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Gennone v. A.J. Eckert Company

June 18, 2010

RICHARD JAMES GENNONE AND JOYCE E. FLOOD, PLAINTIFFS,
v.
A. J. ECKERT COMPANY, INC., ET AL., DEFENDANTS.



MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Presently before the Court is a Motion seeking summary judgment, pursuant to Federal Rule of Civil Procedure 56, in favor of Defendant Detroit Diesel Corporation ("DDC" or "Defendant") and dismissing all claims asserted against that party in the instant action. Dkt. No. 9. DDC is one of many Defendants named by Plaintiffs Richard J. Gennone and Joyce E. Flood in this case, a personal injury suit concerning asbestos exposure and mesothelioma. This case comes before this Court following removal by Defendant from the Schenectady County Supreme Court on or about August 26, 2009. See Dkt. No. 1. Prior to removal, Plaintiffs filed an initial Complaint on May 26, 2009, an Amended Complaint on June 8, 2009, and a Second Amended Complaint on June 30, 2009. The Second Amended Complaint added, inter alia, DDC as a Defendant, alleging that it engaged in the manufacture, sale or distribution of products containing asbestos and which caused or contributed to Plaintiff Gennone's development of mesothelioma. Second Amended Compl. at ¶ 7.

II. BACKGROUND

Plaintiff Richard Gennone alleges an array of injuries attributed to asbestos exposure over a period of years during employment at assorted industrial, manufacturing or shipping jobs. This action seeks to hold liable an extensive list of enterprises that performed activities involving the asbestos products that are asserted as causes of Gennone's harms. Joyce Flood, as the spouse of Gennone, alleges loss of consortium due to the asbestos-based injuries sustained by her husband. First Compl. at ¶¶ 210-12 (incorporated in subsequent pleadings). Among the enterprises named as Defendants, DDC is implicated in this action by Gennone's allegations that he was exposed to asbestos while working with Detroit Diesel engines and generators from 1944-46 and 1950-51. See Memo. in Opp. at 2, Dkt. No. 14; see generally Nov. 30, 2009, Aff. of Thomas Lane ("Lane Aff."), Dkt. No. 9.

DDC seek summary judgment and dismissal of Plaintiffs' claims against them on the ground that the corporation did not exist during the period relevant for this action. That is, DDC presents a history of the Detroit Diesel brand, from its time as a division of General Motors Corporation ("GM") to its current status as a wholly owned subsidiary of Daimler North America Corporation, a subsidiary of Daimler AG. See Corporate Disclosure Statement, Dkt. No. 3. In brief, DDC explains that the corporation was formed January 1, 1988 by acquiring assets of the Detroit Diesel Allison Division of GM; at the juncture, Penske Corporation and GM owned, respectively, 60% and 40% of the newly created corporation. Aug. 24, 2009, Aff. of Shawn Jacque ("Jacque Aff.") ¶ 5, Dkt. No 9, Ex. D. Thereafter, in 1989, Penske obtained an additional 20% stake of DDC from GM, such that it became an 80% owner of the corporation. Id. ¶ 15. The remaining 20% held by GM was acquired by Daimler-Benz in 1993, when DDC became a publicly held company. Id. ¶ 16. In 2000, DaimlerChrysler, previously Daimler-Benz, obtained all stock in DDC. When Daimler and Chrysler split apart in 2007, the resultant Daimler North America Corporation retained all of the shares of DDC, as is currently the case. Id. ¶ 17.

As an additional dimension to DDC's company history, GM's Sales Agreement included provisions for GM to assign all liabilities for a range of matters, including those for products made prior to the sale of the division and formation of the corporation; relatedly, GM entered into an indemnification agreement in which GM committed to indemnify, defend and hold harmless DDC, its successors or assigns from costs and expenses stemming from claims or litigation against DDC concerning GM products prior to the sale. Id. ¶¶ 10-11; see Attached Exhibits to Declaration A and B (Dkt. No. 9, #5-6). The transaction also included a product responsibility agreement in which GM agreed to maintain insurance for product liability claims relating to GM products prior to the sale. Jaque Aff. ¶¶ 12-13. On July 16, 2009, however, the legal staff at GM, upon emerging from Chapter 11 bankruptcy as General Motors Company, notified corporate counsel at DDC that GM would cease to assume its obligations under the indemnification and product responsibility agreements. Id. ¶ 19.

Based on these facts and their alleged legal application, DDC argues that it cannot be subject to liability for claims arising from GM Detroit Diesel machinery that Plaintiff worked with in the 1940s and 1950s. Plaintiffs respond to Defendant's Motion by seeking discovery under Federal Rule of Civil Procedure 56(f) through a filing that contains neither a statement of material facts nor a memorandum of law but, rather, is labeled as an affidavit, despite containing extensive legal argument. While such a filing is inconsistent with the governing local rules, see generally, L.R. 7.1, the Court shall nonetheless reach the underlying merits of Defendant's Motion in this instance. Plaintiffs assert that the "Gennone Estate cannot respond to DDC's motion. Nor . . . does the Court have sufficient information before it to rule upon [it]." Memo in Opp. at 2. Thus Plaintiffs' opposition to Defendant's Motion, without expressly disputing any of the foregoing facts, seeks to avoid summary judgment by showing why the circumstances warrant the Court's allowance of additional time for Plaintiffs to undertake discovery.

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56 provides that summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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); Beard v. Banks, 548 U.S. 521, 529 (2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). A court must "'resolve all ambiguities, and credit all factual inferences that could rationally be drawn, in favor of the party opposing the judgment.'" Brown v. Henderson, 257 F.2d 246, 251 (2d Cir. 2001) (quoting Cifra v. General Elec. Co., 252 F.3d 205, 216 (2d Cir. 2001). "Only 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).

If the moving party meets its initial burden of demonstrating that no genuine issue of material fact exists for trial, the non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Corp., 475 U.S. 574, 586 (1986) (citations omitted). The non-movant "must come forth with evidence sufficient to allow a reasonable jury to find in her favor." Brown, 257 F.3d at 251 (citation omitted). The nonmoving party "may not rely merely on allegations or denials in its own pleadings;" bald assertions unsupported by evidence are insufficient to overcome a motion for summary judgment. FED. R. CIV. P. 56(e)(2); see Carey v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991); Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990).

IV. DISCUSSION

DDC contends that the record before the Court establishes as a matter of law that it cannot be held liable for the torts alleged by Plaintiffs under New York law governing corporate successor liability. Plaintiffs, in the absence of a statement of material facts and without specifically denying the facts on which DDC rests its Motion, seek to show that issues of material facts may exist, for which a continuance and discovery is warranted.

Generally, successor liability is not permitted; only certain, limited sets of circumstances allow a plaintiff to sue an existing corporation for tortious activity by its predecessor. "A corporation that purchases another corporation's assets is not liable for the seller's torts, subject to four exceptions outlined in subject to four exceptions outlined in Schumacher v. Richards Shear Co., 59 N.Y.2d 239 (1983)." Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194, 196 (2006). These four exceptions occur where: "1) [the successor] expressly or impliedly assumed the predecessor's tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations." Schumacher, 59 N.Y.2d at 245. The Court shall consider the application of each exception in turn.

First, there is no question that GM expressly assumed tort liability for Detroit Diesel products manufactured or sold prior to DDC's separation and incorporation. The sales agreement, indemnification agreement and product responsibility agreement all attest to such an arrangement. See Attached Exhibits to Declaration A, B, C (Dkt. No. 9, #5-6). Further, that GM defended asbestos claims relating to Detroit Diesel products dating from the GM era up until emerging from Chapter 11 bankruptcy in 2009 demonstrates that DDC, the successor corporation, was relieved of liability in practice. Id. Exhibit D. Thus, rather than indicate any possibility that DDC ...


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