Gilbert Kouba, Individually and as Representative of the Estate of Audrey Kouba, Karen Williams and Curtis Kouba v. Northland Industries, Inc. D/B/A Magnum Fitness , JHTNA Manufacturing, L.L.C., and Johsnon Health Tech North America, Inc., 583 S.W.3d 857

Background

Magnum Fitness manufactured a treadmill later used by Audrey Kouba; she fell on the treadmill and died from her injuries.
Prior to the accident, Magnum sold its assets to JHTNA under an asset-purchase agreement (the Agreement); Johnson Health (JHTNA’s parent) guaranteed JHTNA’s obligations under the Agreement.
Paragraph 2.5.6 of the Agreement states JHTNA will assume “any Product Warranty Claim solely with respect to claims arising with respect to and during the time periods set forth in the written warranties of [Magnum Fitness]” and attaches a Commercial Treadmill Warranty.
The Commercial Treadmill Warranty provides express repair/replace remedies and states there are no other warranties arising out of the sale other than those contained therein.
Kouba sued for, among other things, breach of the implied warranty of merchantability (UCC), alleging JHTNA assumed that liability; the trial court granted summary judgment for Magnum, JHTNA, and Johnson Health and severed claims; Kouba appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether JHTNA assumed liability for breach of the implied warranty of merchantability under the Agreement	Kouba: the Agreement’s assumption clause (¶2.5.6) and the attached Commercial Treadmill Warranty make the implied warranty a "Product Warranty Claim" that JHTNA assumed	JHT Defs: ¶2.5.6 limits assumption to express written warranties and other Agreement provisions exclude product-liability exposure; implied warranty is not a contract-of-sale term in the Agreement	Court: Reversed summary judgment as to implied-warranty claim—implied warranty is a "Product Warranty Claim" arising from the same sale documents and was not excluded as a matter of law
Whether the Commercial Treadmill Warranty’s express terms supersede or exclude the UCC implied warranty so JHTNA did not assume it	Kouba: implied warranty fills gaps in the express warranty and therefore falls within ¶2.5.6’s scope	JHT Defs: express warranty language or §402.316 modifications limit implied warranty or restrict it to the original purchaser	Court: The express warranty and implied warranty can coexist; no effective modification or conspicuous merchantability-language excluded the implied warranty, so JHTNA’s assumption may include it
Whether Agreement provisions referring to "product liability claims" bar assumption of implied-warranty claims	JHT Defs: other clauses (¶2.6 and ¶6.2) exclude product-liability claims and disclaim assumption of obligations for such claims	Kouba: the implied-warranty claim alleges bodily injury and thus is covered under ¶2.5.6, not excluded	Court: "Product liability claim" is defined conjunctively (bodily injury and property damage); Kouba alleged bodily injury only, so those exclusion clauses do not bar the implied-warranty claim as a matter of law
Whether Johnson Health is liable as guarantor or vicariously if JHTNA is liable	Kouba: Johnson Health guaranteed JHTNA’s performance or is vicariously liable via joint enterprise	JHT Defs: parent not liable absent JHTNA liability	Court: Because summary judgment was improper for JHTNA on the implied-warranty claim, summary judgment was also improper for Johnson Health on that claim

Key Cases Cited

DBHL, Inc. v. Moen Inc., 312 S.W.3d 631 (Tex. App.—Houston [1st Dist.] 2009) (choice-of-law and contract-interpretation principles)
Lockheed Martin Corp. v. Gordon, 16 S.W.3d 127 (Tex. App.—Houston [1st Dist.] 2000) (asset purchaser generally not liable for predecessor’s product claims absent assumption)
Columbia Propane, L.P. v. Wis. Gas Co., 661 N.W.2d 776 (Wis. 2003) (Wisconsin follows majority rule on successor nonliability except for assumed liabilities)
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (standard of review for summary judgment)
Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract interpretation focuses on parties’ intent; harmonize the writing)
Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910 (Tex. 1997) (summary-judgment motion must stand or fall on the grounds presented)
Estate of Kriefall v. Sizzler USA Franchise, Inc., 816 N.W.2d 853 (Wis. 2012) (Wisconsin contract-interpretation principles)