CIVIL ACTION NO:02-2335
November 24, 2003
Before the Court is a Motion for Summary Judgment by Defendant, Applied Hydraulic Systems, Inc, (Applied) which is opposed. The matter came for hearing on November 12, 2003, on the briefs. After review of the motions, memoranda and applicable law, the Court DENIES Defendant's Motion.
Bradley Thomas, an employee of Parker Drilling, alleges that he was injured as he was installing the Nautilus hydraulic crane onto a fixed offshore platform. The crane was manufactured by Nautilus Crane and Equipment Corporation (Nautilus) in 1983, and sold to Parker Drilling. On February 28, 1986, Nautilus sold "certain assets" to Applied. The agreement provided for the sale of assets listed on attached exhibits to the contract. The agreement further provided that Applied purchased the following assets: the furniture and fixtures of the Lafayette operation; the Rental Cranes; the parts and component inventory; the tradename Nautilus Crane and Equipment Corporation, trademark and service mark including the federal registrations, along with the right to use such tradename; and the technical drawing for the manufacturing of the cranes.
The agreement provided as follows:
LIABILITY OR EXPOSURE WITH RESPECT TO ANY EQUIPMENT, CRANE, INVENTORY AND/OR WORK-IN-PROCESS COVERED OR DEALT WITH IN THIS AGREEMENT. AS USED IN THIS CLAUSE, THE TERM PRODUCT "SELLER AND PURCHASER AGREE THAT NOTHING HEREIN SHALL EVER BE OR BE CONSTRUED AS AN ASSUMPTION BY PURCHASER OF ANY PAST, PRESENT OR FUTURE PRODUCTS LIABILITY EXPOSURE OR OBLIGATION OF SELLER WITH RESPECT TO SELLER'S PREVIOUS MANUFACTURING, SALES AND SERVICE ACTIVITIES, INCLUDING, WITHOUT LIMITATION, ANY SUCH LIABILITY EXPOSURE OR OBLIGATION SHALL BETHAT LIABILITY DESCRIBED IN SECTION 402A OF THE RESTATEMENT SECOND OF TORTS OR OTHER SIMILAR LAW OR STATUTE.
The agreement also provided that the purchaser waives compliance by seller with the bulk transfer provision of the UCC and LRS 9:2961.
Plaintiff claims that Applied has liability for the manufacturer's defects in the crane regardless of the sale agreement. Defendant alleges that Plaintiff has not proven that Nautilus sold Applied this particular crane, that Applied was not the manufacturer of the crane nor the manufacturer under the provisions of the LPLA, and finally that the sale agreement insulates them from liability.
LAW AND ANALYSIS
Louisiana courts recognize the rule of nonliability in an asset sale with certain exceptions. Bourque v. Lehmann Lathe, Inc. 476 So.2d 1125 (La.App.Ct. 3rd Cir. 1985). These exceptions are: 1) when the purchaser expressly or impliedly agrees to assume the obligations; 2) when the transaction is entered into to escape liability; or 3) when the purchaser is merely a continuation of the selling corporation.
Applied did not assume the obligations by contract, nor is there evidence that the transaction was entered into to escape liability. The only remaining exception is whether or not Applied became the continuation of the selling corporation. There is no evidence of merger, common shareholders, directors, officers or employees between Applied and Nautilus. However, there is proof of continuity of the identity of the business in the eyes of the public. Id.
Applied purchased the trademark "Nautilus," and trade name "Nautilus Crane Equipment Corporation," as well as the logo, technical drawings for the cranes. Applied continues to manufacture "Nautilus" cranes as indicated on their advertisements and on their website. Thus, whether Applied and Nautilus share a "continued common identity," which allows the Plaintiff to invoke the Louisiana doctrine of successor liability, appears to me to be a fact issue for the jury.
Accordingly, Defendant's Motion for Summary Judgment must be DENIED.