Sorenson v. Allied Products Corp.
| Decision Date | 10 March 1999 |
| Docket Number | No. 04A03-9802-CV-49,04A03-9802-CV-49 |
| Citation | 706 N.E.2d 1097 |
| Parties | Prod.Liab.Rep. (CCH) P 15,478 Sandra J. SORENSON, Administratrix of the Estate of Frank L. Sorenson, Deceased, Appellant-Plaintiff, v. ALLIED PRODUCTS CORPORATION, Appellee-Defendant. |
| Court | Indiana Appellate Court |
Appellant-Plaintiff Sandra J. Sorenson (Sandra), as the widow and Administratrix of the estate of Frank L. Sorenson (Sorenson), appeals the trial court order granting summary judgment in favor of Allied Products Corporation (Allied) on the issue of causation and successor liability. We affirm.
Sandra raises two issues for our review which we restate as:
1. Whether the trial court exceeded its jurisdictional power by granting summary judgment in favor of Allied.
2. Whether Allied can be held liable for Sorenson's death as a successor of White Farm's liability.
Sorenson was employed as a mechanic by Fowler Oliver Sales, Inc. (Fowler) from 1964-1971 and 1977-1993, where he replaced worn out brake assemblies and clutch disks containing asbestos. The brake assemblies and clutch disks were used in Oliver brand and White Farm Equipment Company (White Farm) brand tractors and combines. The Oliver brand name was discontinued sometime after Oliver was purchased by White Farm in the 1960s. Thereafter, Fowler was a White Farm dealership of new equipment sales, but continued to provide service and maintenance on the discontinued Oliver product line as well as the White Farm product line.
In 1985, White Farm was placed in involuntary bankruptcy by its creditors. On October 9, 1985, Allied entered into an Asset Purchase Agreement (Agreement) with White Farm to purchase White Farm assets related to the manufacturing of tractors, planters and tillage equipment. The Agreement provided that Allied would purchase reorganization assets valued at $63,194,000. Excluded assets included a cash account in the amount of $4,600,000, certain receivables in the amount of $6,129,000, certain inventory, and White Farm's interest in certain real estate. In exchange for the transfer of reorganization assets, Allied agreed to issue and deliver to White Farm 340,000 shares of a new series of preferred stock. The Agreement specifically provided that:
Allied shall not assume or in any way become liable for, any claims, liabilities or obligations or any kind or nature, whether accrued, absolute, contingent or otherwise, or whether due or to become due or otherwise arising out of the events or transactions of facts which shall have occurred prior to the final closing date except as expressly assumed by Allied ...
(R. 61-62).
On October 31, 1985, the bankruptcy court ruled that White Farm was authorized to immediately consummate the acquisition agreement with Allied and that the reorganization assets shall immediately be transferred to Allied free and clear of all liens, claims and encumbrances. On November 11, 1987, the bankruptcy court confirmed a plan of reorganization between the official committee of unsecured creditors of White Farm and Borg-Warner Acceptance Corporation. In 1986, Allied entered into new dealer contracts with a number of White Farm dealers, including Fowler. Allied also began selling replacement brakes and clutches to dealers of old Oliver and White Farm brand tractors and combines.
Sorenson became sick in late 1993 and died on April 24, 1994 of mesothelioma from asbestos exposure. The doctor that diagnosed Sorenson with mesothelioma stated that the latency period for the effects of asbestos exposure is thirty to fifty years. Thus, he concluded that Sorenson must have been exposed to asbestos prior to 1986, when Allied attained White Farm's assets. Sandra brought a claim against Allied alleging that Allied supplied the brakes and clutches that Sorenson inspected, serviced and repaired, and from which he was exposed to asbestos while an employee at Fowler. The trial court granted Allied's motion for summary judgment on January 8, 1998, finding that:
1) Allied purchased White Farm during a pending bankruptcy and not for the purpose of avoiding liabilities that existed or potentially existed.
2) From a policy perspective, it would be poor judgment to hold Allied liable for tortious wrong doings, if any, by White Farm, occurring many years prior to the purchase of White Farm's assets.
3) There has been no sufficient exception shown to overcome the general rule that a purchaser of assets is not liable for prior actions of a selling corporation.
4) It was not the intent of White Farm and Allied that Allied assume the type of liability involved in this case.
5) There were no sufficient indicators or criteria in which to determine that the "doctrine of merger" or the "continuation of the business" exceptions existed to justify finding successor liability against Allied.
(R. 356).
Sandra now brings this appeal.
Sandra argues that the trial court exceeded its jurisdictional power by granting summary judgment in favor of Allied. Specifically, she claims that the bankruptcy court, not the trial court had the power to sell White Farm's assets. However, Sandra concedes that Sorenson's claims are not bankruptcy claims capable of being dismissed or discharged by the bankruptcy court and that the October 31, 1985 bankruptcy court order authorizing the sale of White Farm's assets did not discharge or affect Sorenson's claims.
Sandra mistakenly argues that this case involves the bankruptcy court discharging Sorenson's claim. The present claim is a post-sale tort that does not deal in any way with the bankruptcy sale. In a United States Court of Appeals case in the 7th Circuit, cited and analyzed by Sandra, the court held that a bankruptcy court cannot enjoin successor liability lawsuits arising out of injuries which occurred post-confirmation. Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159, 161-63 (7th Cir.1994). Therefore, the bankruptcy court has neither the power to discharge Sorenson's claim nor the power to enjoin a successor liability claim because this is a successor liability tort claim having nothing to do with White Farm's bankruptcy.
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