Suburban v. Trianco-Heatmaker

• Court: District Court, D. New Hampshire
• Decided: August 26, 1997
• Docket: CV-94-403-M
• Status: Published

Opinion

Suburban v. Trianco-Heatmaker CV-94-403-M 08/26/97 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Suburban Propane, P.P., Plaintiff

v. Civil No. 94-403-M

Trianco-Heatmaker, Inc.; Davidson, Gourlev & Acker, Inc.,; and Lakeview Condominium Association, Inc. Defendants

v.

Washington Resources Group, Inc. Third Party Defendant

O R D E R

Suburban Propane's suit seeks contribution from the

defendants for claims against Suburban arising from injuries and

deaths caused by fumes leaking from a residential furnace and

water heater unit. Defendant Trianco-Heatmaker, Inc. ("THI")

moves for summary judgment asserting that the heating unit was

manufactured by AMTI Heating Products, Inc., that THI has no

direct liability related to a product manufactured by AMTI

Heating, and that THI is not responsible for AMTI Heating's torts

under a successor liability theory.

Suburban's initial objection to summary judgment argued that

THI was liable in contribution under the successor liability

exceptions — i.e. that an asset acguisition, which ordinarily would not pass along the selling company's liability for its

products to the acguiring company, does pass along liability if

the asset acguisition is either a de facto merger or amounts to a

continuation of the predecessor's business. While THI's motion

for summary judgment was pending, however. Suburban learned that

THI not only purchased the assets of AMTI Heating in 1989, but

subseguently purchased its stock in 1992. Suburban then filed

two supplemental briefs addressing the stock purchase issue, and

THI responded with its own supplemental memorandum and a copy of

the stock purchase agreement. The parties dispute the legal

significance of both the asset and stock transfers.

In a diversity case, a federal court ordinarily applies the

substantive law of the forum state. Erie R.R. Co. v. Tompkins,

304 U.S. 64, 78 (1938). The parties have relied on New Hampshire

law, interpreted by this district and the First Circuit Court of

Appeals, as controlling authority pertaining to the guestion of

successor liability. The circumstances of this case, however,

present a substantial choice-of-law guestion that the parties

have not addressed. Although the accident involving AMTI

Heating's furnace occurred in New Hampshire, both the asset

purchase agreement and the stock purchase agreement have provided

that those agreements will be construed according to Delaware

law. THI, according to the agreements, is a Delaware

2 corporation, while AMTI Heating is or was a Massachusetts

corporation.

When a choice-of-law question arises because different

states have interests in the claims, the court applies the

choice-of-law rules of the forum state. See Klaxon Co. v.

Stentor Elec. Mfg. Co., 313 U.S. 487, 491 (1941); McCarthy v.

Azure, 22 F.3d 351, 356 n.5 (1st Cir. 1994). If the choice-of-

law provisions in the agreements were controlling as to all

issues raised by the motion for summary judgment, it might be

appropriate to apply Delaware law. See Ferrofluidics Corp. v.

Advanced Vacuum Components, 968 F.2d 1463, 1467 (1st Cir. 1992)

(applying New Hampshire law to contract choice-of-law provision).

The parties have not demonstrated, however, that the agreements

control the question of THI's responsibility for product

liability claims related to AMTI Heating's products. Instead,

the parties continue to dispute the application of successor

liability to the changing facts presented in this case.1 To

resolve THI's liability as the parties have presented the issues,

it would be necessary to apply New Hampshire's five choice-

1 The parties have not addressed whether a statutory merger occurred under either the law of Delaware or Massachusetts, which might prove to be an adequate foundation for a successor liability claim. See, e.g., Del. Code Ann. tit.8, § 251 (1996); Mass. Gen. Laws Ann. ch. 156B, §79 (1997).

3 influencing considerations to the circumstances of this case.

See Benoit v. Test Systems, Inc., 694 A.2d 992, 995 (N.H. 1997).

The court declines to undertake the choice-of-law analysis sua

sponte both because the outcome may well influence the necessary

factual basis2 for summary judgment and because the Supreme

Courts of New Hampshire and Delaware have apparently not resolved

the legal standard applicable to successor liability claims in

those states. Compare Kelly v. Kercher Mach. Works, Inc., 910 F.

Supp. 30, 36 (D.N.H. 1995)(New Hampshire would adopt the broader

version of continuation theory) and Simoneau v. South Bend Lathe,

Inc., 130 N.H. 466 (1988)(declining to adopt "product line"

theory of successor liability); compare Fehl v. S.W.C. Corp., 433

F. Supp. 939 (D.Del. 1977) (predicting Delaware law as to de

facto merger in personal jurisdiction context) and Sheppard v.

A . C . and S . C o ., 484 A.2d 521 (Del. Super. C t . 1984) (discussing

mere continuation theory); and see, e.g., Carreiro v. Rhodes Gill

and C o ., 68 F.3d 1443, 1447 (1st Cir. 1995) (successor liability

under Massachusetts law).

Given these circumstances, THI, the party moving for summary

judgment, has not carried its burden to show that it is entitled

2 Because factual materiality depends on the applicable legal standard, see Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996), choice of law would affect the parties' factual support in support of and in opposition to summary judgment.

4 to judgment as a matter of law based on undisputed material

facts. See Vinick v. Commissioner of Internal Revenue, 110 F.3d

168, 171 (1st Cir. 1997). Accordingly, THI's motion for summary

judgment (document no. 33) is denied without prejudice to filing

a new and well-supported motion that addresses the choice-of-law

issue as well as all material facts.

SO ORDERED.

Steven J. McAuliffe United States District Judge

August 26, 1997

cc: John E. Friberg, Esg. Marc R. Scheer, Esg. Joseph M. McDonough, III, Esg. James E. Owers, Esg. Michael B. O'Shaughnessy, Esg. William L. Tanguay, Esg.