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Simmons v. Mark Lift Industries10/24/2005
Heard April 7, 2005
CERTIFIED QUESTIONS ANSWERED
We granted certification from the United States District Court of South Carolina pursuant to Rule 228, SCACR, to address the following three questions:
1. May a plaintiff maintain a product liability claim in South Carolina under a successor liability theory against a defendant which purchased only assets of a voluntarily bankrupt selling company in an arms-length and court-approved bankruptcy sale and the purchasing company did not approve of, participate in, cause, or contribute to the selling company's bankruptcy?
2. In the product liability context in South Carolina, what test is employed to determine whether there is successor liability of a company which purchased the assets of an unrelated company?
3. May a plaintiff maintain a product liability claim in South Carolina under a successor liability theory against a defendant when there are one or more other viable product liability defendants that may be liable to the plaintiff as a post-manufacturer seller of the allegedly defective product?
FACTUAL/PROCEDURAL BACKGROUND
James Simmons (Simmons) brought a product liability action in state court against Mark Industries, Inc., Terex Corp. (Terex), Mark Lift Industries, Inc., and BPS Equipment Rental and Sales, Inc. (BPS Equipment). The case was removed to federal court based on diversity jurisdiction. Simmons' only basis of liability against Terex and Mark Lift Industries is a successor liability theory.
Simmons' complaint alleges he was injured in a work-related accident at a construction site on August 9, 1999, when an elevated scissorlift aerial work platform collapsed. Mark Industries (Mark), a California corporation, designed, manufactured and sold the scissorlift in 1990. BPS Equipment sold the scissorlift to the end user, which provided it for use on the construction site.
Mark filed for bankruptcy in federal bankruptcy court in July 1991. The bankruptcy court entered an order granting Mark's motion to sell specified assets for adequate consideration on November 6, 1991. Terex was the winning bidder for the assets at an auction the next day.
Following the auction, Mark and Terex entered into a purchase agreement. Section 1.1 of the agreement provides:
Except as otherwise specifically provided in this Agreement, at the Closing . . . all the Assets shall be transferred from seller to Buyer free and clear of all security interests, liens, claims, encumbrances, restrictions or rights of others of every kind and description, including, without limitation, tax liens. Nothing herein shall be construed as the assumption of or by Buyer of any liabilities of the Seller, including, without limitation, any liability for products manufactured or sold by Seller.
Under the agreement, the assets purchased by Terex included the inventory of supplies, raw materials, work in progress, finished goods, trademarks, service marks, trade names, goodwill, all intellectual property, such as drawings, designs, blueprints, patents, licenses, and technology.
On November 13, 1991, the bankruptcy court issued an order approving the auction of assets and the terms and conditions of the purchase agreement entered into by Mark and Terex on November 7, 1991. Specifically, the order provided "that [Mark] is authorized to sell the assets of its estate to Terex Corporation, the maker of the highest and best offer at the auction, on terms and conditions consistent with the Purchase Agreement and related attachments." The order stated that "the sale of the assets authorized hereby is free and clear of any and
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