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Guerrero v. Allison Engine Company3/22/2000
sted Industries, Inc. ("Amsted") as a successor corporation to Johnson Machine & Press Company ("Johnson"), the manufacturer of the machine involved. The trial court granted Amsted's motion for summary judgment.
On appeal, the court recognized that the purchase agreement between successor and predecessor "manifested a clear intent to negate any assumption of liability by Amsted for contingent product claims," yet agreed with plaintiffs' assertion "that a corporation that purchases the assets of a manufacturer and continues the business of the selling corporation in an essentially unchanged manner should not be allowed to use the exculpatory contractual language to avoid liability for contingent personal injury claims arising out of defects in the predecessor's product." Id. at 813.
Upon granting Amsted's petition for certification, the Supreme Court of New Jersey affirmed the judgment of the Appellate Division, echoing the rationales first heard in Ray v. Alad, 560 P.2d 3. "First, the plaintiffs potential remedy against Johnson, the original manufacturer of the allegedly defective press, was destroyed by the purchase of the Johnson assets, trade name and good will, and Johnson's resulting dissolution." Id. at 820. "Second, the imposition of successor corporation liability upon Amsted is consistent with the public policy of spreading the risk to society at large for the cost of injuries from defective products." Id. "Third, the imposition upon Amsted of responsibility to answer claims of liability for injuries allegedly caused by defective Johnson presses is justified as a burden necessarily attached to its enjoyment of Johnson's trade name, good will and the continuation of an established manufacturing enterprise." Id. at 822.
Analysis
Guerrero and Laguna allege that the enhanced engine diffuser in the subject helicopter was defective and unreasonably dangerous. One of the purposes of the strict liability section of the Indiana Product Liability Act is to deter manufacturers from producing products that are unreasonably dangerous to foreseeable users. See Maxon, 497 N.E.2d at 578. Thus, on its face, Guerrero and Laguna's Complaint alleges facts falling under the Indiana Product Liability Act.
Guerrero and Laguna base their product liability claim on the doctrine of strict liability in tort. Accordingly, they must establish that Allison was the manufacturer of the allegedly defective part. See Ind. Code ยง 34-20-2-3. To this end, Guerrero and Laguna argue that Allison, as the successor to the assets of GM/Allison, should be held liable for any defect in the enhanced engine diffuser originally manufactured by Allison/GM. Guerrero and Laguna urge us to impute liability to Allison through application of the product line exception to the traditional rule of corporate successor non-liability.
In applying the four generally recognized exceptions to the successor non-liability rule, we have held that a successor corporation is liable only when the predecessor corporation no longer exists. See Sorenson, 706 N.E.2d at 1099. A similar requirement is found among that minority of states applying the product line exception. See e.g. Ray, 560 P.2d at 9 (holding that one of the justifications for imposing liability on a successor corporation was "the virtual destruction of the plaintiff's remedies against the original manufacturer caused by the successor's acquisition of the business").
Here, Allison's purchase of GM/Allison did not destroy Guerrero and Laguna's potential remedy against GM. Therefore, we do not reach the other supporting rationales of the product line exception; namely, whether Allison had the same ability to spread the ris
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