## Facts

- Freudenberg-NOK, General Partnership (FNOK) supplied General Electric (GE) with dishwasher pump-seal assemblies containing a carbon-steel insert allegedly prone to corrosion and failure, causing leaks and property damage.
- Homeowners asserted numerous property-damage claims against GE arising from leaking dishwashers.
- Electric Insurance Company (EIC), GE’s product-liability insurer, paid approximately $8 million to settle these claims as GE’s subrogee.
- Of 2,104 claims, about 479 (approximately $1.6 million) were paid before November 22, 2000.
- EIC sued FNOK seeking indemnity on two theories: (1) contractual indemnity based on indemnity provisions associated with the sale of the assemblies, and (2) Kentucky common-law indemnity for amounts EIC paid to resolve homeowners’ claims.
- FNOK moved to dismiss, arguing the claims were time-barred under either Kentucky’s UCC four-year statute of limitations for contracts for the sale of goods (K.R.S. § 355.2-725) or, at minimum, barred in part under a five-year limitations period.

## Issues

1. Whether Kentucky’s UCC four-year statute of limitations for contracts for the sale of goods (K.R.S. § 355.2-725) governs EIC’s indemnity claims, including common-law indemnity.
2. If the UCC limitations period does not govern common-law indemnity, what limitations period applies under Kentucky law and when the indemnity cause of action accrues.
3. Whether EIC’s contractual indemnity and common-law indemnity claims were time-barred in whole or in part.

## Decision

- The court granted FNOK’s motion to dismiss in part and denied it in part.
- The court dismissed EIC’s contractual indemnity claims as untimely under K.R.S. § 355.2-725, applying accrual at tender of delivery.
- The court held EIC’s common-law indemnity claims were not governed by K.R.S. § 355.2-725; instead, they were subject to a five-year limitations period for indemnity and accrued when the indemnitee paid the underlying claims.
- The court dismissed common-law indemnity claims tied to payments made more than five years before suit, but allowed common-law indemnity claims based on payments within the five-year window to proceed.
- The court later denied EIC’s motion for partial reconsideration.

## Legal Principles

- Under Kentucky law, contractual indemnity claims arising from a sale-of-goods transaction are treated as actions for breach of a sales contract and are governed by K.R.S. § 355.2-725, which generally accrues at tender of delivery.
- Kentucky common-law indemnity is a separate, derivative claim that accrues when the party seeking indemnity pays (or is compelled to pay) the underlying loss, not at the time of product delivery or the initial injury.
- The limitations period for Kentucky common-law indemnity is five years (K.R.S. § 413.120(7)), and each payment can give rise to a separately accruing indemnity claim.
- Applying UCC accrual at delivery to common-law indemnity would risk barring indemnity before the indemnity right arises; Kentucky’s indemnity accrual rule avoids that result.

## Conclusion

The court distinguished between contract-based and equitable indemnity: contractual indemnity tied to a sale of goods was barred by the UCC’s four-year limitations period running from delivery, while common-law indemnity accrued upon payment and remained viable for amounts paid within five years of filing suit.


Electric Ins. Co. v. Freudenberg-NOK, Gen. P'ship, 487 F. Supp. 2d 894 (W.D. Ky. 2007)