Continental v. Ball Corp

• Court: Colorado Court of Appeals
• Decided: April 24, 2025
• Docket: 24CA0822
• Status: Unpublished

Opinion

24CA0822 Continental v Ball Corp 04-24-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA0822 Jefferson County District Court No. 21CV30699 Honorable Tamara S. Russell, Judge

Continental Holdings, Inc.,

Plaintiff-Appellant,

v.

Ball Corporation and Ball Metalpack, LLC, n/k/a Sonoco Metal Packaging, LLC,

Defendants-Appellees.

JUDGMENT AFFIRMED

Division IV Opinion by JUDGE PAWAR Grove and Berger*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced April 24, 2025

Wheeler Trigg O’Donnell LLP, Joel S. Neckers, Shawn K. Neal, Danielle L. Trujillo, Denver, Colorado, for Plaintiff-Appellant

Steptoe & Johnson PLLC, Deva A. Solomon, Amber M. Moore, Denver, Colorado, for Defendants-Appellees

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2024. ¶1 Plaintiff, Continental Holdings, Inc. (Continental), sued

defendants, Ball Corporation and Sonoco Metal Packaging, LLC, for

breach of contract. A jury found no breach, and judgment entered

for defendants. Continental appeals and we affirm.

I. Background

¶2 The focal point of this appeal is what effect a 1990 stock sale

had on the parties’ indemnification rights and obligations. There is

no dispute about the events preceding the 1990 stock sale or the

legal impact of those events. But the parties do contest the legal

effect of the stock sale.

A. Undisputed Pre-Stock Sale Events

¶3 The contract at issue was executed in 1987, before

Continental existed (the 1987 contract). Under the 1987 contract,

Continental Can Company, USA, Inc. (CCC-USA), sold a portion of

its business, including manufacturing plants, to United States Can

Company (U.S. Can). The contract included an indemnity provision

under which the buyer, U.S. Can, agreed to indemnify the seller,

CCC-USA, for all liabilities incurred after the closing date of June 1,

1987. The indemnification clause applied to the buyer’s and seller’s

respective affiliates, successors, and assigns. In other words, U.S.

1 Can and its successors, affiliates, and assigns were obligated to

indemnify CCC-USA and its successors, affiliates, and assigns.

¶4 At the time the 1987 contract was executed, CCC-USA had a

parent company. After the contract was executed, that parent

company merged into the newly formed Continental. Continental

thus became CCC-USA’s parent company. Continental was also

CCC-USA’s affiliate under the 1987 contract’s definition of that

term (one entity was the affiliate of another if the entity controlled,

was controlled by, or was under common control with that other

entity). Thus, at that time, Continental was entitled to

indemnification under the 1987 contract.

B. The 1990 Stock Sale and Subsequent Events

¶5 By 1990, CCC-USA had changed its name to Continental

Beverage Packaging, Inc. (Continental BP). That same year,

Continental sold all its stock in Continental BP (which had been a

party to the 1987 contract and was a directly indemnified party

thereunder) to another company. The central dispute in this appeal

is whether Continental was still entitled to indemnification under

the 1987 contract after the 1990 stock sale.

2 ¶6 The liability for which Continental seeks indemnification arose

when workers suffered various injuries at the businesses and

plants CCC-USA had sold to U.S. Can in 1987. Some of the injured

workers sued Continental for their injuries, and Continental

incurred various losses in those actions. Continental sought

reimbursement for those losses from defendants, claiming they were

U.S. Can’s successors and therefore owed Continental

indemnification under the 1987 contract. Defendants refused.

Continental then filed this action alleging that defendants breached

the 1987 contract by refusing indemnification.

¶7 At trial, a jury determined that neither defendant breached the

1987 contract, and the trial court entered judgment for defendants.

Thereafter, Continental moved for judgment notwithstanding the

verdict (JNOV). As relevant here, Continental argued that under

the undisputed facts of the case, any reasonable juror would have

concluded that Continental was an indemnitee under the 1987

contract, defendants were indemnitors, and defendants breached

the contract by refusing to indemnify Continental. The trial court

denied the motion.

3 ¶8 Continental appeals. It argues that the court erred by (1)

denying its motion for JNOV and (2) excluding evidence and

refusing to give a jury instruction that would have helped the jury

interpret an ambiguous contract. We disagree with these

arguments and affirm.

II. Motion for JNOV

¶9 We review de novo a court’s denial of a motion for JNOV.

Parks v. Edward Dale Parrish LLC, 2019 COA 19, ¶ 9. In doing so,

we view the evidence and all reasonable inferences from it in the

light most favorable to the nonmoving party. Id. at ¶ 10. A court

should deny a motion for JNOV unless there is no evidence that

could support the verdict. Id. We conclude that there was at least

some evidence supporting the conclusion that Continental was not

an indemnitee after the 1990 stock sale. Accordingly, there was

evidence that supported the verdict and the trial court properly

denied Continental’s motion.1

¶ 10 The parties agree that in 1990, before the stock sale,

Continental was an indemnitee because it was an affiliate of its

1 Based on the conclusion that Continental was not an indemnitee,

we need not address whether defendants were indemnitors.

4 subsidiary, Continental BP (formerly CCC-USA). Continental

argues that it remained an indemnitee after it sold all its stock in

Continental BP based on the assignment provision in the 1987

contract, which imposed restrictions on how certain contract rights

could be assigned.2 According to Continental, it could not have

assigned away its indemnification rights in the 1990 stock sale

because it did not execute an assignment that complied with the

assignment provision. We disagree because we conclude that the

plain and unambiguous language of the assignment provision

renders it inapplicable to Continental. See Mid-State Indus., Ltd. v.

State, 986 N.Y.S.2d 637, 639 (App. Div. 2014) (an unambiguous

contract is enforced according to the plain meaning of its terms).3

¶ 11 The assignment provision says: “This Agreement shall be

binding upon and shall inure to the benefit of the parties and their

respective successors and assigns; provided, that neither this

2 Continental does not tell us when the injuries that gave rise to the

liability occurred, nor does Continental address any impact this timing has on its indemnification rights. Instead, Continental limits its argument to whether it remained an indemnitee after the 1990 stock sale. We therefore confine our analysis to only this issue. 3 The 1987 contract provided that it was “governed by and

construed in accordance with” the laws of New York.

5 Agreement nor any right hereunder may be assigned by a party

without the consent of the other parties hereto.”

¶ 12 The provision as a whole distinguishes between parties to the

1987 contract and successors and assigns of those parties. And it

imposes a restriction only on a party’s assignment of rights.

Continental was not a party to the 1987 contract — indeed,

Continental did not even exist in 1987. And because Continental

was not a party, the assignment restrictions in the 1987 contract

did not apply to it.

¶ 13 Because we conclude that Continental could transfer its

indemnification rights free from the restrictions of the 1987

assignment provision, the question becomes whether there was

evidence that Continental executed such a transfer in the 1990

stock sale. We conclude that there was.

¶ 14 A purchaser of a corporation’s stock takes on the rights and

liabilities that the stock previously conferred on the seller. See

Rochester & K.F. Land Co. v. Raymond, 53 N.E. 507, 509 (N.Y.

1899) (when corporate stock is transferred, “the rights and

liabilities of the stockholder are transferred to the purchaser”);

Cherry Green Prop. Corp. v. Wolf, 722 N.Y.S.2d 537, 538 (App. Div.

6 2001) (citing Rochester, 53 N.E. at 509). Continental does not

dispute that (1) it was an indemnitee only because it owned

Continental BP’s stock, thereby making it Continental BP’s parent

company; and (2) in the 1990 stock sale, Continental sold all its

shares in Continental BP. These undisputed facts were at least

some evidence that Continental sold its indemnitee status with its

Continental BP stock.

¶ 15 Furthermore, there was evidence that after the 1990 stock

sale, Continental no longer met the 1987 contract’s definition of

affiliate. Continental’s expert testified at trial and agreed that after

the 1990 stock sale, Continental BP was no longer “part of

[Continental’s] family tree.” This was evidence that Continental no

longer controlled Continental BP and had therefore lost its affiliate

and indemnitee status.4

4 Continental presents no argument in its opening brief about

whether it qualified for indemnification as a successor. We therefore do not address this argument. See City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 480 (Colo. App. 2003) (declining to consider arguments not raised in opening brief).

7 ¶ 16 Thus, there was at least some evidence supporting the jury’s

verdict that defendants did not breach the 1987 contract because

Continental was no longer an indemnitee under it.

¶ 17 Continental argues that this conclusion is contrary to the

intent of the parties and absurd. But in its principal brief,

Continental does not explain where in the 1987 contract we might

find evidence of this contrary intent. Continental does not identify

where the parties expressed their intent that a once-indemnified

affiliate retains its indemnitee status after it ceases to qualify as an

affiliate. Similarly, we are unaware of any once-an-affiliate-always-

an-affiliate provision in the 1987 contract. Instead, as explained

above, we think that under the plain, unambiguous language of the

contract, Continental was no longer an indemnitee after the 1990

stock sale because it (1) transferred its indemnification rights to the

stock purchaser and (2) no longer qualified as an affiliate.

¶ 18 As for Continental’s contentions that this outcome is absurd,

we respectfully observe that these contentions do not align with the

facts of the case. Continental writes that the jury’s verdict leads to

absurd results because, “although Continental is still obligated to

pay for liabilities arising out of anything it sold under the 1987

8 Agreement . . . Continental is not entitled to indemnification for

those liabilities because it sold the stock of completely unrelated

business operations from those associated with the 1987

Agreement.” First, Continental did not sell anything in 1987 —

Continental did not exist in 1987. Second, the propriety of

Continental’s liabilities for which it seeks indemnification is not

before us and does not inform our analysis. We address only

whether there was some evidence at trial that supported a finding

that Continental lost its indemnitee status in the 1990 stock sale.

¶ 19 Continental further contends that it is absurd that

the only entity able to enforce the indemnification provisions of the 1987 [contract] would be Crown [the stock purchaser] — a party that never purchased, owned, operated, or benefitted from the businesses associated with the 1987 [contract], thus could never incur any liabilities associated with those businesses — which renders the indemnification provisions in the 1987 [contract] ineffective.

Continental seems to be saying that it is absurd to indemnify “a

party that never purchased, owned, operated, or benefitted from the

businesses associated with the 1987 [contract].” But if Crown is

such a business, Continental is too. Like Crown, Continental

9 gained control of CCC-USA/Continental BP only after the latter sold

the business and assets that gave rise to the liability. Suffice it to

say we are not persuaded by Continental’s absurdity arguments.

III. Excluded Evidence and Rejected Jury Instructions

¶ 20 We also disagree with Continental’s allegations of instructional

and evidentiary error. We address them together because they

share the same faulty premise: that the trial court ruled that two

contract terms were ambiguous.

¶ 21 A trial court can admit extrinsic evidence of the contracting

parties’ intent only if the contract is ambiguous. See Schulte Roth &

Zabel LLP v. Metro. 919 3rd Ave. LLC, 164 N.Y.S.3d 104 (App. Div.

2022). If the contract is unambiguous, extrinsic evidence of the

parties’ intent is inadmissible. See Mid-State, 986 N.Y.S.2d at 639.

¶ 22 Continental argues that the trial court ruled that the

meanings of the contract terms “affiliate” and “successor” were

ambiguous. Thus, according to Continental, the court erred by

excluding extrinsic evidence of the contracting parties’ intent and

by refusing to instruct the jury on how to interpret an ambiguous

contract.

10 ¶ 23 Significantly, Continental does not explain how or why the

contested terms were ambiguous. Put differently, Continental does

not explain how the terms were “reasonably susceptible of more

than one interpretation.” Schulte Roth & Zabel, 164 N.Y.S.3d at 105

(citation omitted). Instead, Continental argues that the trial court

implicitly determined the terms were ambiguous. We reject this

premise and conclude that the trial court made no such ruling.

¶ 24 Continental recognizes that the trial court ruled several times

during trial that the 1987 contract was unambiguous, including the

terms at issue here. However, the court asked the jury to decide

whether Continental qualified as an affiliate and whether one

defendant qualified as a successor. According to Continental, by

asking the jury to decide these issues, the court necessarily and

implicitly ruled that the meanings of affiliate and successor were

ambiguous. And this implicit ruling, Continental argues, rendered

it error to exclude the evidence and refuse to give the jury

instructions.

¶ 25 But Continental’s argument conflates two issues:

(1) determining whether a contract term is ambiguous and

(2) applying an unambiguous contract term to the facts of the case.

11 The trial court asked the jury to do only the latter. And Continental

provides no authority for the proposition that asking a jury to do

the latter constitutes an implicit ruling that the contract term itself

is ambiguous. Indeed, we are aware of none.

¶ 26 We therefore conclude that the trial court never departed from

its ruling that the 1987 contract, including the meanings of affiliate

and successor, was unambiguous. Consequently, extrinsic

evidence of the parties’ intent was inadmissible and any instruction

on interpreting an ambiguous contract would have been improper.

IV. Disposition

¶ 27 The judgment is affirmed.

JUDGE GROVE and JUDGE BERGER concur.