SSP PARTNERS AND METRO NOVELTIES, INC., PETITIONERS,
GLADSTRONG INVESTMENTS (USA) CORPORATION, RESPONDENT
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS
====================================================Argued March 20, 2007
JUSTICE HECHT delivered the opinion of the Court.
In Texas, the seller of a defective product is subject to strict liability for damages the product causes even though the defect was not his fault, but he is generally entitled to indemnity from the manufacturer by statute and by common law. Is he entitled to indemnity from an upstream supplier other than themanufacturer? Not, we hold, by statute, and not under the common law without showing that the upstream supplier was at fault. We also hold that corporations cannot be held liable for each other’s obligations merely because they are part of a single business enterprise. For reasons different from the courts of appeals, we remand the case to the trial court for further proceedings.
The parents of afive-year-old boy killed in a house fire sued SSP Partners and Gladstrong Investments (U.S.A.) Corp. on a claim of product liability, alleging that the fire was started by a WAX-brand disposable butane lighter with a defective child-resistant mechanism, sold by SSP and designed, manufactured, and marketed by Gladstrong USA. SSP sought indemnity from Metro Novelties, Inc., one of its suppliers ofWAX lighters, and SSP and Metro both sought indemnity from Gladstrong USA. Before trial, the parents settled with Gladstrong USA and SSP for $1.6 million each, and SSP settled its indemnity claim against Metro for $800,000. Because SSP’s and Metro’s positions are aligned here, we refer to them collectively as SSP except when necessary to distinguish between them.
Gladstrong USA moved for summaryjudgment on SSP’s indemnity claims. Statutory indemnity under chapter 82 of the Texas Civil Practice and Remedies Code is owed only by a manufacturer, defined as “a designer, formulator, constructor, rebuilder, fabricator, producer, compounder, processor, or assembler of any product”. Gladstrong USA asserted that there was no evidence it manufactured WAX lighters or that it sold the lighter inquestion. In response, SSP argued that Gladstrong USA was a “producer” of WAX lighters within the ordinary meaning of that word and therefore a “manufacturer” under the statutory definition; that it was an apparent manufacturer with the same statutory duty; that it should be deemed to have been a manufacturer under industry standards and federal law; and that it should be liable with the actualmanufacturer because they were part of a single business enterprise. As for common law indemnity, SSP argued that upstream distributors other than the manufacturer must indemnify downstream distributors. The parties’ arguments thus raised six issues:
• Regarding statutory indemnity:
- Was Gladstrong USA a “manufacturer” of WAX-brand lighters as defined by the statute?
- Should Gladstrong USAbe deemed by federal law and industry standards to have been a “manufacturer” as defined by statute?
- Is an entity liable as a manufacturer if it is part of a “single business enterprise” with a manufacturer?
- Is an apparent manufacturer of a product a “manufacturer” as defined by statute?
• Regarding common law indemnity:
- Must upstream sellers indemnify downstream sellers for productliability?
- Did Gladstrong USA sell the lighter that caused the accident?
The record establishes the following facts. WAX lighters are made in China by Tianjin Sico Lighters Company, Limited and exported exclusively by Gladstrong Hong Kong, both Chinese companies. Gladstrong Hong Kong designed and patented the lighters’ safety wheel and instructed Tianjin on construction of the lighters....