Neagos v. Valmet-Appleton, Inc., 91-CV-70035-DT.

• Decision Date: 24 April 1992
• Docket Number: No. 91-CV-70035-DT.,91-CV-70035-DT.
• Parties: Cynthia M. NEAGOS and Emil Neagos, Plaintiffs, v. VALMET-APPLETON, INC., formerly known as Appleton Machine Company, Sales Corporation, a Wisconsin Corporation, Chicago Curdworth Service Company, Inc., formerly known as Cleereman Machine Tool Company, a Division of Appleton Machine Company, Sales Corporation, an Illinois Corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

791 F. Supp. 682

Cynthia M. NEAGOS and Emil Neagos, Plaintiffs, v. VALMET-APPLETON, INC., formerly known as Appleton Machine Company, Sales Corporation, a Wisconsin Corporation, Chicago Curdworth Service Company, Inc., formerly known as Cleereman Machine Tool Company, a Division of Appleton Machine Company, Sales Corporation, an Illinois Corporation, Defendants.

No. 91-CV-70035-DT.

United States District Court, E.D. Michigan, S.D.

April 24, 1992.

Jeremiah J. Kenney, Kitch, Saurbier, Drutchas, Detroit, Mich., for plaintiffs.

Timothy Wittlinger, Hill Lewis, Detroit, Mich., for defendant Valmet-Appleton, Inc.

Loretta M. Ames, Plunkett Cooney, Detroit, Mich., for defendant Chicago Curdworth Service Co., Inc.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

EDMUNDS, District Judge.

This products liability action is before the Court on the basis of diversity jurisdiction. Both defendants have brought motions for summary judgment. Having heard oral arguments of counsel for the parties, and upon consideration of the parties submissions and applicable law, the Court hereby grants both defendants' motions.

I. FACTS

Plaintiff Cynthia Neagos was injured on January 4, 1988 when her glove and sleeve became tangled in a manually operated drill press during her employment at Borg-Warner Automotive, Inc., in Sterling Heights, Michigan. Plaintiffs, Michigan residents, brought suit against Defendant Valmet-Appleton Inc. (Valmet), a Wisconsin corporation; and Defendant Chicago Curdworth Service Company, Inc. (Curdworth), an Illinois corporation, contending that both defendants are corporate successors to the original manufacturer of the drill press which caused Cynthia's injuries. Plaintiffs assert claims for negligent design, negligent failure to warn, and breach of express or implied warranties, as well as loss of consortium. Plaintiffs do not allege that either defendant had any direct contact with the drill press.

The drill press in question is a Cleereman model DC drilling machine; and was manufactured in 1937 by the Cleereman Machine Tool Company, of Green Bay, Wisconsin (Cleereman Wisconsin). Some time after its manufacture the drill press was sold to Borg & Beck of Chicago, Illinois. Borg & Beck (now known as Borg-Warner) transferred the drill press to its facility in Sterling Heights, Michigan in 1973.

Although the record does not indicate when, it is undisputed that prior to 1975, Cleereman Wisconsin sold some, and possibly all, of its assets to the Kearney & Trecker Corporation of Wisconsin. In 1975 Kearney & Trecker sold certain of its assets to the Appleton Machine Company. In that transaction Kearney & Trecker conveyed to Appleton Machine

all of the jigs, fixtures, patterns, designs, tooling, transparencies, literature and manuals, machine and material specifications, engineering data, customer files and lists, and unfilled customers' orders, which the Seller owns in connection with the manufacture and sale by the Seller of a line of machine tools known generally as "upright drills"....

Agreement of Sale between Kearney & Trecker and Appleton Machine, dated December 3, 1975. The line of drills included the "Cleereman Model DC Sliding Head Drilling Machine." In addition, Kearney & Trecker assigned the entire right, title and interest in the registered and common-law trademarks and goodwill to the "CLEEREMAN" name, subject to the rights previously granted by Kearney & Trecker to Lio Ho Machine Works, LTD., of Taiwan, Republic of China. Kearney & Trecker also granted to Appleton Machine "a non-exclusive royalty-free license with the right to grant sublicenses, to make, have made, use and sell products employing or resulting from the practice of the inventions claimed in the patent Serial No. 3,191,260, Machine tool turret having multiple tools, issue date 6/29/65."

In 1983 Appleton Machine Company was purchased by O.Y. Wartsila, AB. Subsequent to that purchase Valmet Corporation and O.Y. Wartsila, AB formed a holding company which became known as Valmet Paper Machinery, Inc. Although the parties are vague as to what happened next, it appears that Appleton Machine Company became a subsidiary of Valmet Paper Machinery, and somewhere along the line the entity or entities became known as Wartsila-Appleton. In January of 1987 a name change occurred and Wartsila-Appleton became Valmet-Appleton, Inc., one of the named defendants.

In 1986, Valmet-Appleton's corporate predecessor, Wartsila-Appleton, sold some its assets to H.W. Ward, Inc., of Illinois, which later formed Cleereman Machine Tool, Inc. (Cleereman Illinois).¹ In that asset purchase agreement H.W. Ward purchased substantially all of the operating assets of Wartsila-Appleton's Cleereman Division, including: all inventory (with certain minor exceptions); patents; goodwill, including the exclusive right to use the name Cleereman and its logos, subject to Lio Ho Machine Works' rights; and contractual rights of Wartsila-Appleton for product warranty claims. The purchase agreement specifically excluded all liabilities, fixed or contingent, of Wartsila-Appleton. See Asset Purchase Agreement between Wartsila-Appleton and H.W. Ward, dated June 23, 1986. After this transfer H.W. Ward became known as Cleereman Machine Tools, Inc. (Cleereman Illinois).

Finally, in 1990, Cleereman Illinois transferred some of its assets to defendant Chicago Curdworth. This agreement provided in pertinent part:

Seller shall sell to Purchaser free from all liens and encumbrances, those assets of the Business including the name and style of said business CLEEREMAN MACHINE TOOLS, telephone number, fax number, customer list, goodwill, pattern equipment, drawings, cardex, microfilm records and documents, machinery, equipment and furniture ... and the inventory of all Cleereman parts.... At the time of closing the Seller corporation will change its name and assign to Purchaser the right to the exclusive use of the name CLEEREMAN MACHINE TOOLS, and Seller will assign to Purchaser all its right under an existing computer lease agreement.

Agreement between Cleereman Machine Tools, Inc., and Chicago Curdworth Service Co., Inc., dated March 16, 1990. This agreement also expressly provided that Chicago Curdworth had not agreed to "assume, pay or perform or otherwise discharge any debts, obligations and liabilities of Seller."

Plaintiffs brought this lawsuit in 1991, alleging that Valmet-Appleton and Chicago-Curdworth were liable as corporate successors of Cleereman Wisconsin. Plaintiff's employer, Borg-Warner, was not named as a defendant. Valmet-Appleton filed a motion to dismiss on the grounds that it had no connection whatsoever with the drill press, and could not therefore be liable. Valmet-Appleton also contended that it was not subject to jurisdiction in Michigan. Chicago Curdworth joined in the motion. Judge Friedman² denied the motion without prejudice, stating that it was premature pending the conclusion of discovery. The instant motions followed the close of discovery.

II. STANDARD OF REVIEW

In considering a motion for summary judgment, the Court may grant the motion only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c).³ As the Supreme Court ruled in Celotex, "rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The Court must view the allegations of the complaint in the light most favorable to the non-moving party. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983), cert. denied, 469 U.S. 826, 105 S.Ct. 105, 83 L.Ed.2d 50 (1984). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 265, 106 S.Ct. 2505, 2519, 91 L.Ed.2d 202 (1986). Notwithstanding, the mere existence of a scintilla of evidence in support of the non-movant is not sufficient; there must be sufficient evidence upon which a jury could reasonably find for the nonmoving party. Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. In other words, summary judgment is proper if the nonmoving party will not be able to produce sufficient evidence at trial to withstand a directed verdict motion. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir.1989).

III. ANALYSIS

A. Personal Jurisdiction

Defendant Valmet-Appleton contends that this Court lacks personal jurisdiction over it. Thus the Court's initial inquiry is whether Valmet-Appleton has sufficient contacts with the State of Michigan to satisfy both the requirements of the Michigan long-arm statute and the due process clause of the Constitution. See Theunissen v. Matthews, 935 F.2d 1454, 1459 (6th Cir.1991) (federal district court sitting in diversity must apply law of forum state in determining whether it may exercise jurisdiction over non-resident defendant subject to constitutional concerns of due process) (citations omitted). In addition to state statutory criteria, due process requires that before a nonresident defendant may be subject to judgment in personam, that he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342-43, 85 L.Ed. 278 (1940)). In other words, the defendant's conduct must be such that "he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

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