BECK v. ROPER WHITNEY

The opinion of the court was delivered by: John T. Curtin, United States District Judge

Presently before the court are cross-motions by the plaintiffs and two of the defendants for summary judgment on the issue of successor liability, as well as plaintiffs' motion to amend.

On April 23, 1999, plaintiff David Beck filed an action in New York State Supreme Court, Erie County, against Roper Whitney, Inc.; and against Roper Whitney of Rockford, Inc., a/k/a Roper Whitney Co.; Met-Coil-RWC, Inc.; Roper Properties, Inc.; Forest Industries, Inc., c/o Henry B. Lake; Roper Industries, Inc., c/o Prentice Hall Corporate Systems, all as successors in interest to Roper Whitney, Inc. Mr. Beck asserted claims for breach of warranty and failure to warn against Roper Whitney, Inc., and strict products liability against all defendants. These claims arose as a result of injuries Mr. Beck allegedly sustained on April 24, 1996, when he was struck in the head by the arm of a sheet metal brake manufactured in September 1981 by Roper Whitney, Inc. Item 1, Ex. A. Sandra Beck asserted a derivative claim for loss of consortium.

The action was timely removed to federal court by defendants Roper Whitney, Inc.; Roper Properties, Inc.; and Roper Industries, Inc., c/o Prentice Hall Corporate Systems. Item 1. All defendants, with the exception of Forest Industries, Inc., c/o Henry B. Lake, answered the complaint. Items 2, 4, 7. Former Magistrate Judge Carol E. Heckman ordered that discovery be bifurcated into two phases: successor liability issues and all other issues. Item 8. Magistrate Judge H. Kenneth Schroeder, Jr., set out a scheduling order on the successor liability issues. Items 10, 11.

After some discovery, defendant Met-Coil-RWC, Inc., filed a motion for summary judgment on December 1, 2000, seeking to dismiss all claims and cross-claims against it on the ground that it was not a successor to Roper Whitney, Inc. Item 12. In support of its motion, Met-Coil-RWC, Inc. provided an Affidavit from Katie Michael, Human Resources Director of Met-Coil Systems Corp., and an Attorney's Affidavit with exhibits. Item 12.

Plaintiffs then filed a Cross-Motion for Partial Summary Judgment, seeking a determination that each of the defendants was a corporate successor with respect to any liability which may be attributed to defendant Roper Whitney, Inc., as the manufacturer of the sheet metal brake which caused the injury to Mr. Beck. Plaintiffs also filed an Attorney's Affidavit with exhibits in support of their motion. Item 16. Defendant Roper Whitney of Rockford, Inc. (sued in its own name and as Roper Whitney Co.), also filed a motion for summary judgment, supported by an affidavit of Gary Strakeljahn, Vice-President and Chief Financial Officer of Roper Whitney of Rockford, Inc. ("Roper-Rockford"), Item 19, and opposed plaintiffs' motion for partial summary judgment. Item 23.

On February 20, 2001, plaintiffs filed a motion to amend the complaint, Item 25, which was unopposed. Further briefing on successor liability followed. Oral argument was to have taken place on September 7, 2001. The court instead determined that the motions could better be decided on the papers and, with consent of counsel, considered the motions submitted. For the reasons that follow, the court denies Met-Coil-RWC, Inc.'s motion for summary judgment, denies Roper-Rockford's motion for summary judgment, grants in part and denies in part plaintiffs' motion for partial summary judgment, and grants plaintiffs' motion to amend.

FACTS

For the most part, the facts are uncontested, and are found in the documents attached as exhibits to the various motions.

On April 24, 1996, plaintiff David E. Beck was working as an employee of the Buffalo Sewer Authority. In the course of his employment, he was struck in the head and injured by the arm of a sheet metal brake, Model 812, bearing Serial Number 664 9-81.*fn1 Plaintiff asserts that the sheet metal brake was manufactured by defendant Roper Whitney, Inc., in or about September 1981. However, since 1981, Roper Whitney, Inc., has undergone a number of different corporate incarnations. Many of the subsequent companies use various combinations and permutations of the Roper and Whitney names, making the process of tracing the company's successors complicated and confusing at best.

In 1981, Roper Whitney, Inc., was a wholly owned subsidiary of Roper Industries, Inc., an Illinois corporation ("Roper Industries, Inc. (Ill.)"). Item 12, Ex. A to Ex. E, p. 1.*fn2 Roper Whitney, Inc., was located at 2833 Huffman Boulevard, Rockford, Illinois.

On June 30, 1982, the assets and liabilities of the Roper Whitney, Inc., division of Roper Industries, Inc. (Ill.) were transferred to Dexter Holdings, Inc., Ex. C to Ex. E ("Transfer of Assets"), which then changed its name to Roper Industries, Inc. (Del.). Item 12, Ex. D to Ex. E ("Certificate of Amendment"). The Roper Whitney division of Roper Industries, Inc. (Del.), became known as Roper Whitney Company Division. Ex. F to Ex. E, p. 1.

Following the sale of the Roper Whitney division to Dexter, on June 30, 1982, Roper Industries, Inc. (Ill.) changed its name to Roper Pump Company. On March 29, 1983, Roper Pump Company changed its name to Roper Properties, Inc. At some point, It became a wholly owned subsidiary of Roper Industries, Inc. (Del.). Item 12, Ex. F to Ex. E, p. 1.

On June 30, 1986, Roper Industries, Inc. (Del.) and Roper Properties, Inc. (Ill.) entered into an agreement with Medart Acquisition Corporation ("Medart"), whereby Medart acquired the Roper Whitney Company Division as a "going concern." Item 12, Ex. F to Ex. E (June 25, 1986 Purchase and Sale Agreement), p. 1. By way of this transaction, the Roper Whitney Company Division transferred substantially all of its assets to the newly formed Roper Whitney Corporation "in exchange for which all of the issued shares of capital stock" of said corporation "were issued to Roper Industries, Inc. and Roper Properties, Inc." Id. On August 26, 1986*fn3, Roper Whitney Corporation (Ill.) stock was sold to Medart. Item 12, Vignali Aff., ¶ 7(e); Ex. A to Ex. E (flow chart) and Ex. F to Ex. E ("Purchase and Sale Agreement").

On March 14, 1988, Medart's subsidiary, Roper Whitney Corp. (Ill.) sold certain assets and liabilities of the Roper Whitney Company Division, "subject to certain specified liabilities and obligations" to Industries Machinery Systems and Supply, Inc. ("IMSS"), a wholly owned subsidiary of Met-Coil Systems, Inc. Item 12, Ex. G to Ex. E (March 14, 1988 Asset Purchase Agreement), p. 1. The purchase price for the assets included a $300,000.00 deposit in escrow of Met-Coil Systems stock. Id., p. 3. Following this transaction, IMSS changed its name to Roper Whitney Company, Inc., to reflect the purchase of certain assets by Met-Coil Systems Corp. from Roper Whitney Corporation. Item 12, Ex. G, p. 1. On April 6, 1988, Roper Whitney Corporation (Ill.) changed its name to Forest Industries, Inc., Item 12, Ex. H to Ex. E ("Articles of Amendment").

In 1990, Medart filed for Chapter 7 Bankruptcy. Item 19, Roper-Rockford Statement of Material Facts, ¶ 8(d).

On August 27, 1993, Roper Whitney Company, Inc. (Ill.), located at the Huffman Blvd. address in Rockford, Illinois, entered an Asset Purchase Agreement with three investors (John K. Forlow, David Casazza, and Gautam Gupta) "or a corporation to be formed by them" for certain assets, including all assets used in the operation of its business, as well as the name "Roper Whitney," and assumed certain enumerated liabilities. Item 19, Ex. B. The three investors formed Roper Whitney of Rockford, Inc., on December 6, 1993. Item 19, Ex. A. Roper Whitney Company, Inc., transferred its right, title, and interest in the name "Roper Whitney Company" to Roper-Rockford on December 7, 1993. Item 19, Ex. D. Roper-Rockford operates from the Huffman Street address in Rockford, Illinois.

On October 30, 1993, Roper Whitney Company, Inc., changed its name to Met-Coil-RWC, Inc. Item 19, Ex. C.

DISCUSSION

I. Standard for Summary Judgment

A motion for summary judgment may be granted only when it is shown that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying [which materials] . . . it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. 477 U.S. at 323. The substantive law governing the case will identify those facts which are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Where parties have filed cross-motions for summary judgment asserting the absence of any genuine issues of material fact, "a court need not enter judgment for either party." Morales v. Quintel Entertainment, Inc., 249 F.3d 115, 121 (2d Cir. 2001), citing Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993). "Rather, each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Morales, 249 F.3d at 121 (citation omitted).

II. Successor Liability

Defendants Met-Coil-RWC, Inc., and Roper-Rockford each move for summary judgment, essentially on the grounds that as remote purchasers of assets, they are not liable under the doctrine of successor liability for plaintiffs' injuries. Plaintiffs cross-move for partial summary judgment on the issue of successor liability, asserting that each of the named defendants are corporate successors with respect to any liability which may be attributed to defendant Roper Whitney, Inc. Plaintiffs further argue that Nichols v. Roper-Whitney Co., et al., 843 F. Supp. 799 (D.N.H. 1994), has collateral estoppel effect not only on defendant Roper Whitney Company, but also on Met-Coil-RWC, Inc., Roper-Rockford, and the other defendants.

The rule on successor liability is well settled.

Klumpp v. Bandit Industries, Inc., 113 F. Supp.2d 567, 571 (W.D.N.Y. 2000) (quoting Schumacher v. Richards Shear Co., Inc., 59 N.Y.2d 239, 464 N.Y.S.2d 437, 440 (1983)). These exceptions to the general rule of successor nonliability are set forth in the disjunctive; fulfillment of any one of the four exceptions is adequate to classify the purchasing corporation as a successor corporation.

Before the court addresses the motions of Met-Coil-RWC, Inc., or Roper-Rockford, it will first consider plaintiffs' summary judgment argument on corporate successorship, and whether the New Hampshire District Court's finding in Nichols v. Roper-Whitney Co., et al. has collateral estoppel effect on this action.

None of the other defendants, i.e., Roper Properties, Inc., Roper Industries, Inc. (Del)., or Forest Industries, Inc., have contested their successor liability.

A. Collateral Estoppel

The doctrine of collateral estoppel, or issue preclusion, provides that "`[w]hen an action between two parties terminates in a valid judgment, a later action between the parties may be affected[,] [and possibly barred,] even though it involves a different claim or cause of action.'" Levy v. Kosher Overseers Assn. of America, Inc., 104 F.3d 38, 41 (2d Cir. 1997), quoting James Fleming, et al., Civil Procedure, § 11.17, at 607 (4th ed. 1992).

In order to apply the doctrine of collateral estoppel to bar litigation of an issue,