Thomas & Betts Corp. v. Trinity Meyer, 20-2904-cv(L)

Background

Thomas & Betts (T&B) sold its Meyer Steel Structures business to Trinity under an Asset Purchase Agreement (APA); New York law governs the APA.
After ETT (a nonparty) asserted an express-warranty claim over defective arm brackets it bought from T&B in 2011, T&B settled the claim and sought indemnification from Trinity (and parent Arcosa) under the APA.
T&B filed a First Amended Complaint seeking indemnification; Trinity asserted counterclaims and argued T&B failed to satisfy contractual notice conditions.
The district court dismissed T&B’s FAC under Rule 12(b)(6), concluding Section 6.3 notice requirements were express conditions precedent to Trinity’s indemnification obligations in Section 6.2 and that T&B had not strictly complied.
On appeal, the Second Circuit vacated and remanded, holding that the phrase “subject to the terms and conditions of this Article VI” is not unmistakable language creating conditions precedent and that notice provisions should be judged by substantial compliance; it also reinstated Trinity’s counterclaims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Section 6.3 notice requirements are express conditions precedent to indemnification in Section 6.2	“Subject to” does not create a condition precedent; Article VI should be read to allow substantial compliance	The APA’s “subject to” language makes the Section 6.3 notice rules express conditions precedent requiring strict compliance	No; “subject to” alone is not unmistakable language creating conditions precedent—context controls and conditions are disfavored under NY law
Standard of compliance required for notice (strict vs substantial)	Substantial compliance suffices, particularly where defendant had actual notice and participated in negotiations	Strict, literal compliance required because provision allegedly creates condition precedent	Substantial compliance standard applies; FAC plausibly alleges substantial compliance, so dismissal at pleading stage was improper
Whether Sections 6.2/6.3 (vs Schedule 6.1A) govern the claim	T&B argued Schedule 6.1A applies (alternative position)	Trinity argued Sections 6.2/6.3 govern	Court did not resolve which provision governs; assumed Sections 6.2/6.3 for purposes of decision and ruled those notice provisions are not automatically conditions precedent
Effect on Trinity’s counterclaims after dismissal of T&B’s complaint	N/A (T&B)	District court dismissed counterclaims because it dismissed T&B’s complaint	Vacated dismissal of counterclaims and reinstated them because district court erred in dismissing T&B’s complaint

Key Cases Cited

Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020) (discusses when contractual language suggests a condition precedent and the contextual inquiry required)
Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 660 N.E.2d 415 (N.Y. 1995) (distinguishes express conditions requiring literal performance from constructive conditions allowing substantial compliance)
Ginett v. Computer Task Grp., Inc., 962 F.2d 1085 (2d Cir. 1992) (conditions are disfavored and not read into contracts absent clear language)
Smurfit Newsprint Corp. v. Se. Paper Mfg., 368 F.3d 944 (7th Cir. 2004) (persuasive authority that "subject to" is generally insufficient to make prompt written notice an express condition precedent)
Grandfeld II, LLC v. Kohl’s Dep’t Stores, Inc., 163 A.D.3d 782 (N.Y. App. Div.) (contract must be read as a whole; clear language elsewhere showing conditions precedent undermines inferring them from vague phrasing)
Bailey v. Fish & Neave, 8 N.Y.3d 523 (N.Y. 2007) (agreements should be read as a whole to avoid overemphasis on particular phrases)
Bank of N.Y. Mellon Tr. Co. v. Morgan Stanley Mortg. Cap., Inc., 821 F.3d 297 (2d Cir. 2016) (sophisticated parties’ drafting choices influence whether explicit conditional language was intended)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim for relief)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard applied to evaluate facial plausibility of claims)