New Hampshire High Court Permits Claim Against Successor to Seller of Flammable Robe – Gray v. Leisure Life Industries

By October 4, 2013 Product Liability

In injury lawsuits, it’s not uncommon for the company at fault for an injury to have changed its name or been absorbed by another company. The company that absorbs a prior company is often the “successor in interest,” which means it is exactly as liable as the original company. It stands in the prior company’s shoes for all legal purposes, including product liability lawsuits as well as more pleasant matters, like ownership of intellectual property. In Gray v. Leisure Life Industries, the New Hampshire Supreme Court ruled that Knothe Apparel Group can be held liable for injuries allegedly caused by Leisure Life Industries, notwithstanding the circumstances of Knothe’s 2004 purchase of Leisure Life. But it also ruled that Jeffrey and JoAnne Gray may not pursue the companies for the share of the damages already paid by another defendant.
Jeffrey Gray bought a robe for JoAnne, his wife, in 1996. Nine years later, JoAnne was putting more wood on their wood stove when the robe caught fire, injuring her severely. They sued the Knothe defendants; Orvis, the seller of the robe; and other parties involved in the design and sale of the robe and the wood stove. Knothe moved for summary judgment, noting that Leisure Life was purchased by Knothe and was no longer the same company, but the conditions of the sale didn’t support holding Knothe liable as a successor in interest. In 2009, Orvis added third-party claims against Knothe for indemnification, saying it was just a “pass-through entity.” Just before trial, everyone but Knothe settled; Orvis assigned its indemnity rights to the Grays, who then moved for summary judgment on that claim. The jury ultimately found for the Grays, and the trial court then ruled for them on indemnity, also awarding them attorney fees and costs for Orvis.
Knothe appealed both the indemnity ruling and the ruling on whether Knothe was a successor in interest. The New Hampshire Supreme Court split its ruling, finding for Knothe only on indemnity. The type of indemnity Orvis invoked is equitable, available when an innocent party is obliged to pay an injured person for injuries caused by a third party. But cases and the Restatement of Torts say indemnity can’t occur when the it doesn’t extinguish the liability of the indemnitor. Here, Knothe was still liable to the Grays, so it was entitled to summary judgment on the indemnification claim. It also agreed with Knothe that because there was no indemnification, there should also be no award of attorney fees. Because of these rulings, it said, it didn’t need to address the arguments about successor liability.
This decision might be confusing for someone who’s not a personal injury attorney, but the concepts are important to anyone involved in that kind of case. It’s often true that one person or company “steps into the shoes” of another in the courts. For example, victims of serious personal injuries who got care through Medicare might find that when they win lawsuits, Medicare wants to be reimbursed with part of their winnings. Similarly, if Knothe agrees in a contract to indemnify Orvis, it agrees to cover all of Orvis’s legal costs as specified by the contract. Indemnity claims can complicate and delay lawsuits, which is why it’s best to have an experienced products liability lawyer by your side.


Carey, Danis & Lowe represents clients who have suffered serious injuries or lost a loved one because of someone else’s negligence. If you’d like to learn about your rights and your legal options, don’t hesitate to contact us for a free consultation, by calling 1-877-678-3400 or sending us a message online.
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