Court Opinion

ID: 152956
Source: CourtListenerOpinion
Date Created: 2010-08-12 23:23:52+00
Date Added: 2024-06-11T16:46:40.815294
License: Public Domain

Case: 09-11225     Document: 00511201882          Page: 1    Date Filed: 08/12/2010

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                           August 12, 2010

                                     No. 09-11225                           Lyle W. Cayce
                                   Summary Calendar                              Clerk

WILLIAM HARRIS,

                                                   Plaintiff - Appellant
v.

NEW WERNER HOLDING CO., INC.,

                                                   Defendant - Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:08-CV-1750

Before KING, HIGGINBOTHAM, and BENAVIDES, Circuit Judges.
PER CURIAM:*
        William Harris appeals the district court’s judgment that he take nothing
for his strict products liability, negligence, and gross negligence personal injury
claims against New Werner Holding Co., Inc. For the following reasons, we
AFFIRM.

        *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
   Case: 09-11225      Document: 00511201882        Page: 2     Date Filed: 08/12/2010

                                     No. 09-11225

                                 I. BACKGROUND
                              A. Factual Background
       In May 2003, William Harris purchased a folding ladder from a Lowe’s
Home Improvement retail store in Mesquite, Texas. The ladder was designed,
manufactured, and marketed by Werner Company. In February 2007, the legs
of the ladder collapsed while Harris was using it, and he fell from the ladder,
sustaining injuries on the left side of his body.
       Meanwhile, in 2006, Werner Company and several related entities 1
(collectively the “Werner Entities”) filed for bankruptcy protection in the United
States Bankruptcy Court for the District of Delaware.                  Harris filed two
Administrative Expense Claims in the bankruptcy court, seeking to recover
damages for his injuries arising from the ladder accident.
       In 2007, New Werner Holding Co., LLC, a Delaware limited-liability
company, was formed to purchase the assets of the Werner Entities.                    The
Delaware bankruptcy court oversaw and approved the sale of these assets, which
was accomplished through an asset purchase agreement (the “Asset Purchase
Agreement” or “Agreement”) that defined, inter alia, the scope of liabilities
assumed by New Werner Holding Co., LLC. Subsequent to this sale of assets,
New Werner Holding Co., LLC, was converted to New Werner Holding Co, Inc.
(“New Werner”), a Delaware corporation.
       The Agreement further provided that the “Buyer”—New Werner Holding
Co., LLC—would assume only certain liabilities of the “Sellers”—the Werner
Entities. The agreement defined liability to be:
             any debt, loss, claim, damage, demand, fine, judgment,
       penalty, liability or obligation (whether direct or indirect, known or
       unknown, absolute or contingent, accrued or unaccrued, liquidated

      1
         These entities were: Werner Co., a Pennsylvania corporation; Werner Holding Co.,
Inc., a Delaware corporation; Werner Holding Co., Inc., a Pennsylvania corporation; and WIP
Technologies, Inc., a Delaware corporation.

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      or unliquidated, or due or to become due), and including all costs
      and expenses relating thereto.
And, relevant to the present matter, the “Assumed Liabilities” included:
      2.3    Assumed Liabilities
      Upon the terms and subject to the conditions of this Agreement, on
      the Closing Date, Buyer shall execute and deliver to Sellers the
      Assignment and Assumption Agreement pursuant to which Buyer
      shall assume and agree to discharge, when due . . . , only the
      following Liabilities (without duplication) . . . and no others:
             ...
             (d)    Customer Product Liability,
             All Liabilities of any Seller in respect of the product liability
             claims of the customers of Sellers listed on Schedule 2.3(d)
             . . . that exist as of immediately prior to the Closing [of the
             Agreement].
      Following the sale of assets, Harris, the Werner Entities, and the
unsecured creditors committee (but not New Werner) agreed, through a
stipulation agreement approved by an order of the Delaware bankruptcy court
on November 7, 2007, that “[Harris] shall not be entitled to any recovery from
[the Werner Entities or the Werner Entities’] estates with respect to [his c]laims
as a prepetition or administrative claim or otherwise”; “Harris[’s c]laims shall
be deemed to have been withdrawn with prejudice against [the Werner Entities
but] without prejudice to [Harris’s] right to seek recovery [against other entities];
and “[t]o the extent that [Harris’s] assertion that the Werner ladder involved
was purchased at Lowe’s is accurate, [his] claims are Assumed Liabilities under
the [Asset] Purchase Agreement, and accordingly, under the Sale Order, [the
Werner Entities] have been relieved from any liability with regards to [Harris’s
c]laims.”
      On this final point, the stipulation order stated that “[u]nder Section 2.3
of the [Asset] Purchase Agreement, New Werner assumed certain liabilities . . .

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which included . . . all ‘Liabilities of any Seller in respect of the product liability
claims of the customers of Sellers listed on Schedule 2.3(d).’” The stipulation
agreement further noted that “Schedule 2.3(d) [of the Agreement] identified all
of [the Werner Entities’] customers with the exception of Home Depot, Kawan
Lama, MAB Paints and Sears,” suggesting that the “customers of Sellers”
outlined in Schedule 2.3(d) (which appears nowhere in the record before us) were
retail stores and other businesses who purchased ladders directly from the
Werner Entities.
                          B. Procedural Background
      In August 2008, Harris filed suit against New Werner; Lowe’s Companies,
Inc. (a North Carolina corporation, hereinafter “Lowe’s”); and Jeff Kerr (a Texas
resident who managed the Lowe’s store where Harris bought his ladder) in
Texas state court, alleging strict products liability, negligence, and gross
negligence causes of action. The defendants removed Harris’s suit to the United
States District Court for the Northern District of Texas in October 2008 on the
basis of diversity jurisdiction. In June 2009, Harris, Lowe’s, and Kerr submitted
an agreed motion to dismiss the claims against Lowe’s and Kerr with prejudice
following settlement between the parties; the district court granted the motion.
      Harris filed an amended complaint in May 2009, reasserting his claims
against New Werner but deleting his claims against Lowe’s and Kerr because
they were about to settle. In this complaint, Harris described the case as “a
products liability cause of action which arises from design, manufacturing and
marketing defects of the ladder by Defendant, New Werner . . . .” Harris claimed
that: (1) “New Werner[ ] is strictly liable to Plaintiff for designing,
manufacturing, and placing into the stream of commerce the ladder which was
unreasonably dangerous for its reasonably foreseeable use because of the lack
of a safe design and safe manufacturing that would have prevented Plaintiff’s
[accident and injuries]”; (2) “New Werner[ ] was negligent in the design,

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manufacture and marketing of the product in question [through various acts or
omissions amounting to negligence]”; and (3) “each of [New Werner’s] acts or
omissions . . . were [sic] more than momentary thoughtlessness, inadvertence,
or error in judgment [and] involved an extreme degree of risk [that constituted
gross negligence].”
      In June 2009, New Werner moved for summary judgment, claiming that:
(1) it did not design, manufacture, or market the ladder; (2) it did not “expressly
assume” the liabilities of the Werner Entities; (3) no expert testimony supported
Harris’s claims, as required for the nature of liability alleged; and (4) Harris had
“disproved” the causation element of each of his claims. Harris failed to respond
to New Werner’s summary judgment motion or file any evidence or further
pleadings in support of the allegations in his complaint. On September 16, 2009,
the district court concluded that there were no genuine issues of material fact
as to whether (1) New Werner manufactured, designed, or marketed the ladder
and (2) New Werner “expressly assumed” the liabilities of the Werner Entities
and granted summary judgment to New Werner, declining to address its other
grounds for summary judgment. The district court also entered final judgment,
dismissing Harris’s claims.
      On September 28, 2009, Harris moved for a “new trial” or, in the
alternative, sought leave to file a late response to New Werner’s summary
judgment motion. Harris claimed that a series of unfortunate events coupled
with “confusion in attempting to settle the case in good faith” had led to his
failure to respond. Harris contended that New Werner had falsely disclaimed
“assumption of liability” with respect to his claims. In support of this allegation,
Harris pointed to Section 2.3(d) of the Asset Purchase Agreement (without,
however, furnishing its accompanying schedule) and, for the first time,
mentioned and introduced the stipulation agreement. Harris also attached a
response to New Werner’s motion for summary judgment, urging that New

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Werner had expressly assumed liability for his claims through the Asset
Purchase Agreement and stipulation agreement such that summary judgment
was inappropriate.
       The district court construed Harris’s motion for a new trial as a motion
under Federal Rule of Civil Procedure 59(e) to alter the judgment. The district
court determined that Harris’s “new evidence”—the stipulation agreement—was
not “newly discovered” and that Harris had not shown any manifest error of law
or fact in the court’s judgment. As such, the district court denied Harris’s
requests for relief, noting that “even if it were to consider the ‘new evidence’
offered by [Harris], such evidence would not have changed the outcome.” Harris
filed a notice of appeal two weeks after this decision, contesting both the grant
of summary judgment and the denial of his Rule 59(e) motion.
                                  II. DISCUSSION
       On appeal, Harris raises a number of challenges to the district court’s
determinations through two issues: (1) whether the district court had
“jurisdiction” to issue the summary judgment ruling and, alternatively, (2)
whether the district court’s summary judgment ruling was proper. We address
each in turn.
                          A. District Court Jurisdiction
       Harris argues that New Werner’s “fraudulent[ ] represent[ation] . . . that
the term ‘Sellers’ in the [Asset] Purchase Agreement referred to entities such as
Lowe[’]s [instead of to the Werner Entities] . . . caused the District Court to issue
a ruling interpreting the [Asset Purchase A]greement that was in conflict with
the prior orders of the [Delaware] Bankruptcy Court . . . [,] exceeding its
jurisdiction.”2 We find no defect in the district court’s jurisdiction.

       2
        Contrary to Harris’s assertion, New Werner’s motion for summary judgment did not
fraudulently disclaim liability. As further discussed below, New Werner admitted that it had
assumed certain liabilities through the Asset Purchase Agreement, which may have

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      Even though Harris failed to raise his jurisdictional arguments below,
“‘[e]very federal appellate court has a special obligation to satisfy itself not only
of its own jurisdiction, but also that of the lower courts in a cause under review
. . . .’” Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 442 (5th Cir. 2002) (quoting
Arizonans for Official English v. Arizona, 520 U.S. 43, 73 (1997)).
      “The jurisdiction of the bankruptcy courts, like that of other federal courts,
is grounded in, and limited by, statute.” Celotex Corp. v. Edwards, 514 U.S. 300,
307 (1995). “Pursuant to 28 U.S.C. § 1334, the [bankruptcy court of a district]
has exclusive jurisdiction of all bankruptcy cases under title 11 and ‘original but
not exclusive jurisdiction of all civil proceedings arising under title 11, or arising
in or related to cases under title 11.’” Morrison v. W. Builders of Amarillo, Inc.,
(In re Morrison), 555 F.3d 473, 478 (5th Cir. 2009) (quoting 28 U.S.C. § 1334(b)).
“Core proceedings[—those that are ‘under title 11’—]are those that invoke a
substantive right provided by title 11 or could arise only in the context of a
bankruptcy case.”      Id. at 479 (quotation marks and alterations omitted)).
Harris’s suit against New Werner, who was not the debtor in the Delaware
bankruptcy proceedings, is not a “core” proceeding for which the Delaware
bankruptcy court had exclusive jurisdiction. Further, as explained more fully
below, the orders of the Delaware bankruptcy court do not compel the conclusion
that New Werner assumed liability for Harris’s claims. We discern no defect in
the district court’s jurisdiction.
                             B. Summary Judgment
      Harris also challenges the district court’s grant of summary judgment to
New Werner, contending that the record before the district court indicated that
New Werner had assumed liability for his claims. We disagree.

encompassed potential claims Harris would bring against Lowe’s.

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                                   No. 09-11225

      “We review a district court’s grant of summary judgment de novo.”
Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 233 (5th Cir. 2010)
(quotation marks omitted). “Summary ‘judgment . . . should be rendered if the
pleadings, the discovery and disclosure materials on file, and any affidavits show
that there is no genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law.’” Id. at 234 (ellipsis in original) (quoting
F ED. R. C IV. P. 56(c)(2)). “When the burden at trial rests on the nonmovant, the
movant must merely demonstrate an absence of evidentiary support in the
record for the nonmovant’s case.” Int’l Ass’n of Machinists & Aerospace Workers,
AFL–CIO v. Compania Mexicana de Aviacion, S.A. C.V., 199 F.3d 796, 798 (5th
Cir. 2000) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).
      Harris’s argument that New Werner assumed liability for his claims is
belied by the record. Both parties agree that the Asset Purchase Agreement
governs whether New Werner assumed a certain liability from Werner. This
Agreement shows that New Werner was not a “successor” to the Werner
Entities, and, relevant to this matter, only assumed liabilities of the “customers
of [the Werner Entities].”
      New Werner presented the Agreement, the Delaware bankruptcy court’s
orders, and an affidavit as support for its contention that it did not “expressly
assume” liability for the claims Harris raised in his complaint. New Werner did
admit, however, that it had assumed certain liabilities including “the liability of
Lowe[’]s [for claims by purchasers of the Werner Entities’ ladders],” but it noted
that Harris’s claims against Lowe’s had been dismissed following settlement.
      We need not and do not determine whether Harris has such a potential
claim against New Werner based on assumption of liability for claims against
Lowe’s because Harris’s complaint did not raise claims against New Werner
based on assumption of liability for a claim against Lowe’s. Instead, Harris
raised claims against New Werner based on allegations concerning New Werner’s

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conduct: Harris concedes on appeal that New Werner was not involved in the
manufacture of the allegedly defective ladder. Further, the causes of action for
products liability against a retailer and manufacturer are distinct under Texas
law. Compare T EX . C IV. P RAC. & R EM. C ODE A NN. § 82.003 (West Supp. 2009)
(“Liability of Nonmanufacturing Sellers”) with id. § 82.005 (“Design Defects”).
We will not construe Harris’s pleadings to allege a cause of action not presented
below. See Lemaire v. La. Dep’t of Transp. & Dev., 480 F.3d 383, 387 (5th Cir.
2007) (“[A]rguments not raised before the district court are waived and cannot
be raised for the first time on appeal.”).3
       Moreover, the stipulation agreement between Harris, the Werner Entities,
and the unsecured creditors committee—which was not before the district court
at summary judgment4 —does not upset this determination. The stipulation
agreement clarifies that New Werner assumed only certain liabilities under the
Asset Purchase Agreement. To wit, “[t]o the extent that [Harris’s] assertion that
the Werner ladder involved was purchased at Lowe’s is accurate, [his] claims are
Assumed Liabilities under the [Asset] Purchase Agreement.” In sum, there is
no support for the claims in Harris’s complaint, and the district court properly
granted summary judgment in favor of New Werner.5
       The bottom line is that Harris had an administrative claim against
Werner Co., the manufacturer of the ladder, and a potential claim against
Lowe’s, the alleged retailer of the ladder. Harris dismissed the administrative

       3
          Though Harris does not specifically point to error in the dismissal of his negligence
and gross negligence claims, we note that they are similarly defeated because Harris alleged
liability based solely on New Werner’s acts or omissions.
       4
         Harris’s brief on appeal does not request that we review the correctness of the district
court’s Rule 59(e) determination. Thus, he has waived any argument on the matter. See
Yohey v. Collins, 985 F.2d 222, 224–25 (5th Cir. 1993) (“[Appellant] has abandoned these
arguments by failing to argue them in the body of his brief.”).
       5
        As we find summary judgment proper on these grounds, we, like the district court, do
not consider New Werner’s alternative bases for summary judgment.

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                                No. 09-11225

claim pursuant to the stipulation agreement, approved by the bankruptcy court,
without prejudice to his potential claim against Lowe’s. The latter claim may
have been assumed by New Werner under the Asset Purchase Agreement (we
say “may” because the critical schedule is missing from the record). But Harris
never pleaded such a claim against New Werner.            The claims he did
plead—product liability claims against a manufacturer—were properly
dismissed.
                            III. CONCLUSION
      For the foregoing reasons, we AFFIRM the judgment of the district court.
      AFFIRMED

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