United States District Court, E.D. New York
the Plaintiff MARSHALL T. POTASHNER DAVID SHYER GLENN P.
BERGER Jaffe & Asher LLP
the Defendants JAMES C. UGHETTA JASON SCHMITZ Littleton Joyce
Ughetta Park & Kelly LLP
FREDERIC BLOCK SENIOR UNITED STATES DISTRICT JUDGE
Liberty Mutual Fire Insurance Co. (“Liberty”)
brings this action as a subrogee of Bollinger Sports LLC
(“Bollinger”), claiming breach of warranty and
contractual indemnification. Defendants BRG Sports, Inc.,
Bell Sports, Inc., and Vista Outdoor (collectively,
“defendants”) move to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6), arguing Liberty failed to
state its claims and is barred from bringing them by an
anti-assignment provision. Defendants' motion is denied.
lawsuit stems from a dispute over an April 9, 2012 Asset
Purchase Agreement (“APA”) between Bollinger and
defendants. Pursuant to the APA, Bollinger purchased a
set of assets from Bell Sports, Inc. (“Bell
Sports”), including the design of defendants'
Embark Resistance Band (the “Embark Band”)
exercise equipment. Bollinger then began selling its own
product line (the “Bollinger Band”) based on the
design of the Embark Band.
April 1, 2014, Bollinger was sued for products liability by a
purchaser of the Bollinger Band, who claimed it malfunctioned
and struck him in the eye (the “Underlying
Action”). Bollinger then discovered that in 2011, the
Embark Band had been recalled in cooperation with the
Consumer Product Safety Commission (“CPSC”) for
the same defect. Bell Sports did not disclose this recall or
product defect to Bollinger when it entered into the APA.
who insured Bollinger for the relevant time period, stepped
into Bollinger's shoes and defended the Underlying Action
as Bollinger's subrogee. Liberty settled the Underlying
Action for $650, 000 and incurred $155, 000 in costs for the
defense. Liberty then brought the present action, again as
Bollinger's subrogee, against defendants to recover this
Federal Rule of Civil Procedure 12(b)(6), a party may move to
dismiss a complaint that “fail[s] to state a claim upon
which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To
survive, the complaint must plead “enough facts to
state a claim to relief that is plausible on its face,
” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007), and “allow the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged, ” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).
parties agree that Texas substantive law controls under the
APA's choice of law provision.
defendants argue that Texas's “express negligence
test” bars Liberty's claims. Under this test, a
party that seeks “to indemnify the indemnitee from the
consequences of its own negligence must express that intent
in specific terms.” Ethyl Corp. v. Daniel
Construction Co., 725 S.W.2d 705, 708-09 (Tex. 1987).
Defendants argue that what Liberty is seeking is
indemnification for Bollinger's negligence in selling the
defective exercise band.
argument mischaracterizes Liberty's complaint. Liberty
claims that defendants should indemnify it for Bell
Sports's failure to disclose the design flaws and recall,
not Bollinger's own negligence in selling the ...