Rodger Arst ("Arst Affidavit") ¶ 5; Plaintiff's Appendix, Exhibit 7, Plaintiff's Sixth Amended Petition ("Petition") ¶ 3.01. The approximate value of these walls was $13,729. Holden Affidavit at 1. Goldsmith's ordered the walls from WSI. Id. The V-walls sold to Scruggs were covered by a written warranty from Goldsmith's and WSI. Holden Affidavit at 2. WSI manufactured and installed the walls for Scruggs pursuant to WSI's contract with Goldsmith's. Complaint ¶ 8; Holden Affidavit at 1; see also Petition ¶ 3.01 ("[WSI] manufactured and installed, and Goldsmith's sold and helped install . . . V-walls . . . for Scruggs Consulting.") After completion of the project, Scruggs withheld part of its payment to Goldsmith's because Scruggs was dissatisfied with part of the work. Holden Affidavit at 2.
On September 15, 1995, Scruggs brought suit against WSI and Goldsmith's in the 14th Judicial District Court, Dallas County, Texas, alleging defects in the V-wall panels. Complaint ¶ 5; see also Arst Affidavit ¶ 3. Goldsmith's was "engaged in the regular business of selling office furniture like the V-wall panels at issue in the underlying case." Arst Affidavit ¶ 6. Scruggs amended its petition several times. Complaint ¶ 5; see generally Petition.
That case went to trial, and the court granted WSI and Goldsmith's directed verdicts. Complaint ¶ 6. Scruggs appealed the ruling, and the directed verdicts were reversed. Id.; Plaintiffs Appendix, Exhibit 3, Certified Copy of Scruggs Consulting v. Goldsmith's, Inc., et al., No. 05-98-001 62-CV, 2000 WL 1056495 (Tex.App.-Dallas August 2, 2000, no writ). On March 26, 2001, the underlying litigation proceeded to trial once again. Complaint ¶ 6. Days before that trial setting, WSI settled with Scruggs. Id. WSI settled with Scruggs for $30,000 in exemplary damages and $10,000 in actual damages. Motion for Summary Judgment at 1. Accordingly, Scruggs claims against WSI were non-suited on the morning of the trial. Id.
Scruggs proceeded to trial against Goldsmith's, and on April 30, 2001, final judgment was entered against Goldsmith's for $13,000 in actual damages, $128,000 in attorneys' fees, $1,549 in pre-judgment interest, and post-judgment interest. Arst Affidavit ¶ ¶ 7, 8; Complaint, Exhibit C, Final Judgment. Goldsmith's paid $120,975.34 to satisfy the final judgment. Arst Affidavit ¶ 10. Goldsmith's later settled with Scruggs and was responsible for payment of the post-judgment settlement amounts to Scruggs. Id. ¶ 9; Motion for Summary Judgment at 2. The agreement gave Scruggs a $10,000 credit on the unpaid contract amount, required Goldsmith's to complete nine repair items, and called for Goldsmith's to respond to warranty service requests within 36 hours. Holden Affidavit at 2. Pursuant to this agreement, the repairs were completed, and Scruggs paid the agreed balance. Id. After the repairs were completed, Scruggs did not request that WSI perform any repairs pursuant to WSI's warranty. Id.
WSI has refused Goldsmith's demands to indemnify Goldsmith's for losses Goldsmith's incurred in its defense of the underlying lawsuit. Motion for Summary Judgment at 2. As a result of WSI's refusal to indemnify Goldsmith's, Goldsmith's filed the instant suit against WSI on August 2, 2001 for common law and statutory indemnity, as well as indemnity under the Texas Deceptive Trade Practices Act. See Complaint at 3-4. Goldsmith's maintains that it merely sold Scruggs the defective walls which WSI manufactured and installed. Id. ¶ 8. Thus, Goldsmith's argues, WSI is liable for damages — including but not limited to attorney's fees, expenses, and the amount of the final judgment — incurred by Goldsmith's in its defense of the underlying lawsuit as a seller of defective V-wall panels manufactured and installed by WSI. Id. ¶ ¶ 8, 13; Motion for Summary Judgment at 2.
On December 13, 2001, Goldsmith's amended its complaint. On January 28, 2002, this court denied WSI's motion to dismiss the claims against it for lack of subject matter jurisdiction. On February 7, 2002, WSI filed its answer to Goldsmith's first amended complaint and also filed its counterclaims. On February 27, 2002, Goldsmith's filed a motion to dismiss WSI's counterclaims, a motion to strike or, in the alternative, for a more definite statement. On March 14, 2002, WSI filed a motion for continuance relating to discovery on Goldsmith's motion for summary judgment.
WSI's first counterclaim was for recovery of attorneys' fees because Goldsmith's filed a frivolous lawsuit due to nondiversity of the parties. Defendant's Original Answer Counterclaim to Plaintiffs 1st Amended Original Complaint, Subject to Defendant's Motion to Dismiss for Lack of Jurisdiction ¶ 5. In a memorandum order dated January 28, 2002, the court concluded that the parties were diverse. WSI's second counterclaim seeks an offset for all damages caused by Goldsmith's. Id. The court grants Goldsmith's motion to dismiss WSI's counterclaims, denies Goldsmith's motion to strike, and denies Goldsmith's motion for a more definite statement as moot.
II. ANALYSIS A. Evidentiary Burdens on Motion for Summary Judgment
Summary judgment is proper when the pleadings and evidence on file show that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. FED.R.CIV.P.56(c). "[T]he substantive law will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The movant makes such a showing by informing the court of the basis of its motion and by identifying the portions of the record which reveal there are no genuine material fact issues. See Celotex Corporation v. Catrett, 477 U.S. 317, 323 (1986). Once the movant makes this showing, the nonmovant must then direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial. Id. at 323-24. To carry this burden, the opponent must do more than simply show some metaphysical doubt as to the material facts. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 586 (1986). Instead, it must show that the evidence is sufficient to support a resolution of the factual issue in its favor. Anderson, 477 U.S. at 249. All of the evidence must be viewed, however, in a light most favorable to the motion's opponent. Id. at 255 (citing Adickes v. S.H. Kress Co., 398 U.S. 144, 158-59 (1970)). Summary judgment is properly entered against a party if after adequate time for discovery, it fails to establish the existence of an element essential to its case and as to which it will bear the burden of proof at trial. Celotex, 477 U.S. at 322-23.
The disposition of a case through summary judgment "reinforces the purpose of the Rules, to achieve the just, speedy, and inexpensive determination of actions, and, when appropriate, affords a merciful end to litigation that would otherwise be lengthy and expensive." Fontenot v. Upjohn Company, 780 F.2d 1190, 1197 (5th Cir. 1986).
B. Indemnity Under Texas Law
Under the Texas Civil Practices and Remedies Code (the "Code"), "[a] manufacturer shall indemnify and hold harmless a seller against loss arising out of a products liability action, except for any loss caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable." TEX. CIV. PRAC. REM. CODE ANN. § 82.002(a) (Vernon 1997); see also Meritor Automotive, Inc. v. Ruan Leasing Company, 44 S.W.3d 86, 91 (Tex. 2001) ("[F]or the Manufacturer to implicate section 82.002(a)'s exception to that duty, it must be established that seller's conduct `caused' the loss."). "Loss" includes "court costs and other reasonable expenses, reasonable attorney fees, and any reasonable damages." Id. § 82.002(b). Under this provision, "[d]amages awarded by the trier of fact shall, on final judgment, be deemed reasonable for purposes of this section." Id. § 82.002(c).
"The duty to indemnify under this section: (1) applies without regard to the manner in which the action is concluded; and (2) is in addition to any duty to indemnify established by law, contract, or otherwise." Id. § 82.002(e).
Under Texas law, a "`[p]roducts liability action' means any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product whether the action is based in strict tort liability, strict products liability, negligence, misrepresentation, breach of express or implied warranty, or any other theory or combination of theories." TEX. CIV. PRAC. REM. CODE § 82.001(2) (Vernon 1997); see also Meritor, 44 S.W.3d at 91 ("[A] "products liability action' includes not only products liability claims but also other theories of liability properly joined thereto, such as the allegation of negligence. . . ."). A "seller" is defined as "a person who is engaged in the business of distributing or otherwise placing, for any commercial purpose, in the stream of commerce for use or consumption a product or any component part thereof." Id. § 82.001(3). A "manufacturer" is defined as "a person who is a designer, formulator, constructor, rebuilder, fabricator, producer, compounder, processor, or assembler of any product or any component part thereof and who places the product or any component part thereof in the stream of commerce." Id. § 82.001(4).
It is clear that Goldsmith's is a "seller" and that WSI is a "manufacturer" as defined by the Code. It is undisputed that Goldsmith's sustained a "loss" in the underlying action. A claimant seeking statutory indemnity under the Code "need only prove that it is a statutory seller which suffered a qualifying loss in a products liability action as defined by statute and that the defendant qualifies as a statutory manufacturer." Oasis Oil Corporation v. Koch Refining Co. L.P., 60 S.W.3d 248, 255 (Tex.App.-Corpus Christi 2001, no writ). Thus, WSI must indemnify Goldsmith's for losses which Goldsmith's suffered in the underlying action.
III. CONCLUSION
For the reasons stated, Goldsmith's motion for summary judgment and motion to dismiss WSI's counterclaims are GRANTED. Goldsmith's motion to strike and WSI's motion for continuance are DENIED. Goldsmith's motion for a more definite statement is DENIED as moot.
Within ten days of this date, counsel for Goldsmith's shall submit a proposed form of judgment in conformity with this memorandum order.
SO ORDERED.