308 F.3d 328 (3rd Cir. 2002), 99-4069, Kradel v. Fox River Tractor Co.

Docket Nº:99-4069
Citation:308 F.3d 328
Party Name:Kradel v. Fox River Tractor Co.
Case Date:October 24, 2002
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 328

308 F.3d 328 (3rd Cir. 2002)

Harry T. KRADEL; Marilene Kradel, his wife, Appellants,

v.

FOX RIVER TRACTOR COMPANY, a foreign corporation; Fox Corporation, a foreign corporation; Piper Industries, Inc., a foreign corporation; Hiniker Company, a foreign corporation; Certified Parts, a foreign corporation; AMCA/Koehring Company; Kent Reynolds, as escrow agent on behalf of the former shareholders of defendant Piper Industries, Inc. (Intervenor/Defendant in D.C),

v.

Hiniker Company, Third Party Plaintiff,

v.

AMCA/Koehring Company, Third Party Defendant.

Nos. 99-4069, 00-3146.

United States Court of Appeals, Third Circuit

October 24, 2002

Argued Dec. 12, 2000.

Questions Certified to Supreme Court of Tennessee Feb. 6, 2001.

Response of Supreme Court of Tennessee to Certified Question Nov. 27, 2001.

Page 329

Matthew L. Kurzweg (Argued), Pittsburgh, PA, for Appellants.

Wayne W. Ringeisen (Argued), Arnd N. von Waldow, Reed Smith Shaw & McClay, Pittsburgh, PA, for Appellee Kent Reynolds, as Escrow Agent on Behalf of the Former Shareholders of Piper Industries, Inc.

Clem C. Trischler (Argued), Pietragallo, Bosick & Gordon, Pittsburgh, PA, for Appellee Hiniker Company.

Before SCIRICA, and AMBRO, Circuit Judges, and POLLAK, District Judge.[**]

OPINION

AMBRO, Circuit Judge.

Harry Kradel was injured in 1994 while operating a forage harvester. He and his wife, Marilene Kradel, filed this product liability suit in Pennsylvania state court in 1996, naming, inter alia, the original manufacturer and its corporate successors, Piper Industries, Inc. ("Piper") and the Hiniker Company ("Hiniker"), as defendants. The case was removed to the United States District Court for the Western District of Pennsylvania based on diversity of citizenship. 28 U.S.C. § 1332. The District Court granted summary judgment in favor of Hiniker and Piper on the grounds that (1) under Pennsylvania tort law, Hiniker is not liable because it does

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not fall within the "product line" exception to Pennsylvania's bar on successor liability, and (2) under Tennessee corporate law, Piper—which dissolved in 1986—is not liable for injuries caused by its products eight years after its dissolution.

The Kradels ask us to reverse the District Court's ruling in favor of Hiniker and Piper. We conclude that the District Court correctly ruled that Hiniker is not liable for the Kradels' injuries under Pennsylvania's successor liability law. Because the claim against Piper raised unsettled questions of Tennessee corporate law, we certified it—in the form of five questions— to the Supreme Court of Tennessee. That Court has resolved each of the certified questions against the Kradels.1 Accordingly, we affirm the District Court's judgment in favor of Piper as well.

I. Facts and Procedural History

Harry Kradel lost part of his right leg in 1994 in an accident involving a 1970 model Fox forage harvester (with a Fox corn head attachment) on his farm in western Pennsylvania. In 1970, Fox brand farm equipment was manufactured by the Koehring Company ("Koehring").2 In 1981, Koehring sold, inter alia, its Fox line to Piper. A provision of that asset sale agreement required Piper to assume Koehring's product liability claims.

Piper, in turn, sold the Fox line to Hiniker in 1986 by an agreement that expressly provided for no adoption of liabilities by Hiniker. Piper then dissolved under Tennessee law on December 31, 1986 by filing Articles of Dissolution.

After selling its farm equipment business, Koehring merged with another company in 1981 to become the AMCA/Koehring Company, which continues to operate today. AMCA/Koehring settled with the Kradels on October 5, 1998 for $450,000. The "released parties" under the AMCA/Koehring settlement agreement include "the present and former parents, subsidiaries, predecessors, affiliates, officers, directors, employees, agents, servants . . ., including but not limited to the Fox Tractor Division of Koehring Company; Koehring Company; AMCA/Koehring Company;. . . ."

This appeal is from the grant of summary judgment in favor of Hiniker, Piper, and Kent Reynolds, an escrow agent who holds assets for the benefit of Piper shareholders.3 We have jurisdiction under 28 U.S.C. § 1291 (which permits appeals from final decisions of the district courts), and we review the District Court's grant of summary judgment de novo. American Medical Imaging Corp. v. St. Paul Fire and Marine Ins. Co., 949 F.2d 690, 692 (3d Cir. 1991).

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II. Discussion

A. The Hiniker Claim

The District Court found Hiniker not liable under Pennsylvania law for injuries allegedly caused by Koehring's forage harvester and corn head attachment.4 The Kradels argue that they can reach Hiniker under the "product line" exception to the general rules of successor liability. Because the Kradels successfully recovered a settlement from the original manufacturer, however, this argument is unavailing.

Under Pennsylvania's successor liability doctrine, "[i]n general, when one corporation sells or transfers its assets to a second corporation, the successor does not become liable for the debts and liabilities of the predecessor." LaFountain v. Webb Indus. Corp., 951 F.2d 544, 546^7 (3d Cir. 1991). One exception to this rule is the "product line" exception, which Pennsylvania courts adopted in Dawejko v. Jorgensen Steel Co., 290...

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