Wensing by Wensing v. Paris Industries-New York
| Decision Date | 05 July 1990 |
| Docket Number | INDUSTRIES-NEW |
| Citation | 558 N.Y.S.2d 692,158 A.D.2d 164 |
| Parties | , Prod.Liab.Rep. (CCH) P 12,573 Denise M. WENSING, An Infant, by Dorothy A. WENSING, Her Mother and Natural Guardian, et al., Respondents, v. PARISYORK et al., Defendants, and Leander Acquisition Corporation, Appellant. |
| Court | New York Supreme Court — Appellate Division |
Wilson, Elser, Moskowitz, Edelman & Dicker (Rosario M. Vignali, of counsel), New York City, for appellant.
Birbrower, Montalbano, Condon & Frank, P.C. (Sydell L. Green, of counsel), New City, for respondents.
Before MAHONEY, P.J., and CASEY, MIKOLL, YESAWICH and LEVINE, JJ.
Plaintiff Dorothy A. Wensing commenced this action on behalf of her minor daughter who was severely injured in a sledding accident on December 31, 1987. Allegations of negligence, strict products liability and breach of warranty are made and a derivative claim by the mother is also presented. Defendants include Paris Industries Corporation, which manufactured the sled prior to its purchase in 1986 and which filed a petition in bankruptcy in 1987. Defendants also include Leander Acquisition Corporation, which purchased Paris Industries Corporation's assets from the bankruptcy trustee pursuant to an agreement approved by order of Bankruptcy Court dated August 28, 1987. Plaintiffs' complaint alleges that Leander, which subsequently changed its name to Paris Manufacturing Corporation, is the successor to Paris Industries Corporation and, accordingly, can be cast in liability for the alleged conduct of Paris Industries Corporation. It also alleges that Leander breached a duty to warn as a successor corporation about dangers in the use of the sled. Leander moved to dismiss the complaint against it on the grounds that a defense is founded upon documentary evidence and that the action cannot be maintained because of a discharge in bankruptcy. Supreme Court denied the motion with leave to move for summary judgment following completion of discovery. Leander appeals.
A corporation which acquires the assets of another is not generally liable for the torts of its predecessor (Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 244, 464 N.Y.S.2d 437, 451 N.E.2d 195). Among the exceptions to this rule are an expressed or implied assumption of the predecessor's tort liabilities, a consolidation or merger of the seller and purchaser, or the mere continuation of the seller by the purchaser (id., at 245, 464 N.Y.S.2d 437, 451 N.E.2d 195). With regard to the first, the applicable documents in this case reveal that Leander purchased the assets without assuming "any warranty obligations or product liability claims * * * with respect to any inventory sold, shipped or delivered prior to [August 28, 1987]". They further provide that Leander took the assets "free and clear * * * of * * * all claims for products liability (to the extent that such claims are in existence or arise out of products manufactured and sold prior to the closing date)". These provisions evince a clear intent that Leander was not assuming any liability for products sold prior to its acquisition of assets. Because it is undisputed that the sled involved was manufactured and sold prior to the operative time, Leander cannot be cast in liability under the first enumerated exception.
The remaining two enumerated exceptions "are based on the concept that a successor that effectively takes over a company in its entirety should carry the predecessor's liabilities as a concomitant to the benefits it derives from the good will purchased" (Grant-Howard Assocs. v. General Housewares Corp., 63 N.Y.2d 291, 296, 482 N.Y.S.2d 225, 472 N.E.2d 1). The record reveals that Paris Industries Corporation survived the asset transfer as a distinct corporation, albeit in bankruptcy. Under such circumstances, Leander cannot be cast as its...
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