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Martin Franchises, Inc. v. Cooper U.S., Inc.

Appellate Court of Connecticut

April 12, 2016

MARTIN FRANCHISES, INC.
v.
COOPER U.S., INC

         Argued January 6, 2016.

          Action to recover damages for breach of contract, and for other relief, brought to the Superior Court in the judicial district of Fairfield, where the court, Hon. Richard P. Gilardi, judge trial referee, granted the plaintiff's motion for summary judgment as to liability; thereafter, following a hearing in damages, the court, Hon. Edward F. Stodolink, judge trial referee, rendered judgment for the plaintiff, from which the defendant appealed to this court; subsequently, the court, Hon. Richard P. Gilardi, judge trial referee, issued an articulation of its decision.

          SYLLABUS

         The defendant appealed to this court from the trial court's rendering of partial summary judgment for the plaintiff, claiming that the trial court had improperly determined that a hold harmless provision in a certain purchase agreement obligated the defendant to defend and to indemnify the plaintiff for liability that it might incur in a separate product liability action that had been brought against it. The plaintiff had entered into the purchase agreement with M Co., the defendant's predecessor in interest, to purchase certain assets relating to M Co.'s dry-cleaning business. The hold harmless provision obligated the defendant to assume liability for claims against the plaintiff that arose out of M Co.'s products and operations prior to the date of the agreement. Thereafter, P, a former employee of the plaintiff, brought a product liability action against the plaintiff, claiming that she contracted mesothelioma as a result of exposure to asbestos that had been contained in a dry-cleaning machine she used while employed by the plaintiff. P alleged that the dry-cleaning machine was stamped with a trade name that M Co. had used in connection with a certain division of M Co. The plaintiff filed an answer in which it stated that it had not been in existence until fifteen years after the alleged time of P's exposure to asbestos and had never manufactured products that contained asbestos. Thereafter, the plaintiff brought this third party action seeking contribution or indemnification under the hold harmless provision for liability it might incur as a result of P's action. The plaintiff alleged that it had been incorporated at the time that it entered into the agreement with M Co. and had purchased the trade name as part of the agreement. The plaintiff further alleged that a certain provision in the agreement specified that it had not assumed product liability claims that related to products manufactured, sold or shipped by M Co. prior to the date of the agreement. The plaintiff claimed that the dry-cleaning machine at issue in P's action had been manufactured, sold and shipped prior to the date of the purchase agreement, and, thus, could not have been manufactured, sold or shipped by the plaintiff. Therefore, the plaintiff claimed, the defendant was obligated to defend and to indemnify it for any liability as a result of P's action. As part of its motion for partial summary judgment, the plaintiff submitted an affidavit by W, a corporate officer of the plaintiff, in which W made certain averments pertaining to the plaintiff's corporate history, and stated that the plaintiff had no record of M Co.'s ever having manufactured, distributed or sold any dry-cleaning machine that contained asbestos. On appeal, the defendant claimed that the trial court improperly rendered partial summary judgment for the plaintiff. The defendant claimed that because W's affidavit failed to show affirmatively that she had personal knowledge of the substance of the averments in her affidavit, the plaintiff had failed to satisfy its burden of proving the nonexistence of any genuine issue of material fact as to whether the hold harmless provision obligated the defendant to defend and to indemnify the plaintiff in connection with P's action. Held that the trial court erred in rendering partial summary judgment for the plaintiff, W's affidavit having failed to show the nonexistence of a genuine issue of material fact as to whether the purchase agreement's hold harmless provision obligated the defendant to defend and to indemnify the plaintiff in connection with P's action: the affidavit contained no affirmative showing that W had personal knowledge of and was competent to testify about the plaintiff's past relationship with M Co., the trade name, or the company division from which the plaintiff had acquired the trade name, that W had reviewed business records relative to M Co., that M. Co. had used the trade name to market products, or that M Co. had manufactured, sold or shipped dry-cleaning products bearing the trade name; moreover, the trial court's reliance on W's affidavit was harmful to the defendant, as the other proof that the plaintiff had submitted in support of its motion for partial summary judgment did not establish that there was no genuine issue as to whether a dry-cleaning machine that P allegedly had been exposed to bore the trade name on it, contained asbestos, or was manufactured, sold and shipped by M Co. or its predecessors prior to the date of the purchase agreement.

         Richard F. Connors, for the appellant (defendant).

         Timothy D. Miltenberger, for the appellee (plaintiff).

         Beach, Keller and Lavery, Js. KELLER, J. In this opinion the other judges concurred.

          OPINION

          [164 Conn.App. 488] KELLER, J.

          The defendant, Cooper U.S., Inc., appeals following the trial court's rendering of summary judgment in favor of the plaintiff, Martin Franchises, Inc. On appeal, the defendant claims that the court erred in rendering summary judgment in favor of the plaintiff on the following two grounds: (1) the court improperly concluded that there was no genuine issue of material fact; and (2) the court held the defendant to an incorrect burden of proof in its opposition to the plaintiff's motion for summary judgment. We reverse the trial court's judgment and remand the case to that court with direction to deny the plaintiff's motion for summary judgment and to conduct further proceedings according to law.

         Our resolution of this appeal is informed by the following procedural history. This controversy arose from LaVerne Perezi's contraction of mesothelioma and her subsequent commencement of a product liability action (Perezi action), in August, 2012, against numerous defendants, one of which was the plaintiff in the present appeal.[1] Thereafter, on February 19, 2013, the plaintiff in the present appeal filed a motion to implead the defendant in the present appeal, claiming that the defendant was, or may have been, liable for all or part of Perezi's claim. On this same date, the plaintiff also filed its answer, in which it claimed that it " did not exist at the time of [Perezi's] exposure to asbestos" and that it " never manufactured any products that contained any type of asbestos." On March 4, 2013, the court, Bellis, J., granted the plaintiff's motion to implead the defendant.[2] The plaintiff then served the defendant with a complaint, which it labeled " Third-Party Complaint," and [164 Conn.App. 489] for reasons unknown to the parties and to this court, the action was assigned a separate docket number. This complaint is the operative complaint in the present appeal.

         Perezi, in her three count complaint, alleged in the first count that " [e]ach of the defendants, and/or their predecessors in interest . . . has produced, manufactured or distributed asbestos and/or asbestos products," [3] and that these products caused her to contract mesothelioma.

         The plaintiff's complaint against the defendant contained two counts, the first of which sounded in breach of contract and the second of which sounded in contribution and/or indemnification. In the complaint, the plaintiff alleged the following:

" On May 1, 1978, [the plaintiff] entered into an agreement (the '1978 Agreement') with McGraw-Edison, a predecessor in interest to [the defendant], (the 'Seller'), to purchase certain assets from McGraw-Edison relating to McGraw-Edison's dry-cleaning business. . . .

" Pursuant to the 1978 Agreement, [the plaintiff] acquired said assets of [McGraw-Edison], the Seller. . . .

" Under the 1978 Agreement, [McGraw-Edison], the Seller, assumed and retained all liability for any subsequent claims made against [the plaintiff] or its successors based upon or arising out of [McGraw-Edison's] [164 Conn.App. 490] products and operations that occurred prior to May 1, 1978. . . .

" Under the 1978 Agreement, [the defendant, as successor in interest to McGraw-Edison], is contractually obligated to defend and indemnify [the plaintiff] for the claim submitted by . . . LaVerne Perezi in the [Perezi] action. . . .

" [The plaintiff] has repeatedly requested that [the defendant] defend and indemnify [the plaintiff] in the [Perezi] action, but [the defendant] has refused to do so."

In the first count of the complaint, the plaintiff further alleged that " [Perezi] alleges that she was injured as a result of exposure to products at a dry-cleaning facility in the early 1960s. Under the terms and conditions of the 1978 Agreement, [the defendant] is contractually obligated to defend and indemnify [the plaintiff] with respect to the claims for relief asserted against [the plaintiff] in the [Perezi action]. . . .

" [The plaintiff] has demanded that [the defendant] indemnify it for all defense costs, settlements, judgment or other damages, losses, or expenses incurred by [the plaintiff] as a result of the claims for relief asserted against [the plaintiff] in the [Perezi] action. . . .

" [The plaintiff] has fully performed all of its obligations under the 1978 Agreement. . . .

" Despite [the plaintiff's] demand, [the defendant] has refused to perform its contractual obligations."

In the second count of the complaint, the plaintiff further alleged the following:

" Any negligence on behalf of [the plaintiff] was passive and secondary, while [the defendant's] negligence was active and primary. . . .

[164 Conn.App. 491] " To the extent [the plaintiff] is held liable for any portion of [Perezi's] damages, if any, [the plaintiff] is entitled to contribution or indemnification from [the defendant] for the entire amount, plus costs and interest."

         On September 5, 2014, the plaintiff filed a motion for partial summary judgment, alleging, inter alia, that there was no genuine issue of material fact as to whether the defendant was obligated to indemnify the plaintiff and defend it in the Perezi action pursuant to the language in the 1978 agreement between the plaintiff and McGraw-Edison, the defendant's predecessor in interest. Specifically, the plaintiff alleged in its memorandum of law in support of the motion that on May 1, 1978, it had been incorporated and that it had entered into a purchase agreement by which it agreed to purchase certain assets from the defendant's predecessor in interest, McGraw-Edison. The plaintiff also stated that in April, 1985, the defendant had acquired McGraw-Edison, thereby making the defendant a successor in interest with respect to the 1978 agreement. The plaintiff alleged that pursuant to the 1978 agreement, it had purchased a plant facility in Ohio from McGraw-Edison, as well as a trade name, " Martin," which McGraw-Edison had used in connection with a division of the company known as " Martin Equipment Sales." The plaintiff further alleged that section 5.1 of the 1978 agreement provided that it had agreed to assume certain liabilities of McGraw-Edison, but that this section also specified certain liabilities that it had not assumed from McGraw-Edison. In this vein, the plaintiff indicated that section 5.1 of the 1978 agreement specifically provided that the plaintiff had not assumed " any liabilities or obligations, whether contingent or absolute, accrued or unaccrued, or known or unknown, for . . . product liability claims that relate to any products manufactured, sold and shipped by McGraw-Edison . . . or its predecessors prior to [164 Conn.App. 492] the Closing . . . ." (Emphasis omitted.) The plaintiff further stated that section 14.9 of the 1978 agreement provided that the defendant, as successor in interest to McGraw-Edison, had agreed to pay all costs and expenses that the plaintiff would incur if it were to be named as a defendant in a lawsuit relating to any liability retained by the defendant pursuant to section 5.1 of the 1978 agreement.[4]

         In the memorandum of law in support of its motion, the plaintiff also alleged that Perezi had claimed in her action that " she could have come into contact with asbestos-containing products directly and through secondary exposure from two of her husbands." Furthermore, on the basis of Perezi's and her son's deposition testimony and pleadings in the Perezi action, the plaintiff alleged the following about the Perezi action: " With respect to [the plaintiff], [Perezi] alleges liability [for her contraction of mesothelioma] based upon her work, and her former husband's work, at a dry-cleaning facility. . . . Perezi ceased working at the dry-cleaning facility in 1963--fifteen years before [McGraw-Edison, the defendant's predecessor in interest] sold assets and the trade name to [the plaintiff]. . . . The only piece of equipment in the facility that . . . Perezi can link to [the plaintiff] is a dry-cleaning machine." (Citations omitted.) The plaintiff also argued that because the 1978 agreement was an unambiguous contract that had been entered into by two sophisticated commercial entities, the court must enforce the agreement's terms as written. Thus, the plaintiff referred to the language in section 5.1 of the 1978 agreement and argued that it was " undisputed" ...


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