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Simmons v. Mark Lift Industries10/24/2005
all liens and encumbrances as may presently attach to the assets. . . ." The order further stated that the "sale of assets shall be free and clear of all liens and encumbrances of those creditors who had adequate notice of the Debtor's motion and opportunity to appear and object at the time of the hearing on the Motion. . . ."
On December 5, 1991, Terex created a wholly owned subsidiary to implement the asset purchase agreement between Mark and Terex. The new corporation was named Mark Lift Industries, Inc. (Lift Industries). The assets of Mark were transferred to Lift Industries several days later.
Lift Industries continued to manufacture similar scissorlifts at the California plant for several months, until mid-1992. At this time, Lift Industries closed the plant in California, and relocated the assets and equipment to Terex's manufacturing plant in Waverly, Iowa. Only three Mark employees, none of whom were officers or directors, continued with Terex following the closing of Lift Industries' California plant. From 1992 to 2001, Lift Industries marketed and distributed scissorlifts from its Iowa plant using the trade name used by Mark.
Terex did not have any business relationship with Mark until purchasing its assets in the bankruptcy court auction. There has never been any commonality of officers, directors, or stockholders between Mark and Terex.
DISCUSSION
We find the certified questions may be resolved in accordance with existing South Carolina authority.
In Brown v. American Ry. Express Co., 128 S.C. 428, 123 S.E. 97 (1924), this Court held that in the absence of a statute, a successor or purchasing company ordinarily is not liable for the debts of a predecessor or selling company unless (1) there was an agreement to assume such debts, (2) the circumstances surrounding the transaction warrants a finding of a consolidation or merger of the two corporations, (3) the successor company was a mere continuation of the predecessor, or (4) the transaction was entered into fraudulently for the purpose of wrongfully defeating creditors' claims. Brown v. American Ry. Express Co., 128 S.C. 428, 123 S.E. 97 (1924) (successor corporation which purchased part of predecessor's assets was not liable for lost shipment by predecessor, where successor did not assume liability for such debts and predecessor remained a live and going concern with substantial assets).
Our opinion in Brown sets forth the proper test to determine, in a products liability action, whether there is successor liability of a company which purchases the assets of an unrelated company. Certified Question number 2 is answered accordingly.
Further, we conclude a plaintiff may maintain a state law-based product liability claim under a successor liability theory against a successor corporation which purchased the predecessor's assets in a voluntary sale approved by the federal bankruptcy court provided one of the exceptions set forth in the Brown opinion applies. Accordingly, we find the District Court in this case may answer Certified Question number 1 by reference to the existing precedent set forth in Brown.
Lastly, Terex urges us to find it may not be held liable as a successor because Simmons may seek recovery from the seller, BPS Equipment. Terex asserts that when other entities may answer in damages under a strict liability or negligence theory, it is unnecessary to hold a successor corporation liable in a product liability action. We disagree.
We find a plaintiff may maintain a product liability claim under a successor liability theory against a defendant when there are one or more other viable product liability defenda
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