Estate of Donley v. Pace Industries

984 S.W.2d 421, 336 Ark. 101, 1999 Ark. LEXIS 26
CourtSupreme Court of Arkansas
DecidedJanuary 21, 1999
Docket98-626
StatusPublished
Cited by11 cases

This text of 984 S.W.2d 421 (Estate of Donley v. Pace Industries) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estate of Donley v. Pace Industries, 984 S.W.2d 421, 336 Ark. 101, 1999 Ark. LEXIS 26 (Ark. 1999).

Opinion

W.H. “Dub” Arnold, Chief Justice.

This is an appeal from an order of the Carroll County Circuit Court granting appellees Pace Industries, Inc., and Precision Industries, Inc.’s motion for summary judgment. Our jurisdiction is authorized pursuant to Ark. Sup. Ct. Rule l-2(b)(1), (4), (5), and (6) (1998) because the appeal raises an issue of first impression, an issue needing clarification of the law, and a question concerning the validity of Ark. Code Ann. § 11-9-105(a). The appellants, Eugene Schulze and the Estate of Dennis R. Donley, brought an action against the appellees seeking damages for the wrongful death of Donley and for Schulze’s personal injuries sustained while Donley and Schulze were employed at Automatic Castings, Inc. On May 10, 1993, the appellants were injured at work when Donley turned a valve on a die-cast machine, causing a piston rod to slice through a hose containing flammable hydraulic fluid. The hydraulic fluid sprayed onto the furnace of the machine, ignited, and injured both men.

Although Donley’s estate and Schulze received workers’ compensation benefits, they also filed a products-liability suit against the die-cast machine’s manufacturer (Cleveland Automatic Machine Company), the company that previously owned the machine (appellee Precision), and Precision’s parent company (appellee Pace). On August 9, 1990, approximately three years before the date the appellants were injured, Automatic Castings, the appellants’ employer, Precision, and Pace merged, and Pace became the surviving corporation. According to the appellees, Automatic Castings and Precision continued to operate only as subsidiaries or divisions of Pace. However, the appellants suggest that the three companies remained separate entities.

Sometime after the merger, Precision transferred the die-cast machine to Automatic Castings. The appellants’ theory suggests that this transfer was a “sale” that constituted placement of a product into the stream of commerce, making Precision a “supplier” subject to liability. Further, the appellants allege in their briefs that Precision modified the machine and that those modifications were the direct and proximate cause of the appellants’ injuries. On the other hand, Precision and Pace contend that the transfer of the die-cast machine was a book-entry transfer only and that the transfer simply constituted movement of the machine from one location of the company to another.

In response to the appellants’ complaint, Pace and Precision asserted that Pace qualified as a self-insured corporation pursuant to the Arkansas Workers’ Compensation Act and that the claim fell within the exclusive-remedy provisions of the Act. Flowever, the appellants argued that the case fell within the “dual persona” exception to the exclusive remedy of workers’ compensation, which this court adopted in Thomas v. Valmac Indus., Inc., 306 Ark. 228, 812 S.W.2d 673 (1991). Notably, following our decision in Thomas, the legislature enacted amendments to section 11-9-105(a) in 1993, that abolished the dual-persona doctrine.

On the basis that the Workers’ Compensation Act provided the exclusive remedy, Precision and Pace moved the trial court for summary judgment. On February 23, 1998, the trial court agreed that the application of Thomas to the instant facts, where the injuries occurred after the date on which the corporations merged, would be an impermissible expansion of Thomas’s holding. From this order comes the instant appeal, challenging (1) the trial court’s finding that a ruling in appellants’ favor would represent an impermissible expansion of our holding in Thomas, (2) the trial court’s grant of summary judgment, and (3) the constitutionality of section ll-9-105(a). We find no merit in appellants’ first two arguments, and we decline to reach the merits of the third point on appeal. Accordingly, we affirm the trial court’s grant of summary judgment to appellees.

I. Expansion of Thomas v. Valmac Indus., Inc.

In our decision in Thomas v. Valmac Indus., Inc., 306 Ark. 228, 812 S.W.2d 673 (1991), we recognized the “dual persona” doctrine as an exception to the exclusive-remedy provisions of the Workers’ Compensation Act. In Thomas, the claim involved a corporation that later merged with the claimant’s .employer. Under those particular facts, we held that the exclusivity provisions do not bar a tort action against the employer, where the injured employee had a valid third-party claim against the alleged tortfeasor on the date of his injury and the tortfeasor later merged with the injured worker’s employer. Thomas, 306 Ark. at 234-35. We also noted that the claim was not against the employer in its capacity as employer but as the successor corporation to the alleged tortfeasor. Id.

The appellants’ argument that our holding in Thomas should be extended to embrace a situation where the injury occurred some three years after the corporate merger is unpersuasive. First, the Thomas decision explicitly states that its holding is limited to the particular facts of that case. Second, the appellants’ rebanee on Billy v. Consolidated Machine Tool Corp., 51 N.Y.2d 152, 412 N.E.2d 934, 432 N.Y.S.2d 879 (1980), is misplaced. Although we looked to Billy in our Thomas decision as one of the first cases to adopt the dual-persona theory, the facts underlying Billy are distinguishable from the instant case.

The injured employee in Billy was permitted to maintain a suit against his employer, who had merged with two other corporations prior to the date of the injury, like the instant case. However, the product that resulted in the injury was manufactured and installed by the two merged corporations prior to the merger. Had the plaintiff in Billy not been permitted to sue the employer-manufacturer, the plaintiff would have been barred from any products-liability action against the manufacturer and installer of the defective product. In that vein, the Billy court noted that through the employer’s merger with two other companies, the employer “voluntarily assumed any obligations that those corporations may have had to individuals who might suffer injury as a result of a defect in their product.” (Emphasis added.) Billy, 51 N.Y.2d at 161-62. Here, the appellees neither manufactured nor installed the die-cast machine prior to the merger, and the appellants were not barred from maintaining an action against the die-cast machine’s manufacturer, Cleveland Automatic Machine Company.

Third, the legislature reacted to the Thomas decision by adopting amendments to section ll-9-105(a) that abrogate the dual-persona exception. It would be unreasonable for this court to expand a doctrine that is now clearly defunct and that the legislature has unequivocally annulled. Notably, in section 11-9— 107(e), the legislature stated that a purpose of the section was to annul any inconsistent case law, including Thomas. Accordingly, we conclude that the trial court did not err by finding that the facts of the instant case do not warrant an expansion of the dual-persona exception adopted by this court in Thomas.

II. Summary-judgment motion

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984 S.W.2d 421, 336 Ark. 101, 1999 Ark. LEXIS 26, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estate-of-donley-v-pace-industries-ark-1999.