Gray v. Leisure Life Industries

Summary

The New Hampshire Supreme Court considered whether a manufacturer was required to indemnify a retailer that settled claims brought by an injured consumer. The court held that common-law indemnity was unavailable because the retailer’s settlement did not extinguish the manufacturer’s potential liability to the plaintiffs. The court also reversed the award of attorney’s fees and costs and did not reach the successor-liability issue.

Holdings

1. A party seeking noncontractual indemnity must first extinguish the alleged indemnitor's liability to the underlying plaintiff through a settlement or satisfaction of judgment. Because Orvis's settlement released only Orvis and left the defendants potentially liable, the plaintiffs, as Orvis's assignees, could not recover indemnity.
2. The plaintiffs were not entitled to recover Orvis's attorney's fees and costs because the trial court's fee award was premised on the existence of an indemnity obligation, and no indemnity obligation existed.
3. The court did not reach the defendants' successor-liability argument because reversal of the indemnity judgment made resolution of that issue unnecessary.

Questions Presented

1. Whether Orvis's settlement with the plaintiffs, which released Orvis but did not extinguish the defendants' potential liability, supported a claim for noncontractual indemnity against the defendants.
2. Whether the plaintiffs were entitled to recover Orvis's attorney's fees and costs incurred in defending the underlying action.
3. Whether the trial court erred in ruling on successor liability.

Disposition

reversed