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Hudson v. Siemens Logistics and Assembly Systems

December 19, 2007

CHARLES HUDSON AND DEBRA HUDSON, PLAINTIFFS,
v.
SIEMENS LOGISTICS AND ASSEMBLY SYSTEMS, INC., HK SYSTEMS, INC., AND EATON CORPORATION, DEFENDANTS,
HK SYSTEMS, INC., DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
EATON CORPORATION, DEFENDANT/THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

This matter has come before the Court on the summary judgment motions of Defendant/Third-Party Plaintiff HK Systems, Inc. and Defendant/Third-Party Defendant Eaton Corporation. For the reasons expressed below, HK Systems Inc.'s motion will be granted, and Eaton Corporation's motion will be denied.

BACKGROUND

On February 13, 2004, plaintiff Charles Hudson, who was a warehouse control analyst at the Exxon-Mobil Plant located in Paulsboro, New Jersey, was injured on the job when an automated guided vehicle ("AGV") struck him and pinned him against a conveyer system. On November 15, 2004, Hudson filed a complaint in New Jersey state court against defendant Siemens Logistics and Assembly Systems, Inc. ("Siemens") and HK Systems, Inc. ("HK"). The case was removed to this Court on December 29, 2004, and on August 15, 2005, HK filed a third-party complaint against Eaton Corporation ("Eaton"). On September 13, 2005, the Hudsons filed an amended complaint, adding Eaton as a defendant.

The claims between the Hudsons and the first-party defendants have been resolved--the Hudsons dismissed their claims against Siemens and HK and settled with Eaton--and what remains pending for resolution are HK's third-party claims against Eaton. Specifically at issue is whether Eaton is responsible for the attorneys' fees and costs HK incurred as a result of defending against the Hudsons' claims against it, and, correspondingly, the fees and costs HK has incurred as a result of the prosecution of this claim.

The parties' dispute revolves around an asset purchase agreement ("APA"), which was entered into on January 12, 1995 between Eaton-Kenway, Inc., a former subsidiary of Eaton, and Harnischfeger Engineers, Inc. As a result of the APA, the assets of Eaton-Kenway were sold to Harnischfeger, and a new entity, HK, was formed. The APA sets forth indemnification provisions delineating liability for certain occurrences happening prior to the execution date of the APA and after the execution of the APA. Pursuant to the agreement, Eaton is liable for certain things arising out of the time period before January 12, 1995, and HK is liable thereafter.

The conveyer system and AGV, which Mr. Hudson claims injured him, and which are part of a larger material handling system, were designed, built and installed by Eaton-Kenway between 1989 and 1991. When HK was served with the Hudsons' complaint, it tendered its defense to Eaton, stating that because Eaton manufactured the AGV that struck Mr. Hudson in 1991, Eaton was required to hold harmless and indemnify HK pursuant to the APA. HK interpreted the APA indemnification provision to require that Eaton must provide HK with a defense, or reimburse HK for its legal fees and costs in the event that Eaton declined the tender.

Eaton chose to decline HK's tender, and it now disputes that it is responsible for HK's legal fees and costs. Eaton argues that the APA does not impose on it a duty to defend HK. Instead, Eaton argues that the APA provides that each party pay for its own defense, and that under certain circumstances, one party would be required to indemnify the other. Eaton interprets the indemnification provision to only provide for indemnification for certain events arising prior to January 15, 1995, and the "indemnification" does not include attorneys' fees and costs. Further, Eaton argues that the APA does not contemplate that Eaton would be responsible for HK's post-APA acts or omissions, including attorneys' fees.

The parties agree that the resolution of this issue is a matter of law, and as such, it is ripe for a summary judgment.

DISCUSSION

A. Jurisdiction

This Court's jurisdiction is pursuant to 28 U.S.C. § 1332.

B. Summary Judgment Standard

Summary judgment is appropriate where the Court is satisfied that "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of ...


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