Smith v. Halliburton Co.
| Decision Date | 12 April 1994 |
| Docket Number | No. 13870,13870 |
| Citation | 879 P.2d 1198,118 N.M. 179,1994 NMCA 55 |
| Court | Court of Appeals of New Mexico |
| Parties | Virlon L. SMITH, Sr., Individually and as Personal Representative of the Estate of Dennis Smith, Deceased; Abel Cabello; and Fifty-Five Well Servicing, Inc., Plaintiffs-Appellants, v. HALLIBURTON COMPANY and Stevens & Tull, Inc., Defendants-Appellees, and Dana Corporation; Wilson Manufacturing Co., a Subsidiary of Dana Corporation; Wilson-Wichita, Inc.; and Hartford Accident and Indemnity Company, Cross-Defendants-Appellees, and Gregory Rig Service and Sales, Inc., Defendant-Cross-Claimant-Appellant. |
Plaintiffs and Defendant Gregory Rig Service and Sales, Inc. (hereinafter "Plaintiffs") appeal from a district court decision granting motions for summary judgment and dismissing an amended complaint based on negligence, breach of warranty, and products liability and a cross-claim filed by Gregory Rig. We must determine whether the law of the forum or the law of the state of incorporation controls Plaintiffs' right to sue Defendant Wilson Manufacturing Co., the actual manufacturer of the product, and Defendant Wilson-Wichita, Inc., which merged with Wilson Manufacturing after the product was sold, but dissolved prior to the date of the accident. We also must determine whether New Mexico has personal jurisdiction over Defendant Dana Corporation, the parent company. We conclude that the law of the state of incorporation controls Plaintiffs' right to sue Wilson Manufacturing and Wilson-Wichita, and that New Mexico lacks personal jurisdiction over Dana Corporation. Therefore, we affirm the district court's order.
The amended complaint and cross-claim arise out of an accident that occurred on April 5, 1989 when the racking or tubing board separated from the derrick of a well servicing unit. The complaint alleged that a well servicing unit owned by Plaintiff Fifty-Five Well Servicing, Inc. was negligently designed or constructed by Gregory Rig, Dana Corporation, its subsidiaries or predecessors in interest and caused both personal injuries and property damage.
The material considered by the district court in granting summary judgment contains the following undisputed facts relating to the allegations of the complaint. Wilson Manufacturing manufactured the well servicing unit, which was sold in 1976 to Fifty-Five Well Servicing. Gregory Rig did certain repair work on the unit after it was purchased. In 1977, Wilson Manufacturing merged with Wilson-Wichita, which was incorporated under Delaware law and was a wholly-owned subsidiary of Dana Corporation. Dana Corporation is a Virginia corporation with its principal office and place of business in Ohio. The record indicates that Dana Corporation formed Wilson-Wichita to acquire the assets of Wilson Manufacturing and another closely-held corporation. Wilson-Wichita had one director, an officer of Dana Corporation; Wilson-Wichita's secretary was Dana Corporation's counsel. The record also indicates that Wilson-Wichita contemplated selling Wilson Manufacturing as soon as possible. Following the merger, Wilson Manufacturing continued to operate as a division of Wilson-Wichita, but, in anticipation of the sale, most or all of its assets were transferred to Wilson Oil Rig Manufacturing Co. (hereinafter "WORMCO"). As anticipated, WORMCO was sold in 1981 to LTV, and Wilson-Wichita was dissolved on December 31, 1981. An escrow account was established from proceeds of the sale of WORMCO for purposes of paying claims against Wilson-Wichita.
Dana Corporation moved for an order dismissing the complaint against it for lack of personal jurisdiction. Dana Corporation also moved for summary judgment on all causes of action against it. Wilson-Wichita and Wilson Manufacturing also moved to dismiss the claims against them as barred by Delaware law, which prohibits suit against Delaware corporations more than three years after dissolution. Advancing the same arguments, Dana Corporation and Wilson-Wichita both moved to dismiss the cross-claim.
The district court granted summary judgment to Dana Corporation, Wilson Manufacturing, and Wilson-Wichita on the basis that there was no genuine issue of fact to be submitted; that Plaintiffs' claim against Wilson-Wichita was barred under Delaware law; that New Mexico lacked personal jurisdiction over Dana Corporation; and that Defendants were entitled to summary judgment as a matter of law. The court also determined that the claims against Hartford Accident and Indemnity Co. were moot. The parties apparently agree that the district court's ruling effectively disposed of the claim against Wilson Manufacturing. The complaint and cross-claim against Dana Corporation, Wilson-Wichita, Wilson Manufacturing, and Hartford Accident and Indemnity Company were dismissed with prejudice. Plaintiffs have appealed, claiming that the district court erred in granting summary judgment because (1) New Mexico, not Delaware, law should have been applied to determine whether their claim survived the dissolution of Wilson-Wichita; and (2) the district court did have personal jurisdiction over Dana Corporation for various reasons.
Summary judgment is a remedy to be used only when there are no genuine issues of material fact so that the movant is entitled to judgment as a matter of law. Roth v. Thompson, 113 N.M. 331, 334, 825 P.2d 1241, 1244 (1992); SCRA 1986, 1-056(C) (Repl.1992). If there is no dispute regarding facts and only the legal effect of the facts remains to be determined, summary judgment is appropriate. Gardner-Zemke Co. v. State, 109 N.M. 729, 732, 790 P.2d 1010, 1013 (1990). The parties appear to agree that the material facts are not in issue. Rather, they disagree on the proper application of the law to the facts.
We discuss the issues as Plaintiffs have argued them. However, we believe the issues raised are related.
Plaintiffs in products liability actions such as this one initially must persuade the court of the chosen forum that it has personal jurisdiction. That may not be an easy task. If the successor corporation is a foreign corporation, an injured plaintiff may have difficulty obtaining personal jurisdiction over the successor in a convenient forum. See Miller v. Honda Motor Co., 779 F.2d 769, 772 (1st Cir.1985).
As a general rule, the mere relationship of parent corporation and subsidiary corporation is not in itself a sufficient basis for subjecting both to the jurisdiction of the forum state, where one is a nonresident and is not otherwise present or doing business in the forum state. A foreign parent corporation is not subject to the jurisdiction of the forum state merely because of its ownership of the shares of stock of a subsidiary doing business in the state. Ownership coupled with other factors may, however, give rise to a sufficient jurisdictional basis.
2 James W. Moore et al., Moore's Federal Practice p 4.41-1, at 4-370 to -371 (2d ed. 1993) (footnotes omitted).
We first address the question of whether Delaware law controls the effect of Wilson-Wichita's dissolution, not only because Plaintiffs make that argument first, but also because we think their argument concerning Dana Corporation arises in part out of that company's relationship with Wilson-Wichita. In other words, Plaintiffs ask us to find that New Mexico has personal jurisdiction over Dana Corporation in part because of that entity's relationship to its subsidiary. If Plaintiffs' cause of action against Wilson-Wichita survives, they would not need to rely on New Mexico's exercise of personal jurisdiction over Dana Corporation. If it does not, that might be a factor in considering the existence of personal jurisdiction over the parent corporation.
In this case, Plaintiffs seek to impose liability on Wilson-Wichita, with which Wilson Manufacturing merged, for a product the latter sold before the merger. We assume but need not decide that Plaintiffs would have been entitled to assert successor liability against Wilson-Wichita as a successor to Wilson Manufacturing. Because Wilson-Wichita was dissolved more than three years prior to the filing of this action, and because we conclude that Delaware law controls the effect of dissolution, we need not decide whether, but for the dissolution, Wilson-Wichita would have been subject to successor liability, nor whether its predecessor's contacts with New Mexico were attributable to it for purposes of New Mexico acquiring personal jurisdiction. See City of Richmond v. Madison Management Group, Inc., 918 F.2d 438, 454-55 (4th Cir.1990) ().
Plaintiffs contend that New Mexico law, rather than Delaware law, should be applied to the dissolution of Wilson-Wichita. Based on that contention, they argue that the district court erred in concluding that their cause of action was barred. We disagree.
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