Gray v. Leisure Life Industries

Defendants Leisure Life Industries a/k/a Leisure Life Industries, Inc. a/k/a Leisure Life Industries, LLC (Leisure Life) and Knothe Apparel Group, Inc. appealed a superior court order that denied their motion for summary judgment and granted the cross-motion for entry of final judgment on the issue of indemnity filed by plaintiffs, JoAnne Gray, Jeffrey Gray, Jeffrey J. Gray, and Jonathan Gray. The defendants also appealed the trial court’s order denying their motion for summary judgment on successor liability. Jeffrey Gray purchased a robe from The Orvis Company (Orvis) for his wife, JoAnne. Orvis purchased the robe from the manufacturer, Leisure Life. Mrs. Gray was wearing the robe when she added a piece of firewood to her wood stove and the robe caught fire. As result, she was severely burned and suffered extensive injuries. Plaintiffs sued the defendants and Orvis along with other parties involved either in the design and distribution of the robe or the manufacture and sale of the wood stove. Leisure Life argued that it was not liable for the plaintiffs" injuries because it was no longer the same entity that manufactured the robe, and the circumstances of the purchase did not support holding Knothe liable as a successor. The trial court denied the motion. Orvis claimed that it "had no involvement in the design and manufacturing of the robe" and that it "was simply a 'pass-through' entity." As a result, Orvis sought indemnity or contribution from the defendants for any damages it ultimately owed to the plaintiffs, including the amount of any judgment against, or settlement by, Orvis. Immediately prior to the scheduled start of the trial, all parties except Leisure Life settled with the plaintiffs. The parties involved in the sale and manufacture of the wood stove settled the claims against them for five million dollars. Orvis settled the claims against it for one million dollars and assigned to the plaintiffs "any and all rights to indemnity" that Orvis had against the defendants. The settlement did not extinguish the plaintiffs' claims against the defendants. The plaintiffs, as Orvis's assignees, subsequently moved for summary judgment against the defendants on the indemnity claim. On appeal, the defendants argue that the trial court erred in granting summary judgment for the plaintiffs on the issue of indemnity. They further contend that there is no basis for the trial court’s award of attorney’s fees and costs and that, therefore, the award must be set aside. Finally, the defendants argue that the trial court erred in finding Knothe liable as a successor to Leisure Life. Upon review, the Supreme Court concluded plaintiffs' indemnity claim failed because when Orvis settled with the plaintiffs, it extinguished its own liability, but not that of the defendants. The trial court's order addressing the settlement stated that "[t]his case has been settled as to all defendants except Leisure Life Industries." In consideration for the receipt of one million dollars and the assignment of Orvis's indemnity rights against the defendants, the plaintiffs released Orvis from all claims of liability asserted against it. In contrast, there was no release of liability running to the defendants, and the defendants remained potentially liable to the plaintiffs under the theories of direct liability asserted against them, including the strict liability claim. The Court reversed the trial court’s denial of summary judgment with respect to the plaintiffs’ indemnity claim. View "Gray v. Leisure Life Industries " on Justia Law