Dillman v. Indiana Rolls Inc.

67 Pa. D. & C.4th 294, 2004 Pa. Dist. & Cnty. Dec. LEXIS 167
CourtPennsylvania Court of Common Pleas, Lehigh County
DecidedApril 21, 2004
Docketno. 2001-C-1963
StatusPublished
Cited by3 cases

This text of 67 Pa. D. & C.4th 294 (Dillman v. Indiana Rolls Inc.) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Lehigh County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dillman v. Indiana Rolls Inc., 67 Pa. D. & C.4th 294, 2004 Pa. Dist. & Cnty. Dec. LEXIS 167 (Pa. Super. Ct. 2004).

Opinion

LAVELLE, S.J., Specially Presiding,

This is a product liability action in which plaintiff seeks damages for injuries he allegedly sustained while using a machine manufactured by Bertsch and Company Inc. Plaintiff has filed a motion for partial summary judgment in which he seeks a declaration that defendant Park Corporation is subject to strict liability in tort as the successor-in-interest to Bertsch.

BACKGROUND

Husband-plaintiff (Dillman) alleges that he sustained personal injuries on February 26, 2000, while using a Bertsch initial pinch type plate bending roll machine.1 [296]*296While feeding a piece of metal into the machine, Dillman claims that a glove on his left hand became caught on a burr and his hand was pulled into the rollers, resulting in the partial amputation of several fingers.

The machine in question was manufactured in 1965 by Bertsch and Company Inc. Bertsch was founded in 1879 and began designing and manufacturing initial pinch type plate bending roll machines and other metal fabricating machines in or about the year 1900. In 1984, after experiencing a period of financial difficulty, Bertsch commenced negotiations with Park for the sale of its assets, including its line of bending roll machines. On or about November 30,1984, Park and Bertsch entered into a written agreement for the sale of substantially all of Bertsch’s assets, excluding accounts receivable, for $1.9 million (later reduced to $1.5 million because of title problems relating to Bertsch’s real estate holdings). Among the assets to be sold were Bertsch’s trade names and logos, engineering drawings, customer lists and other records. As a condition of the agreement, Bertsch was required to file a Chapter 11 bankruptcy proceeding and obtain approval of the sale from the Bankruptcy Court. The agreement also required that Bertsch, following consummation of the sale to Park, would cease transacting business and distribute its remaining assets to its creditors.

Bertsch filed its Chapter 11 petition on November 13, 1984, and requested court approval of the asset sale to Park on November 29,1984. William Cook, Park’s vice-president, testified in another product liability action against Park that the provision requiring the bankruptcy proceeding was imposed so that Park could obtain the [297]*297assets free and clear of the liens and claims of Bertsch’s creditors. “They [Bertsch] decided the only way that they could give us the assets clear was by going into bankruptcy. To put it through to Bankruptcy Court.” Deposition of William Cook, p. 89. (Plaintiffs’ exhibit 14.) Cook further testified that the bankruptcy filing was solely Bertsch’s idea and that Park thought there might be some risk to the proceedings. (Id.)

Bertsch’s counsel in the negotiations with Park were Wayne C. Ponader, Esquire, and John G. Deckard, Esquire. Both attorneys testified by affidavits that by November 10, 1984, the essential terms of the asset purchase agreement had been agreed upon and that one of the conditions of the sale was that Bertsch would file for protection under Chapter 11 of the Bankruptcy Code. (Affidavits of Wayne C. Ponader and John G. Deckard, plaintiffs’ exhibit 15.)

For purposes of the instant motion, the parties entered into a stipulation in which they agreed:

(1) That the machine that injured plaintiff was defective and unsafe;

(2) That various exhibits, including depositions and affidavits, developed during discovery in the case of Rhodes v. Bertsch, a Division of Park Corporation, filed in the United States District Court for the Middle District of Pennsylvania to No. 3:CV-91-1601, be considered as evidence in determining the instant motion. The plaintiff in Rhodes sustained an injury similar to that sustained by Dillman using a Bertsch bending roll machine of similar, if not identical, design to the machine which injured Dillman.

[298]*298DISCUSSION

The sole issue presented by the instant motion is whether Dillman is, as a matter of law, entitled to summary judgment against Park on the theory that Park is the successor in interest to Bertsch under the “product line” exception to the rule of successor liability.

The Standard for Summary Judgment

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, admissions and affidavits demonstrate that there exists no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. “ ‘The record must be viewed in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party’.... Summary judgment may be entered only in those cases where the right is clear and free from doubt.” Abbott v. Anchor Glass Container Corp., 758 A.2d 1219, 1223 (Pa. Super. 2000); Schroeder v. PennDOT, 551 Pa. 243, 710 A.2d 23 (1998).

Successor Liability

Under Pennsylvania’s successor liability law, the general rule is that when one company sells or transfers its assets to another company, the successor does not become liable for the debts and liabilities of the predecessor merely because of its acquisition of the predecessor’s assets. Husak v. Berkel Incorporated, 234 Pa. Super. 452, 341 A.2d 174 (1975). Our courts, however, have carved out an exception to this general rule of non-liability in [299]*299the so-called “product line” exception, which the Superior Court has succinctly stated in the following language:

“[Where] one corporation acquires all or substantially all the manufacturing assets of another corporation, even if exclusively for cash, and undertakes essentially the same manufacturing operation as the selling corporation, the purchasing corporation is strictly liable for injuries caused by defects in units of the same product line, even if previously manufactured and distributed by the selling corporation or its predecessor.” Dawejko v. Jorgensen Steel Co., 290 Pa. Super. 15, 23, 434 A.2d 106, 110 (1981).

In reaching this formulation, the Dawejko court cited the California Supreme Court’s decision in Ray v. Alad Corporation, 19 Cal. 3d 22, 136 Cal. Rptr. 574, 560 P.2d 3 (1977). The Ray court stated that the product line exception would be imposed on the successor corporation if these three circumstances were shown: “(1) the virtual destruction of the plaintiff’s remedies against the original manufacturer by the successor’s acquisition of the business, (2) the successor’s ability to assume the original manufacturer’s risk-spreading rule, and (3) the fairness of requiring the successor to assume a responsibility for defective products that was a burden necessarily attached to the original manufacturer’s good will being enjoyed by the successor in the continued operation of the business.” Dawejko, 290 Pa. Super, at 22-23, 434 A.2d at 109; Ray, 19 Cal. 3d at 30-31, 136 Cal. Rptr. at 579, 560 P.2d at 8-9.

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Bluebook (online)
67 Pa. D. & C.4th 294, 2004 Pa. Dist. & Cnty. Dec. LEXIS 167, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dillman-v-indiana-rolls-inc-pactcompllehigh-2004.