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Standex International Corp. v. QCP, Inc.

United States District Court, S.D. New York

February 6, 2017

STANDEX INTERNATIONAL CORPORATION and BAKERS PRIDE OVEN CO., LLC f/k/a BPOC ACQUISITION CO., INC., Plaintiffs,
v.
QCP, INC. f/k/a BAKERS PRIDE OVEN CO., INC., Defendant/Third-Party Plaintiff,
v.
APW/WYOTT FOODSERVICE EQUIPMENT COMPANY and ASSOCIATED AMERICAN INDUSTRIES, INC., Third-Party Defendants.

          OPINION AND ORDER

          KATHERINE POLK FAILLA United States District Judge.

         Plaintiffs Standex International Corporation (“Standex”) and Bakers Pride Oven Co., LLC (“Bakers Pride, ” and with Standex, “Plaintiffs”), brought this action against Defendant QCP, Inc. (“QCP” or “Defendant”), seeking (i) a declaratory judgment affirming Plaintiffs' interpretation of the parties' Asset Purchase Agreement (the “APA”), and (ii) damages for QCP's breach of its APA indemnification obligations. QCP asserted counterclaims against Plaintiffs, pursuing (i) a declaratory judgment affirming QCP's interpretation of the APA, (ii) reimbursement for its legal costs, and (iii) a declaration of Plaintiffs' Plaintiffs to remit the same to QCP and/or QCP's insurers. QCP also brought an action against APW/Wyott Foodservice Equipment Company (“APW”) and Associated American Industries, Inc. (“AAI, ” and with APW, “Third-Party Defendants”) to obtain similar relief: (i) a declaratory judgment affirming QCP's interpretation of the APA, (ii) reimbursement for QCP's legal costs, and (iii) a declaration of Third-Party Defendants' indemnification or contribution obligations and a court order directing Third-Party Defendants to remit the same to QCP and/or QCP's insurers.

         Plaintiff Standex has moved to dismiss the counterclaims against it under Federal Rule of Civil Procedure 12(b)(6); AAI and APW have moved to dismiss Defendant's Third-Party Complaint on the same basis. For the reasons set forth herein, both motions are granted.

         BACKGROUND[1]

         A. Factual Background

         1. The APA Between QCP and Bakers Pride

         In the summer of 1995, [2] QCP, its shareholders, and Bakers Pride “entered into [the APA] for the sale of certain defined assets, including tangible personal property and equipment, inventory, accounts receivable, the ‘Baker's Pride' corporate name, and other assets.” (Compl. ¶ 9; TPC ¶¶ 26-27).[3]Various subsections of the APA detailed the terms of the exchange: Section 1.03 governed the retention of liabilities and established that as of the APA's Effective Date, Bakers Pride would “assume and agree to pay only the liabilities and obligations” of QCP that were “listed on Schedule 1.03.” (Compl. ¶ 11 (emphasis added); see also Id. at Ex. A; TPC, Ex. A). These liabilities included, as relevant here, “[p]roduct liabilities based on events that occurred after the Closing Date” of July 20, 1995. (Compl., Ex. A; TPC, Ex A). Section 1.03 also emphasized the exclusivity of these listed liabilities, noting that Bakers Pride would “not assume or be liable for any other liabilities or obligations” of QCP except as otherwise specified by the APA. (Compl., Ex. A; TPC, Ex. A).

         Article VI of the APA addressed the issue of indemnification. Section 6.01 dictated that QCP and its shareholders

agree[d] to indemnify, defend and hold harmless [Bakers Pride] and its officers, directors, agents, attorneys and affiliates from and against all losses, claims, obligations, demands, assessments, penalties, liabilities, costs, damages, reasonable attorneys' fees and expenses (collectively, “Damages”) asserted against or incurred by them by reason of or resulting from ... [a]ny product liability based on events that occurred on or prior to the Closing Date; ... [or] [a]ny liability of [QCP] not specifically assumed by [Bakers Pride in the APA].

(Compl., Ex. A; TPC, Ex. A). Section 6.02, in turn, outlined Bakers Pride's corresponding indemnification obligations, stating that Bakers Pride

agree[d] to indemnify, defend and hold harmless [QCP] and [its] Shareholders and [QCP's] officers, directors, agents, attorneys and affiliates from and against all Damages asserted against or incurred by them by reason of or resulting from ... the failure of [Bakers Pride] to pay, perform and discharge when due any Assumed Liabilities.

(Compl., Ex. A; TPC, Ex. A).

         2. Standex, AAI, and APW

         There is no dispute that the remaining parties to this litigation - Standex, AAI, and APW - were not signatories to the APA. (Compl. ¶ 16; Pl. Br. 3; Def. Opp. 8). But BPOC Acquisition Company, Inc., which was a signatory, is alleged to have been formed by “certain members of APW, ” for the purpose of entering into the APA. (TPC ¶ 13). It is further alleged that at some point after the execution of the APA, both Bakers Pride and APW became subsidiaries of AAI. (Id. at ¶ 33; TPC, Ex. B at 3; Ans., Ex. B at 3).

         On January 9, 2007, Standex and AAI entered into a Stock Purchase Agreement (the “SPA”), through which Standex purchased all shares of AAI, including all shares of Bakers Pride. (TPC ¶¶ 15-18; id. at Ex. B). QCP contends that this purchase made Standex “a corporate affiliate of [Bakers Pride]” (Compl. ¶¶ 22-23), and, by extension, made Bakers Pride a Standex subsidiary, “a member of the [Standex] family of companies, ” and “a division of [Standex]” (TPC ¶¶ 17-18; see also Id. at ¶¶ 34-36).

         3. The Asbestos Litigations

         Plaintiffs “have been named and anticipate that they will continue to be named as defendants in numerous claims alleging bodily injury from exposure to asbestos allegedly contained in ‘Bakers Pride' ovens manufactured, distributed, sold, or installed by QCP ... prior to the Closing Date of the APA.” (Compl. ¶ 25). QCP has been named as a defendant in these claims as well, and is also likely to continue to be. (Id. at ¶ 26).

         Plaintiffs disclaim liability for these claims. They allege that all of the asbestos-related claims are premised on “events” that occurred “a decade or more prior to the Closing Date of the APA.” (Compl. ¶ 28). Moreover, in the years since that date, Bakers Pride “has not manufactured, distributed, sold or installed any ‘Baker's Pride' ovens containing asbestos.” (Id. at ¶ 29). Therefore, “[f]or nearly 20 years, [Plaintiffs] tendered the Asbestos Claims that name[d] them as defendants to QCP and/or its agents, and QCP and/or its agents defended and resolved [them].” (Id. at ¶ 32). It was not until 2015 that “QCP and/or its agents” began “fail[ing] and refus[ing] to indemnify, defend and hold harmless Standex and [Bakers Pride] from and against the Asbestos Claims.” (Id. at ¶ 35).

         B. Procedural Background

         On April 23, 2015, QCP filed a complaint in this District, which was docketed at number 15 Civ. 3243 (GBD). (TPC ¶ 37; Ans. ¶ 93). But before the case progressed very far, and “[i]n order to allow the parties to seek an amicable resolution of the issues, ” the parties agreed that the case “would be dismissed without prejudice, ” with leave to “be refiled if a resolution was not attained and on twenty days[‘] notice.” (Id. at ¶ 38; see also Ans. ¶ 94; TPC, Ex. C; Ans., Ex. C). The parties also entered into a tolling agreement with regard to any applicable statute of limitations. (TPC ¶ 43; Ans. ¶ 95). That agreement specified that “any claim which was timely asserted in the first filed action would be considered timely [in any later-filed action] even if in the intervening time period a Statute of Limitations may have expired.” (Id. at ¶ 44; see also Id. at Ex. D; Ans., Ex. D).

         Plaintiffs - who were defendants in the earlier litigation - filed their Complaint in this action on January 22, 2016 (Dkt. #1), and an Amended Complaint on February 5, 2016 (Dkt. #11-12). In the interim, on January 29, 2016, QCP provided the notice required by the parties' Tolling Agreement. (TPC ¶ 39). QCP answered on March 4, 2016, asserting counterclaims against Plaintiffs. (Dkt. #19). Both parties then filed a series of letters between March 21, 2016, and April 5, 2016, advising the Court that QCP wished to reopen the prior case between the parties, in order to name parties that Plaintiffs had omitted from their Complaint, and that Plaintiffs opposed this reopening. (Dkt. #26-27, 29-30). The Court directed the parties to appear at a conference to discuss this dispute. (Dkt. #31).

         At the conference held on April 20, 2016, the Court discussed with the parties their intentions regarding this litigation. (Dkt. #36). The Court directed QCP to file an Amended Answer and Third-Party Complaint within 30 days of the conference. (Id.). The Court also gave Plaintiff Standex leave to file a motion to dismiss both QCP's counterclaims against it, and gave QCP's ...


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