TRACEY BY TRACEY v. Winchester Repeating Arms Co.

• Decision Date: 28 August 1990
• Docket Number: Civ. A. No. 87-0207.
• Citation: 745 F. Supp. 1099
• Parties: Tara TRACEY, a minor by her parents and natural guardians William TRACEY and Lorraine Tracey, and William and Lorraine Tracey, in their own right v. WINCHESTER REPEATING ARMS COMPANY, Western Cartridge Company, Olin Industries, Olin Corporation, Olin Corporation, Winchester Group, U.S. Repeating Arms Company, and John Doe Corporation.
• Court: U.S. District Court — Eastern District of Pennsylvania

745 F. Supp. 1099

Tara TRACEY, a minor by her parents and natural guardians William TRACEY and Lorraine Tracey, and William and Lorraine Tracey, in their own right v. WINCHESTER REPEATING ARMS COMPANY, Western Cartridge Company, Olin Industries, Olin Corporation, Olin Corporation, Winchester Group, U.S. Repeating Arms Company, and John Doe Corporation.

Civ. A. No. 87-0207.

United States District Court, E.D. Pennsylvania.

August 28, 1990.

Richard E. Genter, Philadelphia, Pa., for plaintiffs.

John J. Hatzell, Jr., Philadelphia, Pa., for defendants.

MEMORANDUM

O'NEILL, District Judge.

I. Introduction.

This is a product liability action. Plaintiffs¹ allege that on January 12, 1985 a Winchester Model 1897 shotgun discharged and injured plaintiff Tara Tracey. Plaintiffs' Complaint contains five counts alleging strict liability, negligence, breach of warranty, medical expenses and wanton, reckless and/or intentional misconduct. Defendants² have moved for summary judgment on the grounds that they did not manufacture the shotgun in question. Plaintiffs have filed a cross-motion for summary judgment.³

Defendants argue that because they are the successors in interest to the corporation which manufactured the shotgun they are not liable under the general rule of successor non-liability. Plaintiffs assert that the Pennsylvania Courts have adopted the "product line" exception to the general rule and that defendants can be liable under this exception. Plaintiffs argue in the alternative that if defendants are not subject to liability under the product line exception they may be liable under other exceptions to the general rule or on a failure to warn theory.

For the reasons that follow, I conclude that defendants are not liable under the rule of successor non-liability. Further, I hold that neither the product line exception to the general rule or any other exception to the rule applies in this case. Finally, I conclude that defendants are entitled to summary judgment on plaintiffs' failure to warn theory.

II. Undisputed Facts.

The following facts are undisputed. On January 15, 1985, plaintiff Tara Tracey was injured when a Model 1897 Winchester 12 gauge shotgun (Serial No. 119117C) discharged. A Connecticut corporation, the Winchester Repeating Arms Company ("WRAC-Conn."), manufactured and distributed the shotgun in or about December 1900. WRAC-Conn. manufactured the Model 1897 shotgun from 1897 through December 22, 1931.⁴

On or about February 7, 1929, WRAC-Conn. (later renamed "Winchester Manufacturing Company" by court order on February 21, 1929) was reorganized with its companion company, The Winchester Company, by transferring all of its assets to a newly formed corporation, Winchester Repeating Arms Company of Delaware ("WRAC-Del."). Final Decree of Foreclosure and Sale, November 10, 1931, Chase National Bank of New York v. Winchester Repeating Arms Company, et al., In Equity, Consolidated Cause No. 2131 (U.S.D.C. Conn.) ("Final Decree"), page 3, ¶ 4; page 4, ¶ 8; pages 19 and 20, ¶¶ 7 and 8. On or about January 22, 1931, a creditors' bill was filed against WRAC-Del. in the United States District Court for the District of Connecticut. Id., pages 7-8, ¶¶ 2-4.

On or about January 22, 1931, the United States District Court for the District of Delaware appointed two receivers for WRAC-Del. Id., page 8, ¶ 4. Subsequent to the appointment of the receivers, the creditors of WRAC-Del. formed two committees, The Bondholders' Protective Committee and The Debenture Holders' Protective Committee. These two committees appointed a Reorganization Committee. On November 3, 1931, the Reorganization Committee submitted to the United States District Court for the District of Connecticut for approval a "Plan and Agreement of Reorganization and Sale of Winchester Repeating Arms Company" ("Reorganization Committee's Plan"). Both the Bondholders' Protective Committee and the Debenture Holders' Committee approved the Reorganization Committee's Plan. Id., pages 70-71, ¶¶ 1-3.

On November 10, 1931, the District Court approved the Reorganization Committee's Plan in its Final Decree. The Court made the following relevant findings:

1. That it is apparent that continued operation by the Receivers would not produce revenue sufficient to pay the unpaid interest and principal due and to become due in respect of the Bonds and debentures and other obligations outstanding and the operating and maintenance expenses of WRAC-Del.'s properties.

2. That the assets of WRAC-Del. are not and will not be of sufficient value to meet its matured liabilities as they mature or accrue and its property herein mentioned and described should be administered and sold and the net proceeds thereof distributed in the manner herein stated.

Id., page 72, ¶¶ 1-2.

As part of the Final Decree, the Court entered the following injunction:

All creditors and stockholders of, and claimants against, WRAC-Del. and/or WRAC-Conn, ..., are hereby severally and respectively perpetually enjoined from prosecuting against the Receivers or the Purchaser of any of the property directed to be sold by this decree, or against any nominee or assignee or grantee of such Purchaser, or against any party to the above Consolidated Cause or Constituent Causes or any thereof, or against any person or persons, corporation or corporations, claiming by, under or through them, or any of them, or against any of the property sold pursuant to this decree, any suit or proceeding arising out of, or based on, any obligation or liability of WRAC-Del. or WRAC-Conn., or otherwise to impose liability upon the Purchaser, or upon any nominee or assignee or grantee of the Purchaser, or upon any party to any of the above-entitled Causes, or upon any person or persons, corporation or corporations, claiming by, under or through them, or any of them, or upon any property sold pursuant to this decree, in respect of any claim against WRAC-Del. or WRAC-Conn..

Id., page 97. The Final Decree excepted from this injunction "any claims which may accrue after the entry of this decree". Id., page 96.

On December 15, 1931, two individuals, P.C. Beardslee and Ben-Fleming Sessel, purchased substantially all of the manufacturing assets of WRAC-Del. pursuant to the terms of the Final Decree. See Decree Confirming Sale and Directing Execution and Delivery of Deeds, December 22, 1931, Chase National Bank of New York v. Winchester Repeating Arms Company, et al., In Equity, Consolidated Cause No. 2131 (U.S.D.C.Conn.) ("Decree Confirming"). Beardslee and Sessel made their bid as pursuant to the Final Decree and the Reorganization Committee's Plan. Their bid was the highest bid for WRAC-Del.'s assets. Decree Confirming, at pages 3-5, ¶¶ 2-7. Beardslee and Sessel purchased all of WRAC-Del.'s assets for a price of three million dollars ($3,000,000) in cash and four million eight hundred thousand dollars ($4,800,000) par value of stock of the Western Cartridge Company ("WCC").

Beardslee and Sessel subsequently "assigned, transferred and set over" their ownership interest in WRAC-Del. to Winchester Repeating Arms Company of Maryland ("WRAC-Md."). Decree Confirming, page 5, ¶ 8. WRAC-Md. was a corporation organized and existing under the laws of Maryland. At the time the transfer of WRAC-Del.'s assets to WRAC-Md. was completed, WRAC-Md. was a wholly-owned subsidiary of WCC. Minutes, Special Meeting of the Board of Directors of Western Cartridge Company, December 14, 1931. At no time did either WCC or WRAC-Md. purchase or acquire any of WRAC-Del.'s stock.

After the sale of its assets, WRAC-Del. continued its corporate existence until April 1, 1934 when its charter became void and inoperative due to non-payment of franchise taxes. The Governor of Delaware proclaimed the charter void in January 1935. See Letter from Marie C. Shultie, Corporations Administrator, Delaware Department of State to counsel for defendants dated August 27, 1984. WRAC-Md. continued its existence until December 31, 1938, when its corporate existence was dissolved and it became a division of WCC.

On December 31, 1944, Olin Corporation merged into WCC, and the corporate name was changed to Olin Industries, Inc. On August 31, 1954, Olin Industries, Inc. merged with Mathieson Chemical Corporation and its name was changed to Olin Mathieson Chemical Corporation. On September 1, 1969, Olin Mathieson Chemical Corporation changed its name to Olin Corporation, one of the defendants in this action. Olin Corporation or one of its affiliated companies manufactured the Model 1897 shotgun from December 22, 1931 until 1957, when Olin discontinued its manufacture.⁵

On or about July 21, 1981, Olin Corporation sold all of its tangible assets for the domestic manufacturing and selling of firearms to U.S. Repeating Arms Company, a corporation organized and existing under the laws of Connecticut ("USRAC-Conn."). Olin Corporation also granted to USRAC-Conn. a license for the use of the "Winchester" trademark in connection with the manufacture and sale of certain firearms.

On or about December 29, 1987, pursuant to a plan of reorganization for USRAC-Conn. under Chapter 11 of the Bankruptcy Code, USRAC-Conn. transferred its tangible and intangible assets to Hew Haven Arms Company, Inc. ("HNAC"), a corporation organized and existing under the laws of Massachusetts. HNAC later changed its name to U.S. Repeating Arms Company.

III. Standard for Summary Judgment.

Under Fed.R.Civ.P. 56(c), summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(e) provides that when a properly supported motion for summary judgment is made, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's...