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Garcia v. Coe Manufacturing Co.1/28/1997
SERNA, Justice.
{1} Altagracia Garcia, individually and as personal representative of the estate of her husband Curtis Garcia, sued the Coe Manufacturing Company ("Coe") in negligence and strict products liability for wrongful death. The trial court entered summary judgment in favor of Coe, ruling as a matter of law that Coe could not be held liable for injuries caused by a press and forming line manufactured by Coe's predecessor, Washington Iron Works, Inc ("WIW"). The court also ruled that Coe did not have an independent duty to warn of alleged design defects in this equipment. Garcia appealed, and the Court of Appeals certified this case to us.
{2} Under the current New Mexico rule, a successor corporation that purchases the assets of another corporation is, with four exceptions, not responsible for its predecessor's debts and liabilities. However, we today adopt for use in cases involving questions of tort liability an approach that balances the policies underlying products liability law and contract law, and hold that the general rule of nonliability is not controlling in this case. Accordingly, we reverse the summary judgment on Garcia's strict products liability claim and remand for further proceedings. We also hold that a genuine issue of material fact exists as to whether Coe had an independent duty to warn of alleged defects in the equipment. We therefore reverse summary judgment on that issue.
{3} Facts. In 1990, Medite was the owner of a fiberboard manufacturing plant outside of Las Vegas, New Mexico. This plant utilized press and forming line equipment [hereinafter "boardline" equipment] manufactured by WIW and purchased by Medite's predecessor, Montana de Fibra, to convert wood chips into medium-density fiberboard. Curtis Garcia was a laborer at the plant and generally worked outside shoveling wood chips; however, on December 17, 1990, he worked inside cleaning up fiber around the forming line, which is an elevated conveyor used to move the chips through the manufacturing process. While the conveyor was stopped for a brief period, Mr. Garcia inadvertently came into contact with it. Upon restarting, the conveyor pulled him underneath a roller, crushing him to death. Montana de Fibra had contracted for the purchase of the boardline equipment in 1982, and WIW was required by the purchase agreement to assist Montana de Fibra in the installation and start-up of the equipment. The installation was not completed until the fall of 1984.
{4} On March 5, 1984, WIW sold to Coe all of its assets relating to the manufacture of boardline plants, equipment, and parts. However, it did not agree to assume any of WIW's debts or liabilities. The sale included patents, trade names, spare parts, design drawings, patterns, jigs, and fixtures, as well as the right to use the name "Washington Iron Works." WIW agreed to indemnify Coe against all claims arising in connection with the boardline plants, equipment, parts, and products manufactured and sold by it prior to March 5, 1984. As part of this indemnification agreement, WIW promised to carry insurance for a period of six years to cover expenses and losses arising from such claims.
{5} Following the sale, Coe mailed a notice to substantially all of WIW's customers, informing them that the latter's boardline division had joined Coe. Penner, who held the position of general manager with WIW and later with Coe, testified that this notice was intended to ensure that WIW customers stayed with Coe and to generate future business. He also testified that Coe wanted WIW's customers to know where they could obtain warranty service on their boardline equipment.
{6} Because installation and start-up of the b
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