The opinion of the court was delivered by: LUONGO
This is an action for personal injuries brought against several defendants allegedly involved with the manufacture or sale of a machine referred to as a "Mudrick Picker." On March 11, 1983, defendant B & M Machine Works, Inc. (B & M) filed a motion for summary judgment on the ground that it was not a successor corporation to the manufacturer of the machine, and that it was not otherwise sufficiently affiliated with the manufacturer or its successors that it could be held accountable for plaintiff's injuries. B & M's motion was opposed as premature by plaintiff and the other defendants, who also claimed that the discovery completed at that time failed to establish the absence of genuine issues of material fact. I postponed consideration of B & M's motion, and granted the parties until August 31, 1983 to complete discovery bearing upon the motion.
After a further exchange of correspondence, I again deferred ruling upon B & M's motion in order to afford the parties additional time for discovery. Since then, B & M's answers to plaintiff's second set of interrogatories have been made part of the record, plaintiff's counsel has notified the court that he will offer no additional evidence in opposition to B & M's motion, and no other defendant has added to the record. I conclude that the motion is now ripe for resolution, and, for the reasons discussed below, I will grant it.
The gravamen of plaintiff's complaint is that he was injured during the course of his employment by a defective Mudrick Picker, model Md-2140, serial number 833.
It is agreed by the parties that the machine in question was manufactured by Mudrick Machine Works, and sold to plaintiff's employer, General Felt Industries, during February of 1957. The dispositive question on this motion centers on the relationship between defendant B & M and the manufacturer and its successors in interest.
Plaintiff maintains that B & M either became a successor to Mudrick Machine Works, or assumed the manufacturer's liabilities. In support of that argument, plaintiff sketches the following chain of ownership of Mudrick Machine's assets through 1973: He asserts that in 1961, Mudrick sold its "entire California manufacturing operation, including the relevant picker line, to James Hunter Machine Company;"
that James Hunter Machine Company continued to operate Mudrick's manufacturing plant; that, later in 1961, James Hunter Machine Company sold its "entire California operation to Defendant, Crompton & Knowles Corporation;" that Crompton & Knowles assumed the liabilities of James Hunter Machine Company, and continued operating the facility under Hunter's name; and that between 1971 and 1973, the "original Mudrick manufacturing facilities" were sold in part to B & M, and the remainder to the James Hunter Machine Company.
The crucial transactions, continues plaintiff, were Crompton & Knowles' sales in 1971 to B & M, and to James Hunter Machine Company in 1973. With respect to the sale to B & M, plaintiff contends that B & M purchased sufficient manufacturing assets from Crompton & Knowles to continue manufacturing pickers such as the one that injured plaintiff, and, indeed, that B & M committed itself to producing such devices until Crompton & Knowles' James Hunter division was able to establish manufacturing facilities in Massachusetts. With regard to the sale to James Hunter Machine Company, plaintiff asserts that a material question of fact remains because it is uncertain whether Hunter ever resumed manufacture of the line of machines at issue in this suit.
Based on this scenario as supplemented by B & M's recently filed answers to interrogatories, the parties dispute whether there remain genuine issues of material fact as to B & M's relationship to Mudrick Machine Works' apparent successors. In support of its motion for summary judgment, B & M argues that neither the traditional theories for imposition of successor liability nor the recently adopted "product line exception" render it subject to liability based upon plaintiff's allegations. The traditional theories are inoperative, B & M argues, because its purchase of assets from Crompton & Knowles did not amount to a consolidation, merger, or continuation of the seller; because the sale was not effected to escape liability; and because B & M did not agree to assume the liabilities of the selling corporation. Plaintiff's claim under the product line exception fails, according to B & M, because B &M's purchase of assets from Crompton & Knowles' James Hunter division contemplated that the Hunter division, and not B & M, would continue to manufacture equipment of the type that injured plaintiff, because B & M did not purchase the assets or inventory used in the manufacture of machines of the type that caused plaintiff's injury, because B & M did not purchase the name or goodwill of the seller, and because B & M did not purchase all or substantially all of the seller's manufacturing assets.
In response, plaintiff argues only that B & M has failed to establish the inapplicability of the product line exception. To buttress that claim, plaintiff points to the initial agreement between B & M and the James Hunter division which required B & M to produce "MC type pickers" until Crompton & Knowles relocated the James Hunter division in Massachusetts. That agreement, plaintiff contends, viewed in light of B & M's purchase in 1972 of additional inventory from the James Hunter division in Los Angeles, compels the conclusion that B & M purchased sufficient assets to continue the manufacture of the Mudrick picker. Plaintiff further claims that the 1973 sale of the James Hunter division's manufacturing operation to the James Hunter Machine Company raises questions as to whether the latter ever resumed operations and whether B & M ever ceased manufacture of the allegedly defective machine.
Moreover, plaintiff contends that B & M's capacity, and at least temporary obligation, to manufacture the Mudrick picker product line, when considered in light of the uncertain volume of assets transferred to James Hunter Machine Company (and the uncertainty as to how those assets were used), leaves open the possibility that B & M became Crompton & Knowles' successor with respect to the allegedly defective product. Phrased differently, plaintiff argues that the current record does not foreclose the possibility that Crompton & Knowles sold all or substantially all of its assets for production of the product line to B & M.
Plaintiff also disputes B & M's contention that it never produced a picker of the type involved in plaintiff's accident. In this regard, plaintiff notes that B & M retained the right, under its contract with the James Hunter division, to manufacture an "F-6" picker, a device not distinguished on the record as it stood when plaintiff's memorandum was filed from the "M-2" type machine involved in plaintiff's accident. Plaintiff's Memorandum of Law at 5, n.1. And finally, in a status report submitted before argument on these motions, plaintiff asserts that B & M has admitted that it acted as the James Hunter division's "West coast representative for sales and service" after April 28, 1972.
The general principle regarding the liability of corporations that acquire assets of other corporations, of course, "is that 'a mere sale of corporate property by one company to another does not make the purchaser liable for the liabilities of the seller not assumed by it. '" Knapp v. North American Rockwell Corporation, 506 F.2d 361, 363 (3d Cir. 1974), cert. denied, 421 U.S. 965, 44 L. Ed. 2d 452, 95 S. Ct. 1955 (1975), quoting, Shane v. Hobam, Inc., 332 F. Supp. 526, 527 (E.D. Pa. 1971) ...