Opinion
1225 CA 20-00744
03-19-2021
Donald F. SCHULTZ, III, as Administrator of the Estate of Donald F. Schultz, II, Deceased, Plaintiff-Respondent, v. ALAMO GROUP INC., Individually and as Successor in Interest to Clean Earth Environmental Group, LLC, Clean Earth Kentucky, LLC, and/or Vacall Industries, Inc., Alamo Group (TX), Inc., Individually and as Successor in Interest to Clean Earth Environmental Group, LLC, Clean Earth Kentucky, LLC, and/or Vacall Industries, Inc., Gradall Industries, Inc., Individually and as Successor in Interest to Vacall Industries, Inc., Defendants-Appellants, et al., Defendants.
HURWITZ & FINE, P.C., BUFFALO (BRENNA C. GUBALA OF COUNSEL), FOR DEFENDANTS-APPELLANTS. LIPSITZ GREEN SCIME CAMBRIA LLP, BUFFALO (JOHN A. COLLINS OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
HURWITZ & FINE, P.C., BUFFALO (BRENNA C. GUBALA OF COUNSEL), FOR DEFENDANTS-APPELLANTS.
LIPSITZ GREEN SCIME CAMBRIA LLP, BUFFALO (JOHN A. COLLINS OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
PRESENT: WHALEN, P.J., SMITH, TROUTMAN, BANNISTER, AND DEJOSEPH, JJ.
MEMORANDUM AND ORDER
It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action after plaintiff's decedent sustained severe injuries, ultimately leading to his death, as a result of decedent's operation of a sewer-cleaning truck in the course of his employment. The truck was manufactured by a company (predecessor company) from which assets were purchased by nonparty Alamo Group (AL) Inc., as guaranteed by defendant Alamo Group Inc. (collectively, Alamo Group). In the complaint, plaintiff asserted causes of action for, inter alia, strict products liability and wrongful death. Defendants-appellants (defendants) moved for summary judgment dismissing the complaint against them on the ground that they could not be held liable for the alleged tortious acts of the predecessor company. Defendants asserted that their asset purchase agreement (APA), as approved by the order of the Bankruptcy Court overseeing the Chapter 11 reorganization of the predecessor company, precluded the assertion against them of liability claims related to the subject assets. Defendants highlighted that the Bankruptcy Court order permitted the predecessor company to sell the subject assets to the Alamo Group free and clear of all liens and liabilities, including successor liability, and that the Alamo Group required such as a condition of the purchase. Supreme Court denied the motion, and we affirm.
Defendants contend that they cannot be held liable under the de facto merger doctrine inasmuch as there was no continuity of ownership (see Sweatland v. Park Corp. , 181 A.D.2d 243, 245-246, 587 N.Y.S.2d 54 [4th Dept. 1992] ; see also Simpson v. Ithaca Gun Co. LLC , 50 A.D.3d 1475, 1476, 856 N.Y.S.2d 397 [4th Dept. 2008], lv denied 11 N.Y.3d 709, 868 N.Y.S.2d 602, 897 N.E.2d 1086 [2008] ). Defendants, however, failed to address the factor of continuity of ownership in their motion papers, and thus their contention is not properly before us on this appeal (see Ciesinski v. Town of Aurora , 202 A.D.2d 984, 985, 609 N.Y.S.2d 745 [4th Dept. 1994] ).
Defendants further contend that the language in the APA and the order of the Bankruptcy Court purporting to limit their successor liability establish their prima facie entitlement to judgment as a matter of law. We likewise reject that contention. The parties to the APA could regulate how successor liability would be allocated among themselves, but such provisions in the APA "cannot affect the rights of a stranger to their contract" ( Grant-Howard Assoc. v. General Housewares Corp. , 63 N.Y.2d 291, 297, 482 N.Y.S.2d 225, 472 N.E.2d 1 [1984] ; see Sweatland , 181 A.D.2d at 247, 587 N.Y.S.2d 54 ; Wensing v. Paris Indus.-N.Y. , 158 A.D.2d 164, 166-167, 558 N.Y.S.2d 692 [3d Dept. 1990] ). Furthermore, the Bankruptcy Court may permit the free and clear sale of assets only if nonbankruptcy law, such as our State law, permits it (see 11 USC § 363 [f] [1]).
Inasmuch as the APA and the order of the Bankruptcy Court were the only two bases on which defendants moved for summary relief, we conclude that they failed to meet their initial burden of establishing their entitlement to judgment as a matter of law (see Nationwide Mut. Fire Ins. Co. v. Long Is. A.C., Inc. , 78 A.D.3d 801, 802, 912 N.Y.S.2d 226 [2d Dept. 2010] ; see also Meadows v. Amsted Indus. , Inc., 305 A.D.2d 1053, 1054-1055, 760 N.Y.S.2d 604 [4th Dept. 2003] ; see generally Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). Thus, we need not consider the adequacy of plaintiff's opposing submissions (see Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 [1985] ; Gagnon v. St. Joseph's Hosp. , 90 A.D.3d 1605, 1606, 935 N.Y.S.2d 789 [4th Dept. 2011] ).