The opinion of the court was delivered by: LEONARD D. WEXLER
William J. Howard ("Plaintiff") has brought the instant diversity action against Clifton Power Fluid Machinery, Inc. ("Clifton Fluid") based on a workplace injury Plaintiff suffered while operating a hydraulic press that was manufactured by Clifton Hydraulic Press Co. ("Clifton Hydraulic"), a company that is no longer doing business. Plaintiff seeks to hold Clifton Fluid liable in a products liability action for the press manufactured by Clifton Hydraulic. In response, Clifton Fluid contends that it is not related to Clifton Hydraulic and therefore cannot be held liable for its alleged torts. On that basis, Clifton Fluid has moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons stated below, the motion is granted.
In February 1991, Plaintiff, a New York domiciliary, was injured while working for third-party defendant J.B. Nottingham & Co., ("Nottingham"), a New York corporation. At the time of his injury, Plaintiff was using a "Model 501" hydraulic press that had been manufactured by Clifton Hydraulic and sold to Nottingham in 1976.
Clifton Hydraulic, which manufactured customized hydraulic presses, was a New Jersey corporation with three principals: Michael Brodsky, Sr. ("Brodsky"), Mary Brodsky (his wife), and Matthew S. Trella. At least two sons of Michael and Mary Brodsky worked for Clifton Hydraulic after they reached adulthood.
Brodsky died in September 1980. Thereafter, the company ceased operations and sold off its assets to pay its debts. However, the corporation remained in existence until 1988, when the State of New Jersey dissolved it for failure to pay corporate taxes.
About two months after Brodsky's death, his widow and four of the Brodsky sons formed a new corporation, Clifton Fluid, which also makes and sells hydraulic presses. The Brodskys are the sole shareholders of the new corporation. Clifton Hydraulic employees who were not members of the Brodsky family were not retained by the new corporation.
Although the presses sold by both Clifton Hydraulic and Clifton Fluid are customized for individual buyers, they are based on a "product line" with specific model numbers. Both corporations advertised and sold "Model 501" presses.
Clifton Fluid did not acquire the manufacturing equipment of Clifton Hydraulic.
Furthermore, in an evidentiary hearing held on September 1, 1993, Michael Brodsky, Jr. testified that Clifton Fluid never used a Clifton Hydraulic customer list, nor did it advertise itself as a successor corporation to Clifton Hydraulic.
Plaintiff has brought a separate action against Clifton Hydraulic. Clifton Hydraulic, having been dissolved in 1988, has not answered plaintiff's summons and complaint in that action. Plaintiff now brings this action against Clifton Fluid, claiming that it is a successor to Clifton Hydraulic under the "mere continuation" theory of successor liability.
In addressing the issue of successor liability, this Court must first determine whether to follow the law of New York of New Jersey. A federal court in a diversity case must apply the choice-of-law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). Under New York choice-of-law rules, the Court must first determine whether there is an actual conflict between the laws of the jurisdictions involved. Matter of Allstate Ins. Co., 81 N.Y.2d 219, 597 N.Y.S.2d 904, 905, 613 ...