Tanenbaum Keale LLP is pleased to announce a significant trial victory on behalf of firm client, A.O. Smith Corporation, arising out of a matter pending in the Court of Common Pleas of Bucks County Pennsylvania.

This matter was originally filed in 2011 as a product liability and negligence action arising out of serious injuries sustained while using agricultural equipment manufactured by a former subsidiary of A.O. Smith, known as A.O. Smith Harvestore Products, Inc. (“AOSHPI”). The product in question, a roller mill, was manufactured by AOSHPI in 1980. Thereafter, in 1996, AOSHPI sold its roller mill product line to a third party but maintained liabilities for any roller mills sold before 1996.

In 2000, A.O. Smith sold the remaining assets and liabilities of the Harvestore division to CST Industries, Inc., pursuant to an Asset Purchase Agreement (“APA”). In 2010, a young student working at a Pennsylvania agricultural college was seriously injured when her hand was caught in the subject Harvestore roller mill. Plaintiff filed suit against numerous parties, including A.O. Smith Corporation and CST Industries, Inc. As between A.O. Smith and CST, the dispute focused on whether the subject roller mill incident was an “assumed liability” by CST within the meaning of the APA. This issue was initially addressed by motion for Summary Judgment on behalf of A.O. Smith, which motion was granted by the trial judge in January 2012 on the eve of trial, ruling that the subject roller mill incident was an “assumed liability” under the APA and that CST was obligated to indemnify A.O. Smith for any and all liabilities arising out of the subject roller mill accident.

In February 2013, CST settled the underlying action, but reserved rights to recover the settlement payment by appealing the summary Judgment ruling in favor of A.O. Smith. CST’s appeal was subsequently granted, and the case was remanded for a trial to determine the intent of the parties with respect to whether the subject roller mill incident was an intended and assumed liability as defined in the APA. CST was seeking recovery in excess of $3 million from A.O. Smith in this matter.

In February 2019, a trial was conducted before Judge Robert Mellon to determine the intent of the parties relating to the scope of the assumed liabilities under the APA. After hearing testimony from numerous witnesses and upon consideration of various forms of extrinsic evidence, the Court entered a definitive verdict in favor of A.O. Smith Corporation and against CST Industries, Inc., holding that CST Industries is obligated to indemnify A.O. Smith in connection with any liabilities in the subject litigation. Accordingly, Judgment was entered in favor of A.O. Smith on all counts, and CST’s claims for reimbursement were thereby rejected.

This matter was handled by Tanenbaum Keale LLP partners Thomas Robertson and Tiffany Alexander and associate Timothy Freeman.