Nelson v. F.W. Woolworth Co.

788 F.2d 472
CourtCourt of Appeals for the Seventh Circuit
DecidedApril 25, 1986
DocketNo. 85-1654
StatusPublished
Cited by1 cases

This text of 788 F.2d 472 (Nelson v. F.W. Woolworth Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nelson v. F.W. Woolworth Co., 788 F.2d 472 (7th Cir. 1986).

Opinion

CUDAHY, Circuit Judge.

F.W. Woolworth Co. (“Woolworth”) ordered a shirt through Bunnan Tong Co. (“Bunnan Tong”) that ignited and injured one of the plaintiffs. This diversity case concerns whether Woolworth or Bunnan Tong should bear the costs of settlement for those injuries. The District Court for the Western District of Wisconsin found that Bunnan Tong was not liable for any of the plaintiffs’ claims against Woolworth. Woolworth appeals, contending that the district court ignored the indemnity agreement between the parties. We affirm.

On October 28, 1978, four-year-old Telina Nelson was severely injured when she ignited a flannel shirt she was wearing with a butane lighter. The shirt had been purchased from defendant-third party plaintiff-appellant F.W. Woolworth Co. at its Rice Lake, Wisconsin store. The shirt was manufactured in Hong Kong. Bunnan Tong was Woolworth’s purchasing agent in Hong Kong and had helped Woolworth secure a manufacturer there. The two companies had done business for over 40 years.

Telina Nelson’s shirt was one of 4,000 dozen that Woolworth had ordered through Bunnan Tong in 1976. As part of that deal Woolworth had sent its buying representative to Hong Kong to select the fabric and arrange for the specifications, such as the labeling and packaging of the shirts. Woolworth’s specifications also required that two sample shirts be sent to the United States for testing for compliance with federal and company flammability requirements. The shirts were found in compliance.

The 1966 contract between Woolworth and Bunnan Tong, which was renewed in 1976, contained an indemnity provision which specified that Bunnan Tong:

... agree[s] to stand behind all of the merchandise which you [Bunnan Tong] have furnished to us [Woolworth], which you are now furnishing to us, or which you may furnish to us — at any future date — and you agree that you will hold us harmless in regard to any claims, which may be made against us — by anyone involving this merchandise, or its sale by us, except for any claims arising from fault or negligence on our [Woolworth’s] part.

In addition, the 1976 purchase order contained a second indemnification clause which provided:

In accepting this order, shipper (or seller) agrees to indemnify, save harmless and defend F.W. Woolworth Company against any claim or action involving this merchandise or arising out of its sale or possession by F.W. Woolworth Company [474]*474and against any loss or damage or expense incurred by F.W. Woolworth Company in connection therewith.

In June 1982, Nelson through her guardian brought suit against Woolworth and Bunnan Tong, along with Park Industries, Inc., the manufacturer of the butane lighter, and United Garment Manufacturing Company, the manufacturer of the shirt. The suit alleged that both the lighter and the shirt were made with design defects that made the products unreasonably dangerous. Woolworth filed a cross-claim against Bunnan Tong and asked Bunnan Tong to assume its defense pursuant to the indemnity agreement. Although making no allegations of Woolworth’s negligence, Bunnan Tong refused.

Bunnan Tong also refused two later tenders of Woolworth’s defense. Woolworth eventually settled with plaintiffs for $1.3 million, while Bunnan Tong settled for $7,500. Woolworth continued to try to recoup the amount of the settlement and costs from Bunnan Tong. Woolworth moved for summary judgment. The district court denied this motion because Bun-nan Tong contended that the fact of Woolworth’s possible negligence remained in dispute. At the time the motion was made, Bunnan Tong argued before the court that, “To the extent that it is found that the certain garment was not in compliance with local standards for flame retarded garments, then F.W. Woolworth must share some of the blame with the parents.” (Excerpts from November 14, 1984 hearing, Appellants’ Appendix at 144).

The case eventually went to a bench trial. Woolworth presented two fabric experts who testified that the flannel met stringent national and company standards. Bunnan Tong presented no independent testimony of its own but offered a deposition summary of plaintiffs’ expert, Robert Johnson, who stated that the product was unsafe and failed to provide adequate warning of its flammability.

The court found for Bunnan Tong. In reaching its conclusion, the court noted that Johnson’s deposition illustrated how Woolworth might potentially have been at fault. Johnson had stated, inter alia, that the shirt burned with intense heat and flame, was difficult to extinguish, did not contain available flame retardants, and carried no warning label. Thus, the court held that “the potential liability to the plaintiffs faced by Woolworth flowed from its conduct and its conduct alone.”

Noting that the indemnity provision governs unless Woolworth is negligent and arguing that no finding of negligence was ever made, Woolworth asks this court to reverse the district court’s ruling. We find the district court’s finding supportable as well as fair in light of the evidence before it and therefore affirm.

I.

Looking solely at the indemnity provisions in the buying agreement and purchase order, Woolworth contends that “Bunnan Tong did not agree to indemnify Woolworth simply for claims caused by Bunnan Tong. Bunnan Tong agreed to hold harmless and defend Woolworth from any claims from anyone involving any aspect of the merchandise as long as they were not caused by Woolworth’s negligence.” (Appellant’s Brief at 25-26). Woolworth also argues that in agreeing to these provisions, Bunnan Tong assumed the burden for paying for claims unless it could prove Woolworth’s fault or negligence. While Bunnan Tong told the court that Woolworth may have shared the blame with Telina Nelson’s parents for her injuries, Woolworth notes that Bunnan Tong offered no independent testimony demonstrating fault. Therefore, Woolworth concludes, its summary judgment motion was, in essence, unopposed and should have been granted by the District Court. Moreover, to the extent that the court made any findings of fact against the company, Woolworth believes these were clearly erroneous.

Summary judgment is, of course, addressed to the discretion of the court. See McLain v. Meier, 612 F.2d 349, 356 (8th Cir.1979), and the trial court is given wide [475]*475latitude in determining whether entry of summary judgment in a particular situation is appropriate. See Fine v. City of New York, 71 F.R.D. 374 (S.D.N.Y.1976). Therefore, it was within the court’s power to deny appellant’s motion and allow the issues to be further developed at trial.

Nor do we find the trial court’s ultimate determinations to be clearly erroneous. Woolworth points to one clause in the purchase order and buying agreement and concludes that the intention was plain that Bunnan Tong would indemnify unless it could show that Woolworth was at fault or negligent.

Under the applicable Wisconsin law, parties may certainly negotiate indemnity agreements. See Dykstra v. Arthur G. McKee & Co., 92 Wis.2d 17, 284 N.W.2d 692 (1979). In construing such agreements, the language of the contract is an important tool. See Matter of Watertown Tractor & Equipment Co., Inc.,

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Related

Nelson v. Woolworth
788 F.2d 472 (Third Circuit, 1986)

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Bluebook (online)
788 F.2d 472, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-v-fw-woolworth-co-ca7-1986.