William Harris v. New Werner Holding Co., Inc.

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
August 12, 2010 N o . 09-11225 S u m m a r y Calendar Lyle W. Cayce Clerk

W I L L I A M HARRIS,

P la in t iff - Appellant v. N E W WERNER HOLDING CO., INC.,

D e fe n d a n t - Appellee

A p p e a l from the United States District Court for the Northern District of Texas U S D C No. 3:08-CV-1750

B e fo r e KING, HIGGINBOTHAM, and BENAVIDES, Circuit Judges. P E R CURIAM:* W illia m Harris appeals the district court's judgment that he take nothing fo r his strict products liability, negligence, and gross negligence personal injury c la im s against New Werner Holding Co., Inc. For the following reasons, we A F F IR M .

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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.

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No. 09-11225 I . BACKGROUND A . Factual Background I n May 2003, William Harris purchased a folding ladder from a Lowe's H o m e Improvement retail store in Mesquite, Texas. The ladder was designed, m a n u fa c t u r e d , and marketed by Werner Company. In February 2007, the legs o f the ladder collapsed while Harris was using it, and he fell from the ladder, s u s t a in in g injuries on the left side of his body. M e a n w h ile , in 2006, Werner Company and several related entities 1 (c o lle c t iv e ly the "Werner Entities") filed for bankruptcy protection in the United S t a te s Bankruptcy Court for the District of Delaware. Harris filed two

A d m in is tr a t iv e Expense Claims in the bankruptcy court, seeking to recover d a m a g e s for his injuries arising from the ladder accident. In 2007, New Werner Holding Co., LLC, a Delaware limited-liability c o m p a n y , was formed to purchase the assets of the Werner Entities. The

D e la w a r e bankruptcy court oversaw and approved the sale of these assets, which w a s accomplished through an asset purchase agreement (the "Asset Purchase A g r e e m e n t " or "Agreement") that defined, inter alia, the scope of liabilities a s s u m e d by New Werner Holding Co., LLC. Subsequent to this sale of assets, N e w Werner Holding Co., LLC, was converted to New Werner Holding Co, Inc. (" N e w Werner"), a Delaware corporation. The Agreement further provided that the "Buyer"--New Werner Holding C o ., LLC--would assume only certain liabilities of the "Sellers"--the Werner E n t it ie s . The agreement defined liability to be: a n y debt, loss, claim, damage, demand, fine, judgment, p e n a lt y , liability or obligation (whether direct or indirect, known or u n k n o w n , absolute or contingent, accrued or unaccrued, liquidated

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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No. 09-11225 o r unliquidated, or due or to become due), and including all costs a n d expenses relating thereto. A n d , relevant to the present matter, the "Assumed Liabilities" included: 2.3 A s s u m e d Liabilities

U p o n the terms and subject to the conditions of this Agreement, on t h e Closing Date, Buyer shall execute and deliver to Sellers the A s s ig n m e n t and Assumption Agreement pursuant to which Buyer s h a ll assume and agree to discharge, when due . . . , only the fo llo w in g Liabilities (without duplication) . . . and no others: ... (d ) C u s t o m e r Product Liability,

A ll Liabilities of any Seller in respect of the product liability c la im s of the customers of Sellers listed on Schedule 2.3(d) . . . that exist as of immediately prior to the Closing [of the A g r e e m e n t]. F o llo w in g the sale of assets, Harris, the Werner Entities, and the u n s e c u r e d creditors committee (but not New Werner) agreed, through a s t ip u la t io n agreement approved by an order of the Delaware bankruptcy court o n November 7, 2007, that "[Harris] shall not be entitled to any recovery from [t h e Werner Entities or the Werner Entities'] estates with respect to [his c]laims a s a prepetition or administrative claim or otherwise"; "Harris['s c]laims shall b e deemed to have been withdrawn with prejudice against [the Werner Entities b u t ] without prejudice to [Harris's] right to seek recovery [against other entities]; a n d "[t]o the extent that [Harris's] assertion that the Werner ladder involved w a s purchased at Lowe's is accurate, [his] claims are Assumed Liabilities under t h e [Asset] Purchase Agreement, and accordingly, under the Sale Order, [the W e r n e r Entities] have been relieved from any liability with regards to [Harris's c ]la im s ." On this final point, the stipulation order stated that "[u]nder Section 2.3 o f the [Asset] Purchase Agreement, New Werner assumed certain liabilities . . .

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No. 09-11225 w h ic h included . . . all `Liabilities of any Seller in respect of the product liability c l a im s of the customers of Sellers listed on Schedule 2.3(d).'" The stipulation a g r e e m e n t further noted that "Schedule 2.3(d) [of the Agreement] identified all o f [the Werner Entities'] customers with the exception of Home Depot, Kawan L a m a , MAB Paints and Sears," suggesting that the "customers of Sellers" o u tlin e d in Schedule 2.3(d) (which appears nowhere in the record before us) were r e t a il stores and other businesses who purchased ladders directly from the W e r n e r Entities. B . Procedural Background I n August 2008, Harris filed suit against New Werner; Lowe's Companies, I n c . (a North Carolina corporation, hereinafter "Lowe's"); and Jeff Kerr (a Texas r e s id e n t who managed the Lowe's store where Harris bought his ladder) in T e x a s state court, alleging strict products liability, negligence, and gross n e g lig e n c e causes of action. The defendants removed Harris's suit to the United S t a te s District Court for the Northern District of Texas in October 2008 on the b a s is of diversity jurisdiction. In June 2009, Harris, Lowe's, and Kerr submitted a n agreed motion to dismiss the claims against Lowe's and Kerr with prejudice fo llo w in g settlement between the parties; the district court granted the motion. Harris filed an amended complaint in May 2009, reasserting his claims a g a in s t New Werner but deleting his claims against Lowe's and Kerr because t h e y were about to settle. In this complaint, Harris described the case as "a p r o d u c t s liability cause of action which arises from design, manufacturing and m a r k e t in g defects of the ladder by Defendant, New Werner . . . ." Harris claimed t h a t : (1) "New Werner[ ] is strictly liable to Plaintiff for designing, m a n u fa c t u r in g , and placing into the stream of commerce the ladder which was u n r e a s o n a b ly dangerous for its reasonably foreseeable use because of the lack o f a safe design and safe manufacturing that would have prevented Plaintiff's [a c c id e n t and injuries]"; (2) "New Werner[ ] was negligent in the design, 4

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No. 09-11225 m a n u fa c t u r e and marketing of the product in question [through various acts or o m i s s io n s amounting to negligence]"; and (3) "each of [New Werner's] acts or o m is s io n s . . . were [sic] more than momentary thoughtlessness, inadvertence, o r error in judgment [and] involved an extreme degree of risk [that constituted g r o s s negligence]." I n 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 a s s u m e " the liabilities of the Werner Entities; (3) no expert testimony supported H a r r is 's claims, as required for the nature of liability alleged; and (4) Harris had " d is p r o v e d " the causation element of each of his claims. Harris failed to respond t o New Werner's summary judgment motion or file any evidence or further p le a d in g s in support of the allegations in his complaint. On September 16, 2009, t h e district court concluded that there were no genuine issues of material fact a s to whether (1) New Werner manufactured, designed, or marketed the ladder a n d (2) New Werner "expressly assumed" the liabilities of the Werner Entities a n d granted summary judgment to New Werner, declining to address its other g r o u n d s for summary judgment. The district court also entered final judgment, d is m is s in g Harris's claims. O n September 28, 2009, Harris moved for a "new trial" or, in the a lt e r n a t iv e , sought leave to file a late response to New Werner's summary ju d g m e n t motion. Harris claimed that a series of unfortunate events coupled w it h "confusion in attempting to settle the case in good faith" had led to his fa ilu r e to respond. Harris contended that New Werner had falsely disclaimed " a s s u m p t io n of liability" with respect to his claims. In support of this allegation, H a r r is pointed to Section 2.3(d) of the Asset Purchase Agreement (without, h o w e v e r , furnishing its accompanying schedule) and, for the first time, m e n tio n e d and introduced the stipulation agreement. Harris also attached a r e s p o n s e to New Werner's motion for summary judgment, urging that New 5

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No. 09-11225 W e r n e r had expressly assumed liability for his claims through the Asset P u r c h a s e Agreement and stipulation agreement such that summary judgment w a s inappropriate. T h e district court construed Harris's motion for a new trial as a motion u n d e r Federal Rule of Civil Procedure 59(e) to alter the judgment. The district cou rt determined that Harris's "new evidence"--the stipulation agreement--was n o t "newly discovered" and that Harris had not shown any manifest error of law o r fact in the court's judgment. As such, the district court denied Harris's r e q u e s ts for relief, noting that "even if it were to consider the `new evidence' o ffe r e d by [Harris], such evidence would not have changed the outcome." Harris file d a notice of appeal two weeks after this decision, contesting both the grant o f summary judgment and the denial of his Rule 59(e) motion. I I . DISCUSSION O n appeal, Harris raises a number of challenges to the district court's d e t e r m in a t io n s through two issues: (1) whether the district court had " ju r is d ic t io n " to issue the summary judgment ruling and, alternatively, (2) w h e t h e r the district court's summary judgment ruling was proper. We address e a c h in turn. A . District Court Jurisdiction H a r r is argues that New Werner's "fraudulent[ ] represent[ation] . . . that t h e term `Sellers' in the [Asset] Purchase Agreement referred to entities such as L o w e [']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 t h e prior orders of the [Delaware] Bankruptcy Court . . . [,] exceeding its ju r is d ic t io n ."2 We find no defect in the district court's jurisdiction.

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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No. 09-11225 E v e n though Harris failed to raise his jurisdictional arguments below, " `[e ]v e r y federal appellate court has a special obligation to satisfy itself not only o f 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 A r iz o n a n s 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, 3 0 7 (1995). "Pursuant to 28 U.S.C. § 1334, the [bankruptcy court of a district] h a s exclusive jurisdiction of all bankruptcy cases under title 11 and `original but n o t 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., (I n 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 s u b s t a n t iv e right provided by title 11 or could arise only in the context of a b a n k r u p t c y case." Id. at 479 (quotation marks and alterations omitted)).

H a r r is 's suit against New Werner, who was not the debtor in the Delaware b a n k r u p t c y proceedings, is not a "core" proceeding for which the Delaware b a n k r u p t c y court had exclusive jurisdiction. Further, as explained more fully b e lo w , the orders of the Delaware bankruptcy court do not compel the conclusion t h a t New Werner assumed liability for Harris's claims. We discern no defect in t h e district court's jurisdiction. B . Summary Judgment H a r r is also challenges the district court's grant of summary judgment to N e w Werner, contending that the record before the district court indicated that N e w 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 " W e 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) (q u o ta t io n marks omitted). "Summary `judgment . . . should be rendered if the p le a d in g s , the discovery and disclosure materials on file, and any affidavits show t h a t there is no genuine issue as to any material fact and that the movant is e n tit le d to judgment as a matter of law.'" Id. at 234 (ellipsis in original) (quoting F ED. R. CIV. P. 56(c)(2)). "When the burden at trial rests on the nonmovant, the m o v a n t must merely demonstrate an absence of evidentiary support in the r e c o r d for the nonmovant's case." Int'l Ass'n of Machinists & Aerospace Workers, A F L ­ C I O v. Compania Mexicana de Aviacion, S.A. C.V., 199 F.3d 796, 798 (5th C ir . 2000) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). Harris's argument that New Werner assumed liability for his claims is b e lie d by the record. Both parties agree that the Asset Purchase Agreement g o v e r n s whether New Werner assumed a certain liability from Werner. This A g r e e m e n t shows that New Werner was not a "successor" to the Werner E n t it ie s , and, relevant to this matter, only assumed liabilities of the "customers o f [the Werner Entities]." New Werner presented the Agreement, the Delaware bankruptcy court's o r d e r s , and an affidavit as support for its contention that it did not "expressly a s s u m e " liability for the claims Harris raised in his complaint. New Werner did a d m it , however, that it had assumed certain liabilities including "the liability of L o w e [']s [for claims by purchasers of the Werner Entities' ladders]," but it noted t h a t Harris's claims against Lowe's had been dismissed following settlement. We need not and do not determine whether Harris has such a potential c la im against New Werner based on assumption of liability for claims against L o w e 's because Harris's complaint did not raise claims against New Werner b a s e d on assumption of liability for a claim against Lowe's. Instead, Harris r a is e d claims against New Werner based on allegations concerning New Werner's 8

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No. 09-11225 c o n d u c t : Harris concedes on appeal that New Werner was not involved in the m a n u fa c t u r e of the allegedly defective ladder. Further, the causes of action for p r o d u c t s liability against a retailer and manufacturer are distinct under Texas la w . Compare TEX. CIV. PRAC. & REM. CODE ANN. § 82.003 (West Supp. 2009) (" L ia b ilit y of Nonmanufacturing Sellers") with id. § 82.005 ("Design Defects"). We will not construe Harris's pleadings to allege a cause of action not presented b e lo w . See Lemaire v. La. Dep't of Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2 0 0 7 ) ("[A]rguments not raised before the district court are waived and cannot b e raised for the first time on appeal.").3 M ore o v e r , the stipulation agreement between Harris, the Werner Entities, a n d the unsecured creditors committee--which was not before the district court a t summary judgment4 -- d o e s not upset this determination. The stipulation a g r e e m e n t clarifies that New Werner assumed only certain liabilities under the A s s e t Purchase Agreement. To wit, "[t]o the extent that [Harris's] assertion that t h e Werner ladder involved was purchased at Lowe's is accurate, [his] claims are A s s u m e d Liabilities under the [Asset] Purchase Agreement." In sum, there is n o support for the claims in Harris's complaint, and the district court properly g r a n t e d summary judgment in favor of New Werner.5 T h e bottom line is that Harris had an administrative claim against W e r n e r Co., the manufacturer of the ladder, and a potential claim against L o w e 's , the alleged retailer of the ladder. Harris dismissed the administrative
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. 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, 224­25 (5th Cir. 1993) ("[Appellant] has abandoned these arguments by failing to argue them in the body of his brief."). 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 c la im pursuant to the stipulation agreement, approved by the bankruptcy court, w it h o u t prejudice to his potential claim against Lowe's. The latter claim may h a v e been assumed by New Werner under the Asset Purchase Agreement (we s a y "may" because the critical schedule is missing from the record). But Harris n e v e r pleaded such a claim against New Werner. The claims he did

p le a d -- p r o d u c t liability claims against a manufacturer--were properly d is m is se d . I I I . CONCLUSION F o r the foregoing reasons, we AFFIRM the judgment of the district court. A F F IR M E D

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