Tanenbaum Keale LLP partners Tom Robertson and Tiffany Alexander, along with associate Tim Freeman, obtained a significant appellate victory on behalf of client A. O. Smith Corporation in the Superior Court of Pennsylvania.
On September 24, 2020, the Superior Court affirmed a non-jury verdict rendered by the Court of Common Pleas of Bucks County, Pennsylvania, following a three-day bench trial, holding that CST Industries, Inc. is obligated to indemnify A.O. Smith in connection with all liabilities in this litigation. It also affirmed the trial court’s ruling on a post-trial motion to award A.O. Smith attorney’s fees and expenses in connection with a substantial portion of the litigation. The end result is that A.O. Smith is not required to reimburse CST Industries, Inc. for $2.5 million (plus more than $400,000 in interest) that it paid in 2013 to settle an underlying lawsuit arising from personal injuries. In addition, CST now has to reimburse A.O. Smith for attorney fees and expenses that it incurred for a portion of the litigation, which may exceed $1.2 million.
This matter was originally filed in 2011 as a product liability and negligence action arising out of serious injuries sustained by Danielle Fisher 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 a 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 for $2.5 million, but appealed the summary Judgment ruling in favor of A.O. Smith. The Superior Court ultimate reversed and remanded for trial. Following a three-day bench trial in February 2019, the Court of Common Pleas of Bucks County entered a verdict in favor of A.O. Smith, finding that the parties intended for CST to assume roller mill liabilities pursuant to the APA. A.O. Smith then filed a post-trial motion seeking attorney fees and expenses. The post-trial motion was granted, and CST sought appellate review of the verdict and post-trial motion ruling.