Philadelphia Electric Co. v. Hercules, Inc.

587 F. Supp. 144, 21 ERC 1785, 14 Envtl. L. Rep. (Envtl. Law Inst.) 20515, 21 ERC (BNA) 1785, 1984 U.S. Dist. LEXIS 19279
CourtDistrict Court, E.D. Pennsylvania
DecidedFebruary 22, 1984
DocketCiv. A. 82-690
StatusPublished
Cited by12 cases

This text of 587 F. Supp. 144 (Philadelphia Electric Co. v. Hercules, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Philadelphia Electric Co. v. Hercules, Inc., 587 F. Supp. 144, 21 ERC 1785, 14 Envtl. L. Rep. (Envtl. Law Inst.) 20515, 21 ERC (BNA) 1785, 1984 U.S. Dist. LEXIS 19279 (E.D. Pa. 1984).

Opinion

MEMORANDUM OF DECISION

McGLYNN, District Judge.

In April of 1980 the Commonwealth of Pennsylvania, Department of Environmental Resources, (DER), discovered a hydrocarbon resinous material, which it deemed to be a pollutant, on property owned by Philadelphia Electric Company, (PECO), in Chester, Pennsylvania, (Chester Site). The *147 DER required PECO to remove this resinous material from the property and the banks of the Delaware River. 1

In February of 1982, PECO brought this suit claiming negligence, private nuisance and public nuisance against Hercules Incorporated, (Hercules), on the ground that Hercules’ predecessor in interest, Pennsylvania Industrial Chemical Corporation, (PICCO), had caused the contamination during its operation of a petrochemical plant at the Chester Site in the period from 1945 to 1971. Since PICCO had sold the property to Gould, Inc., (Gould), in 1971, who thereafter sold to PECO in 1974, PECO’s complaint also included claims of nuisance, deceit and/or misrepresentation against Gould, on the ground that Gould contributed to the contamination and/or knew of the contamination but did not disclose this condition when it sold the property to PECO in 1974. 2 Both Hercules and Gould denied the claims of PECO and cross-claimed against each other. Jurisdiction of the case was based upon diversity of citizenship between the parties. See 28 U.S.C. § 1332 (West Supp.1983). After a five day trial, the jury returned a verdict in favor of PECO 3 , and in favor of Gould on the cross-claims.

Presently before the court are Hercules’ motions for judgment notwithstanding the verdict, pursuant to Fed.R. Civ.P. 50(b), and, in the alternative, for a new trial, pursuant to Fed.R.Civ.P. 59. Generally, a jury’s verdict may be set aside only if manifest injustice will result if it were allowed to stand. The court may not substitute its own judgment for that of the jury merely because the court may have reached a different conclusion. To grant a motion for judgment n.o.v., the court must find, as a matter of law, that the plaintiff failed to adduce sufficient facts to justify the verdict. Neville Chemical Co. v. Union Carbide Corp., 422 F.2d 1205, 1210 (3d Cir.1970), cert. denied, 400 U.S. 826, 91 S.Ct. 51, 27 L.Ed.2d 55 (1970).

However, a motion for a new trial, unlike a motion for a judgment n.o.v., does not seek a final judgment but another trial. Thus, a motion for a new trial is within the sound discretion of the trial judge and should be granted only when the verdict is palpably contrary to the clear weight of the evidence or when a miscarriage of justice has occurred. Lind v. Schenley Industries, Inc., 278 F.2d 79, 88-89 (3d Cir.1960), cert. denied, 364 U.S. 835, 81 S.Ct. 58, 5 L.Ed.2d 60 (1960); J. Moore & J. Wicker, 6A Moore’s Federal Practice ¶ 59.08 (2d ed. 1983). For the reasons set forth herein, Hercules’ motions will be denied.

I. CORPORATE SUCCESSOR LIABILITY

Hercules’ first argument is that the court erroneously denied its motion for summary judgment on the issue of corporate successor liability. The inquiry regarding corporate successor liability commences with Pennsylvania law, for it controls the outcome of this diversity suit. Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

The general rule in Pennsylvania is that when one corporation merely sells or transfers all of its assets to a successor corporation, the successor does not acquire the liabilities of the transferor corporation merely because of its succession to the transferor’s assets. Husak v. Berkel Incorporated, 234 Pa.Super. 452, 341 A.2d 174, 176 (1975). There are, however, certain exceptions to this rule. Liability for obligations of a selling corporation may be imposed on the purchasing corporation when: (1) the purchaser expressly or im *148 pliedly agrees to assume such obligation; (2) the transaction amounts to a consolidation or merger; (3) the purchasing corporation is merely a continuation of the selling corporation; or (4) the transaction is fraudulently entered into to escape liability. See Shane v. Hobam, Incorporated, 332 F.Supp. 526, 527 (E.D.Pa.1971). A fifth circumstance, sometimes included as an exception to the general rule, is where the transfer was without adequate consideration and provisions were not made for creditors of the transferor. See Lopata v. Bemis Co., Inc., 383 F.Supp. 342 (E.D.Pa.1974); McKee v. Harris Seybold Co., Div. of Harris-Int. Corp., 109 N.J.Super. 555, 264 A.2d 98 (1970). Additionally, Pennsylvania has recently adopted a product-line exception. Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 434 A.2d 106, 111 (1981); Amader v. Pittsburgh Corning Corp., 546 F.Supp. 1033 (E.D.Pa.1982).

In order to determine whether the sale of assets in this case falls within one of the six exceptions to the general rule of nonliability it will be necessary to examine the circumstances of the sale of PICCO assets. It is clear that if one of these exceptions apply, Hercules can be held liable for the acts of its predecessor in interest. 4 Shane, 332 F.Supp. at 527.

The contract of sale between Hercules and PICCO is entitled an Agreement and Plan of Reorganization (Agreement). After setting forth the warranties of the respective corporations, the Agreement provides in Article IV § 4.1 that PICCO was to convey:

all of its properties and assets of every kind and description as a going concern together with but not limited to cash, monies on deposit, goodwill, including the right to use of the name PICCO, customer lists, credit and sales records and all other interests to which it has any right by ownership, use or otherwise ... ... [in exchange for 240,000 shares of common stock of Hercules[ 5 ] and] ...
(ii) The assumption by Hercules of any and all obligations and liabilities of PIC-CO under the various agreements, contracts, leases, licenses and other writing referred to in Article I herein, including those specifically excepted from the representations in Article I; and
(iii) The

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587 F. Supp. 144, 21 ERC 1785, 14 Envtl. L. Rep. (Envtl. Law Inst.) 20515, 21 ERC (BNA) 1785, 1984 U.S. Dist. LEXIS 19279, Counsel Stack Legal Research, https://law.counselstack.com/opinion/philadelphia-electric-co-v-hercules-inc-paed-1984.