Argued-May 19, 2017
Goldberg Segalla LLP, Garden City, NY (Brian W. McElhenny and
Brendan T. Fitzpatrick of counsel), for appellants.
& Dean, PLLC (Mischel & Horn, P.C., New York, NY
[Scott T. Horn and Naomi M. Taub], of counsel), for
WILLIAM F. MASTRO, J.P. REINALDO E. RIVERA L. PRISCILLA HALL
JOSEPH J. MALTESE, JJ.
DECISION & ORDER
action, inter alia, to recover damages for personal injuries
based on products liability, etc., the defendants Bauer
Corporation and Babcock Co., Inc., appeal, as limited by
their brief, from so much of an order of the Supreme Court,
Nassau County (Diamond, J.), entered October 14, 2015, as
denied that branch of their motion which was for summary
judgment dismissing the complaint insofar as asserted against
that the order is reversed insofar as appealed from, on the
law, with costs, and that branch of the motion of the
defendants Bauer Corporation and Babcock Co., Inc., which was
for summary judgment dismissing the complaint insofar as
asserted against them is granted.
December 2012, the injured plaintiff allegedly fell from a
defective wooden ladder while performing work outside of the
Nassau Coliseum. The injured plaintiff, and his wife suing
derivatively, commenced this action against the County of
Nassau, the County of Nassau Department of Public Works,
Bauer Corporation, and Babcock Co., Inc. As pertinent to this
appeal, the plaintiffs asserted a cause of action sounding in
products liability against Bauer Corporation and Babcock Co.,
Inc. (hereinafter Babcock Co.; hereinafter together the Bauer
defendants), based upon the allegedly defective wooden
ladder, which was manufactured by W.W. Babcock Company, Inc.
(hereinafter Old Babcock), in 1988. Prior to the commencement
of this action, Babcock Co. acquired all of Old Babcock's
assets from the Small Business Administration (hereinafter
the SBA), and then merged with Bauer Corporation.
Bauer defendants moved for summary judgment, inter alia,
dismissing the complaint insofar as asserted against them.
The Supreme Court denied that branch of the motion,
concluding, in pertinent part, that there were triable issues
of fact as to whether Babcock Co. was a mere continuation of
Old Babcock. The Bauer defendants appeal, and we reverse the
order insofar as appealed from.
may be held strictly liable for injuries caused by their
products "because of a mistake in the manufacturing
process, because of defective design or because of inadequate
warnings regarding use of the product" (Sprung v MTR
Ravensburg, 99 N.Y.2d 468, 472; see Singh v Gemini
Auto Lifts, Inc., 137 A.D.3d 1002, 1002). However, as a
general rule, a corporation which acquires the assets of
another corporation is not liable for the predecessor's
tortious conduct, including a defective and dangerous product
manufactured by the predecessor (see Schumacher v
Richards Shear Co., 59 N.Y.2d 239, 244; Nationwide
Mut. Fire Ins. Co. v Long Is. A.C., Inc., 78 A.D.3d
801). There are four exceptions to this general rule against
successor liability. A corporation may be held liable for the
torts of its predecessors if (1) the successor corporation
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 was entered into fraudulently to escape such
obligations (see Schumacher v Richards Shear Co., 59
N.Y.2d at 245; Nationwide Mut. Fire Ins. Co. v Long Is.
A.C., Inc., 78 A.D.3d at 801-802).
the Bauer defendants established their prima facie
entitlement to summary judgment with evidence that they did
not make or sell the subject ladder, that they were not
liable pursuant to the general rule against successor
liability, and that none of the exceptions to the general
rule applied here. In opposition, the plaintiffs failed to
raise a triable issue of fact with respect to any of the
exceptions to the general rule, including the two they
contested: that Babcock Co., the purchasing corporation, was
allegedly a mere continuation of Old Babcock, and that the
Bauer defendants impliedly assumed Old Babcock's tort
respect to the mere continuation exception, the underlying
theory is that, if a corporation goes through "a mere
change in form without a significant change in substance, it
should not be allowed to escape liability" (Martin
Hilti Family Tr. v Knoedler Gallery, LLC, 137 F.Supp.3d
430, 458 [SD NY] [internal citations and quotation marks
omitted]; see JGB Enterprises, Inc. v Beta Fluid Sys.,
Inc., 135 F.Supp.3d 18, 32 [ND NY]). Thus, this
exception applies where "it is not simply the business
of the original corporation which continues, but the
corporate entity itself" (Ladjevardian v Laidlaw-Co
eshall, Inc., 431 F.Supp. 834, 839). A continuation
envisions something akin to a corporate reorganization,
rather than a mere sale, with "a common identity of
directors, stockholders and the existence of only one
corporation at the completion of the transfer"
(id. at 839; see Schumacher v Richards Shear
Co., 59 N.Y.2d at 245).
the Bauer defendants' submissions demonstrated that,
after Old Babcock went out of business and ceased to exist,
the SBA acquired its equipment, inventory, and general
intangibles pursuant to a first security interest lien.
Thereafter, the SBA sold those assets to Babcock Co. for $75,
000, and issued a bill of sale for "[a]ll of its rights,
title and interest in the machinery and equipment, furniture
and inventory, fixtures and general intangibles of [Old
Babcock] pursuant to [a] security agreement dated December 9,
1991, between Babcock and Norstar Bank, N.A." This
included the right to use Old Babcock's name and
trademark. Further, the Bauer defendants submitted evidence
that none of the owners or officers of Old Babcock was an
owner or officer of Babcock Co. or Bauer Corporation.
Accordingly, the Bauer defendants established, prima facie,
that the mere continuation exception does not apply because
there was no sale between Old Babcock and Babcock Co., no
continuity of ownership or control between those entities,
and no corporate reorganization (cf. Nationwide Mut. Fire
Ins. Co. v Long Is. A.C., Inc., 78 A.D.3d at 802;
Burgos v Pulse Combustion, 227 A.D.2d 295, 295-296).
In opposition, the plaintiffs failed to raise a triable issue
of fact. The mere fact that some former Old Babcock employees
worked for Babcock Co. was insufficient to raise a triable
issue of fact (see generally Ladjevardian v
Laidlaw-Coggeshall, Inc., 431 F.Supp. at 839).
the plaintiffs' contention that the Bauer defendants
impliedly assumed Old Babcock's tort liability is without
merit. The Bauer defendants demonstrated, prima facie, that
they did not assume any tort liability of Old Babcock and, in
opposition, the plaintiffs failed to ...