LIPPENS, BRIAN v. WINKLER BACKEREITECHNIK GMBH ( 2016 )


Menu:
  •         SUPREME COURT OF THE STATE OF NEW YORK
    Appellate Division, Fourth Judicial Department
    1148
    CA 15-00221
    PRESENT: SMITH, J.P., PERADOTTO, CARNI, WHALEN, AND DEJOSEPH, JJ.
    BRIAN LIPPENS, PLAINTIFF-RESPONDENT,
    V                               MEMORANDUM AND ORDER
    WINKLER BACKEREITECHNIK GMBH, WERNER & PFLEIDERER
    INDUSTRIELLE BACKTECHNIK GMBH, BAKERY
    ENGINEERING/WINKLER, INC., DEFENDANTS-APPELLANTS,
    WINKLER INTERNATIONAL CORPORATION, ET AL.,
    DEFENDANTS.
    (APPEAL NO. 2.)
    LECLAIR RYAN, A PROFESSIONAL CORPORATION, NEW YORK CITY (LESLIE F.
    RUFF OF COUNSEL), FOR DEFENDANTS-APPELLANTS WINKLER BACKEREITECHNIK
    GMBH AND WERNER & PFLEIDERER INDUSTRIELLE BACKTECHNIK GMBH.
    OSBORN, REED & BURKE, LLP, ROCHESTER (JEFFREY P. DIPALMA OF COUNSEL),
    FOR DEFENDANT-APPELLANT BAKERY ENGINEERING/WINKLER, INC.
    MACCARTNEY, MACCARTNEY, KERRIGAN & MACCARTNEY, NYACK (WILLIAM K.
    KERRIGAN OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
    Appeals from an order of the Supreme Court, Monroe County (J.
    Scott Odorisi, J.), entered November 19, 2014 in a personal injury
    action. The order, among other things, denied the motions of
    defendants Bakery Engineering/Winkler, Inc., Winkler Backereitechnik
    GmbH and Werner & Pfleiderer Industrielle Backtechnik GmbH for summary
    judgment dismissing plaintiff’s amended complaint.
    It is hereby ORDERED that the order so appealed from is
    unanimously modified on the law by granting those parts of the motion
    of defendant Bakery Engineering/Winkler, Inc. with respect to the
    fourth and fifth causes of action in the amended complaint, and
    dismissing those causes of action, and as modified the order is
    affirmed without costs.
    Memorandum: Plaintiff, a New York State resident, commenced this
    products liability action seeking damages for injuries he sustained in
    Rochester, New York, in September 2006 when his arm was caught in a
    component of a commercial bread-making machine known as a “proofer”
    during the course of his employment with Wegmans Food Market, Inc.
    (Wegmans), a nonparty. The proofer was sold to Wegmans in 1994 by
    defendant Winkler USA LP (Winkler USA). The proofer was manufactured
    by a German company, Winkler GmbH, which filed for bankruptcy in
    Germany in 2000. The Winkler GmbH German bankruptcy proceeding
    -2-                          1148
    CA 15-00221
    resulted in three separate asset sales, two of which are relevant to
    this action. Defendant Bakery Engineering/Winkler, Inc. (Bakery)
    purchased, inter alia, Winkler GmbH’s customer lists, customer
    contracts, accounts receivable, and balance sheet assets. In a
    separate sale, defendant Winkler Backereitechnik GmbH (Winkler)
    purchased, inter alia, Winkler GmbH’s entire manual and industrial
    machinery program and equipment, a component program for bread and
    cookies, as well as an industrial proofing cabinet. Winkler is wholly
    owned by defendant Werner & Pfleiderer Industrielle Backtechnik GmbH
    (Werner).
    Inasmuch as they did not design, manufacture, sell, or distribute
    the product at issue, plaintiff’s amended complaint against Winkler,
    Werner, and Bakery is based in part upon theories of successor tort
    liability. The parties agree that, under German law, a purchaser of
    assets from a bankruptcy trustee is immune from successor liability
    for the pre-sale torts of the seller. Thus, Winkler, Werner, and
    Bakery contend that there can be no successor liability here because,
    inter alia, they purchased the assets of Winkler USA and/or Winkler
    GmbH from the German bankruptcy trustee.
    Winkler and Werner together, and Bakery separately (hereafter,
    moving defendants), moved for summary judgment dismissing the amended
    complaint against them on the ground, inter alia, that comity and
    choice of law principles require New York courts to apply German
    bankruptcy law to plaintiff’s successor tort liability claims.
    Supreme Court applied New York’s law of successor tort liability and
    denied both motions. The court also determined that Winkler and
    Werner failed to meet their burden with respect to the “de facto
    merger” theory of successor liability under New York law, and that
    Bakery failed to meet its burden with respect to both the “de facto
    merger” and “mere continuation” theories of successor liability.
    Lastly, the court denied that part of Bakery’s motion seeking summary
    judgment dismissing the fourth cause of action based upon failure to
    warn, and the fifth cause of action based upon the theory that Bakery
    launched an instrument of harm. We conclude that the court erred in
    denying those parts of Bakery’s motion with respect to the fourth and
    fifth causes of action, and we therefore modify the order accordingly.
    Initially, we reject the moving defendants’ contention that
    comity requires the application of German bankruptcy law to the issue
    of successor tort liability in this New York action. It is well
    settled that laws of foreign governments have extraterritorial
    jurisdiction only by comity (see J. Zeevi & Sons v Grindlays Bank
    [Uganda], 37 NY2d 220, 227-228, cert denied 
    423 US 866
    ; see also
    Huntington v Attrill, 
    146 US 657
    , 669; Mertz v Mertz, 271 NY 466,
    470). “The principle which determines whether we shall give effect to
    foreign legislation is that of public policy and, where there is a
    conflict between our public policy and application of comity, our own
    sense of justice and equity as embodied in our public policy must
    prevail” (J. Zeevi & Sons, 37 NY2d at 228). Contrary to the public
    policy reflected by German law, New York’s public policy provides for
    successor tort liability in asset purchase transactions from bankrupt
    corporations, but only if one or more well-defined exceptions apply
    -3-                          1148
    CA 15-00221
    (see Sweatland v Park Corp., 181 AD2d 243, 245-246). In light of the
    foregoing, we decline to extend comity to German bankruptcy law. We
    further conclude that, inasmuch as plaintiff is a New York domiciliary
    and the situs of the alleged tort is in New York (see Burnett v
    Columbus McKinnon Corp., 69 AD3d 58, 59-60), choice of law principles
    also compel the application of New York’s successor tort liability
    rules (see Neumeier v Kuehner, 31 NY2d 121, 128).
    With respect to successor tort liability under New York law, we
    are concerned here only with the de facto merger and mere continuation
    exceptions (see Sweatland, 181 AD2d at 245-246; Wensing v Paris
    Indus.-N.Y., 158 AD2d 164, 167). We reject the contention of the
    moving defendants that there was no de facto merger herein because
    there was no continuity of ownership. Even assuming, arguendo, that
    the moving defendants established a lack of such continuity, we
    conclude that the court nonetheless properly denied the motions (see
    Sweatland, 181 AD2d at 245-246). “Public policy considerations
    dictate that, at least in the context of tort liability, courts have
    flexibility in determining whether a transaction constitutes a de
    facto merger. While factors such as shareholder and management
    continuity will be evidence that a de facto merger has occurred . .
    . , those factors alone should not be determinative” (id. at 246).
    Instead, the court should analyze each situation on a case-by-case
    basis and thus, contrary to the contention of the moving defendants,
    the presence or absence of continuity of ownership is not
    determinative (see id.).
    We likewise reject Bakery’s contention that there was no de facto
    corporate merger herein because it purchased assets from a “natural
    person,” i.e., the German bankruptcy trustee. The asset sale
    agreement specifically identified “Winkler USA” as the seller.
    Moreover, the agreement conveyed Winkler USA’s inventory, contracts,
    and commitments with customers, accounts receivable, balance sheet
    assets, and the exclusive right to use the Winkler logo and name in
    certain markets. It also obligated Bakery to assume all employees of
    Winkler USA and obligated Winkler USA to assign to Bakery the lease
    for Winkler USA’s facility in Rockaway, New Jersey. Under those
    circumstances, we conclude that the court properly denied that part of
    Bakery’s motion based on the theory of de facto merger (see generally
    Hoover v New Holland N. Am., Inc., 71 AD3d 1593, 1594). We reject
    Bakery’s further contention that it established prima facie
    entitlement to summary judgment with respect to the mere continuation
    exception. We conclude that, on this record, Bakery failed to
    establish that it was not a mere continuation of Winkler USA (see
    generally Martorel v Tower Gardens, Inc., 74 AD3d 651, 652).
    We agree with Bakery, however, that the court erred in denying
    that part of its motion seeking to dismiss the fourth cause of action
    based on an alleged failure to warn. We conclude that Bakery met its
    initial burden by establishing that it did not service or repair the
    proofer and therefore had no duty to warn (see Ward v Lithibar-Matik,
    Inc., 6 AD3d 424, 425), and we further conclude that plaintiff failed
    to raise an issue of fact (see generally Zuckerman v City of New York,
    -4-                          1148
    CA 15-00221
    49 NY2d 557, 562). We also agree with Bakery that the court erred in
    denying that part of its motion seeking to dismiss the fifth cause of
    action based on the theory that, although plaintiff was not a party to
    the service contract between Bakery and Wegmans, Bakery could still be
    held liable to plaintiff because Bakery “ ‘launched a force or
    instrument of harm’ ” that injured plaintiff (see Espinal v Melville
    Snow Contrs., 98 NY2d 136, 141-142, quoting Moch Co. v Rensselaer
    Water Co., 247 NY 160, 168). Inasmuch as it is undisputed that Bakery
    did not service or repair the proofer, Bakery established that it did
    not create or exacerbate any alleged dangerous condition in that
    machine, and plaintiff failed to raise an issue of fact (see generally
    Zuckerman, 49 NY2d at 562).
    Entered:   April 29, 2016                      Frances E. Cafarell
    Clerk of the Court
    

Document Info

Docket Number: CA 15-00221

Filed Date: 4/29/2016

Precedential Status: Precedential

Modified Date: 10/7/2016