Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Joshua Castillo was killed, and his two brothers were injured in a fire started with a cigarette lighter purchased by his sister at a Circle K store. Joshua’s parents brought a products liability case against SSP Partners Inc., Circle K’s parent company, and Gladstrong Investments (USA) Corp. (Gladstrong USA). In turn, SSP sued Metro Novelties, as the supplier of the lighters, for indemnity. SSP and Metro together also sued Gladstrong USA for indemnity. SSP and Metro also sued Tianjin Sico Lighters Co., Ltd., the alleged manufacturer of a component of the lighter, though these claims were severed. And SSP and Metro failed to secure leave of court to sue Gladstrong USA’s parent company, known as Gladstrong Hong Kong. Gladstrong USA filed a no-evidence summary judgment motion against SSP and Metro in the indemnity case, which was granted. Gladstone on the same day settled with the Castillo family. The Castillos’ case against SSP and Metro went to trial, where the jury ruled for the Castillos. On appeal, SSP says summary judgment in the Gladstrong USA case was improper. As to the case with the Castillos, SSP says the trial court erred in granting a no-evidence summary judgment motion filed in that case denying statutory indemnity on SSP’s claim that Gladstrong USA was either the manufacturer or the supplier of the lighter; and common law indemnity. Metro raises substantially similar arguments, as well arguments that its proof shoed it was entitled to indemnity under Civ. Prac. & Rem. Code �82.002 against Gladstrong USA because Gladstrong USA is a manufacturer under �81.001(4), jointly liable with Gladstrong Hong Kong under the single business enterprise theory, and is deemed to be a manufacturer under 15 U.S.C. �2052(a)(4). Metro also raises common law indemnity arguments. HOLDING:Reversed and remanded. Addressing Metro’s argument relating to the Gladstrong USA summary judgment motion, the court finds that Gladstrong USA waived its objections to Metro’s summary judgment evidence because Gladstrong USA did not secure a ruling on its objections and did not object to a lack of a ruling. Turning to the propriety of the summary judgment ruling, the court first concludes that establishing Gladstrong USA’s status as the manufacturer was an element of SSP’s and Metro’s claim for indemnity for which they bore the burden of proof. Consequently, Gladstrong USA properly brought no-evidence summary-judgment motions against SSP and Metro on this basis. The court then examines the statutory duty to indemnity found in �82.002. Under this statute, SSP and Metro had the burden to show: (1) SSP and Metro were statutory sellers; (2) they suffered a qualifying loss; (3) the loss was suffered in a products liability action as defined by statute; and (4) Gladstrong USA qualifies as a statutory manufacturer. The resolution of this issue hinges on Gladstrong USA’s status under the fourth element above. The court reviews seven unique facts linking Gladstrong USA to Gladstrong Hong Kong. The court also notes that the officers of both companies are the same, and, except for the president’s wife and daughter, only one other company employee works in this country. The court finds ample evidence and case law to support the finding that Gladstrong USA and Gladstrong Hong Kong were a single business enterprise, but those cases are only in the context where both parties have been named to the lawsuit. Here, however, there is no authority supporting liability as a single business entity when one of the businesses was not, at some point, made a party to the case. The court does find support for the fact that even if Gladstrong USA did not actually manufacture the lighter and cannot be found to be the manufacturer by statute, it is still liable as the apparent manufacturer of the lighter. First, although Gladstrong USA did not place its own name on the lighter, more than a scintilla of evidence suggests it was nevertheless closely involved in the importation, marketing and distribution of the lighter and that it participated significantly in the issues related to a recall of the product and its subsequent redesign. Furthermore, the testimony of the company’s president indicates that he, either individually or in his capacity as an officer and director of Gladstrong Hong Kong, deliberately holds Gladstrong USA out to be the manufacturer so that customers will believe the price is lower. Though the doctrine of apparent manufacturer still survives, and could apply to these facts, the court finds that the doctrine does not appeal to be applicable under the specific statutory definition of “manufacturer” under �82.001(4). It does, however, remain under the common law duty to indemnify, the court rules, and it applies to this case. “Evidence tendered by SSP and Metro demonstrates that Gladstrong USA, although perhaps not the ‘manufacturer’ as defined under the statute, is so closely allied with the manufacturer as to be virtually indistinguishable from it, and that the company has been deliberately ‘held out’ as the manufacturer of the product in order to entice additional consumer sales. Evidence further exists to suggest that Gladstrong USA was involved in the importation and marketing of the lighter. We therefore conclude that SSP and Metro have satisfied their burden of proof to tender more than a scintilla of evidence as to the challenged element of their indemnity claims, namely, that Gladstrong USA is the manufacturer of the lighter. We conclude that the evidence is more than a scintilla and sufficient to defeat a no-evidence motion for summary judgment. Our conclusion is limited to the facts of this case.” OPINION:Errlinda Castillo, J.; Hinojosa, Yanez and Castillo, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.