Trane Technologies Company LLC v. Hussmann Corporation

Background

The dispute concerned a stock purchase agreement under which Hussmann acquired a manufacturing plant and equipment from entities that were predecessors to Trane Technologies Company LLC. The equipment included a blanking shear. On September 6, 2014, a Hussmann employee suffered fatal injuries while working on that machine.

The employee’s wife and minor daughter later sued nine defendants, including Trane’s predecessors, alleging product defect, failure to warn, negligence, and wrongful death. Trane defended that lawsuit and stated that it had incurred $378,375.07 in defense expenses. Trane sought indemnification from Hussmann under Section 9.3 of the stock purchase agreement. Hussmann rejected Trane’s requests for indemnification.

The parties filed cross-motions for summary judgment. Trane argued that its losses were covered by Sections 9.3(a)(iii) and 9.3(a)(iv). Hussmann argued that Trane’s claim was subject to an 18-month survival period and was therefore time-barred.

Issue

The court addressed whether the third-party tort lawsuit fell within Section 9.3(a)(iii), covering losses arising from the operations and liabilities of the sold companies or business, or Section 9.3(a)(iv), covering proceedings brought by an unaffiliated third party that arise from or relate to operation of the business. The court also considered whether Section 9.1’s 18-month survival period barred Trane’s claim.

Reasoning

Applying New York contract law, the court held that the agreement’s language entitled Trane to indemnification under both Sections 9.3(a)(iii) and 9.3(a)(iv). The underlying lawsuit arose from operation of the business because the employee was injured at the plant while using a machine Hussmann acquired under the agreement.

The lawsuit also qualified as a covered “Proceeding” because the agreement defined that term to include a legal suit or action, it was brought by unaffiliated third parties, and it related to operation of the business.

The court rejected Hussmann’s time-bar argument. It interpreted the 18-month limitation in Sections 9.1 and 9.5 as applying to indemnification for breaches of representations, warranties, covenants, and agreements. The court concluded that the underlying tort lawsuit was not one of those contractual breaches. The court also rejected Hussmann’s argument that the agreement’s treatment of environmental claims showed that other claims could not survive beyond the 18-month period. In the court’s view, the broad language of Sections 9.3(a)(iii) and (iv) covered the losses at issue without an additional limitation.

Disposition

The court granted Trane Technologies Company LLC’s motion for summary judgment and denied Hussmann Corporation’s motion for summary judgment. The court stated that Trane was entitled to indemnification for its costs in defending the underlying lawsuit. The conclusion further instructed the clerk to grant judgment to Trane and stated that the complaint should be dismissed with costs. That language appears inconsistent with the court’s statement that Trane prevailed and was entitled to indemnification.