Opinion
23421
09-08-2020
Tonie L. McIntyre, Individually and as Natural Guardian of T.M., an Infant, Plaintiffs, v. Bradford White Corporation, BROOKLINE HOUSING ASSOCIATES, LLC d/b/a BRIDGEWATER APARTMENTS, BROOKLINE HOUSING ASSOCIATES, LLC, WILDER BALTER PARTNERS, LLC, WILDER BALTER PARTNERS, INC., HONEYWELL INTERNATIONAL, INC. HONEYWELL, INC., RAPSCO, INC. and SPARCO, INC., Defendants.
LaFave, Wein & Frament, PLLC, Guilderland (Paul H. Wein of counsel), for plaintiffs. White and Williams LLP, New York (Rafael Vergara and Robert Wright of counsel), for Bradford White Corporation, defendant. Thorn, Gershon, Tymann and Bonanni, LLP, Albany (Matthew H. McNamara and Erin Mead of counsel), for Brookline Housing Associates, LLC d/b/a Bridgewater Apartments, Brookline Housing Associates, LLC, Wilder Balter Partners, LLC and Wilder Balter Partners, Inc., defendants. Pillinger Miller Tarallo, LLP, Garden City (Neil L. Sambursky and Stinson LLP [Kadee Anderson of the Minnesota bar, admitted pro hac vice] of counsel), for Honeywell International, Inc., defendant. O'Connor, O'Connor, Bresee and First, P.C., Albany (Elizabeth J. Grogan of counsel), for Rapsco, Inc. and Sparco, Inc., defendants.
LaFave, Wein & Frament, PLLC, Guilderland (Paul H. Wein of counsel), for plaintiffs. White and Williams LLP, New York (Rafael Vergara and Robert Wright of counsel), for Bradford White Corporation, defendant. Thorn, Gershon, Tymann and Bonanni, LLP, Albany (Matthew H. McNamara and Erin Mead of counsel), for Brookline Housing Associates, LLC d/b/a Bridgewater Apartments, Brookline Housing Associates, LLC, Wilder Balter Partners, LLC and Wilder Balter Partners, Inc., defendants. Pillinger Miller Tarallo, LLP, Garden City (Neil L. Sambursky and Stinson LLP [Kadee Anderson of the Minnesota bar, admitted pro hac vice] of counsel), for Honeywell International, Inc., defendant. O'Connor, O'Connor, Bresee and First, P.C., Albany (Elizabeth J. Grogan of counsel), for Rapsco, Inc. and Sparco, Inc., defendants. Martin D. Auffredou, J.
Plaintiffs commenced this action seeking to recover damages for personal injuries sustained by the infant, T.M. ("the infant"), on September 11, 2011. Plaintiffs allege that the infant was burned while he was being bathed in the kitchen sink by plaintiff Tonie McIntyre ("plaintiff" or "McIntyre"), as a result of a defective hot water heater and mixing valve installed on the water heater. The water that caused the infant's injuries was heated by a water heater, piped through a mixing valve, and then discharged at the kitchen faucet. The water heater supplied hot water for heating and domestic hot water for the fixtures (for uses such as bathing and washing). The water heater was set at the hottest temperature so that it could deliver water at 160 degrees Fahrenheit to the heating system. A mixing valve installed between the water heater on the domestic delivery line was intended to limit the temperature of the water to 120 degrees when it was delivered to the sinks and bathroom. The mixing valve was tested following the accident, on April 25, 2019, and the water temperature was measured at 144 degrees.
The hot water heater and mixing valve were installed in the mid-1990s, during renovations of the Bridgewater Apartments complex in which plaintiffs resided at the time of the incident. The water heater was manufactured by defendant Bradford White Corporation ("Bradford White"). The mixing valve was manufactured by defendant Sparco, Inc. ("Sparco"). Pursuant to an Asset Purchase Agreement, dated December 22, 1999 ("the APA"), Honeywell International, Inc. ("Honeywell") purchased "substantially all" of the assets of Sparco and agreed to assume from Sparco, on terms and subject to conditions set forth in the agreement, certain specified liabilities of Sparco related to such assets. The APA set January 4, 2000 as the earliest date for "the Closing Date," upon which "the completion of the transactions contemplated by this Agreement ('the Closing')" was to take place. The APA specifically provided that Honeywell did not assume or otherwise have any liability for "product liability claims arising out of or in connection with injuries or damages to persons or property or economic loss caused by any product manufactured or sold by [Sparco] on or prior to the Closing Date" and that Sparco retained liability for such claims. On or about January 4, 2000, Sparco officially changed its name to Rapsco, Inc. ("Rapsco"). On or about December 21, 2001, Rapsco was dissolved.
Plaintiffs contend, generally, that: Bradford White constructed, manufactured, designed, marketed, tested, inspected, sold, distributed, and/or placed in the stream of commerce the allegedly defective hot water heater; defendants Honeywell, Honeywell, Inc., Rapsco and/or Sparco constructed, manufactured, designed, marketed, tested, inspected, sold, distributed, and/or placed in the stream of commerce the allegedly defective mixing valve; and defendants Brookline Housing Associates, LLC d/b/a Bridgewater Apartments, Brookline Housing Associates, LLC, Wilder Balter Partners, LLC and Wilder Balter Partners, Inc. ("the Brookline defendants") owned the building in which the hot water heater was installed and the apartment in which plaintiffs resided at the time of the incident.
Bradford White moves to dismiss plaintiff's amended complaint, pursuant to CPLR 3211 [a] [7] and, upon conversion to a motion for summary judgment, pursuant to CPLR 3211 [c].
Honeywell moves to dismiss plaintiffs' first, fourth and fifth causes of action (all of the causes of action asserted against Honeywell), pursuant to CPLR 3211 [a] [1], [7] and [c].
Honeywell also argues that Honeywell, Inc. does not exist as a legal entity and, for that reason, the first, fourth and fifth causes of action in the Amended Verified Complaint should be dismissed against Honeywell, Inc., in their entirety and with prejudice.
Oral argument on Bradford White's and Honeywell's motions were held on February 21, 2020. During oral argument, the Court granted permission for plaintiffs and Honeywell to submit further briefs concerning two issues related to Honeywell's motion.
Following oral argument, defendants Rapsco and Sparco served upon counsel for plaintiffs, Bradford White and the Brookline defendants a motion to dismiss the amended complaint against Rapsco and Sparco ("Sparco/Rapsco") pursuant to R.I.G.L. (General Laws of Rhode Island) § 7-1.2-1324 and CPLR 3211 [a] [5]. Due to the COVID-19 pandemic and resulting public health emergency, the motion was not filed in the office of the Washington County Clerk until June 8, 2020. After receiving Sparco/Rapsco's motion, counsel for Honeywell submitted correspondence to the Court, dated July 1, 2020, in further support of Honeywell's motion, pointing to statements made in the affirmation of Sparco/Rapsco's counsel in support of those defendants' motion. Plaintiffs responded to Honeywell's July 1, 2020 correspondence, in further opposition to Honeywell's motion, in their opposition to Sparco/Rapsco's motion. Counsel for plaintiffs and Honeywell also submitted further correspondence to the Court, in further opposition to, and support of, Honeywell's motion.
All written submissions, which are recited at the end of this Decision and Order, have been reviewed and considered by the Court in deciding all three pending motions.
Plaintiffs have asserted three causes of action against Bradford White: negligence; strict products liability; and breach of the warranties of merchantability and fitness for a particular purpose. Plaintiffs allege, generally, that Bradford White constructed, manufactured, designed, marketed, tested, inspected, sold, distributed, and/or placed in the stream of commerce a defective hot water heater that was unreasonably dangerous and that while the infant was being bathed in a kitchen sink under running water heated by that water heater, "there was a sudden spike in the temperature of the running water causing" the infant injury (see Amended Verified Complaint, dated September 11, 2019, ¶¶ 34, 36, 38, 47-53).
In its motion, Bradford White alleges, generally: (1) that the water heater was reasonably safe, such that plaintiffs cannot maintain a claim against Bradford White under the theory of strict products liability; (2) that the negligence claim against Bradford White fails because no defect exists in the hot water heater; and (3) no implied breach of warranty claim exists against Bradford White because no privity of contract exists between plaintiffs and Bradford White.
Plaintiffs have asserted the same three causes of action against Honeywell: negligence; strict products liability; and breach of the warranties of merchantability and fitness for a particular purpose. Plaintiffs allege, generally, that Honeywell manufactured, designed, marketed, tested, inspected, sold distributed and/or placed in the stream of commerce an allegedly defective mixing valve and that the valve was being used by plaintiffs for its intended use and purpose and in the manner intended, when the infant sustained his injuries (see Amended Verified Complaint dated September 11, 2019, ¶¶ 66-72, 76-79).
In its motion, Honeywell argues that Sparco manufactured the mixing valve, not Honeywell, prior to the Closing Date of the APA, and under the APA, Honeywell did not assume any liability to plaintiffs for any alleged defect in the mixing valve. Honeywell further contends that it is not liable to plaintiffs under a theory of successor liability. Honeywell argues that, as such, plaintiffs' causes of action against Honeywell must be dismissed, with prejudice.
In their opposition to Bradford White's and Honeywell's motions, plaintiffs initially argue that unknown facts need to be determined via discovery and the motions are premature.
With respect to Bradford White's motion, plaintiffs further contend that Bradford White was aware of the dangers of scalding water and knew that in order to provide heat to the residence and water for personal use, and perform for its intended purpose, a mixing valve had to be installed on the hot water heater, yet Bradford White failed to provide any warning of the need to service the mixing valve, which plaintiffs assert was a component part of the hot water heater. Plaintiffs do not argue that Bradford White failed to provide adequate warnings on the water heater.
"A party injured as a result of a defective product may seek relief against the product manufacturer or others in the distribution chain if the defect was a substantial factor in causing the injury. In general, a strict products liability cause of action may be presented upon a mistake in the manufacturing process, an improper design or a failure to provide adequate warnings regarding the use of the product" (Darrow v Hetronic Deutschland GMBH, 181 AD3d 1037, 1039 [3d Dept 2020] [internal quotation marks, brackets and citation omitted]; see also, Matter of In re New York City Asbestos Litig., 27 NY3d 765, 787 [2016] ["a product has a defect that renders the manufacturer liable for the resulting injuries if it: (1) contains a manufacturing flaw; (2) is defectively designed; or (3) is not accompanied by adequate warnings for the use of the product"] [internal quotation marks and citations omitted]).
In their opposition, plaintiffs do not offer any arguments with respect to any alleged manufacturing flaw, improper design, negligence, or breach of warranty. Plaintiffs' failure to address these issues indicates an intention to abandon these claims as a basis for liability (Perez v Folio House, Inc., 123 AD3d 519, 520 [1st Dept 2014]; see also Bubar v Brodman, 177 AD3d 1358, 1360 [4th Dept 2019], rearg denied, 179 AD3d 1558 [4th Dept 2020]; Elam v Ryder Sys., Inc., 176 AD3d 675, 676 [2d Dept 2019]).
Thus, the issue before the Court is limited to whether Bradford White has demonstrated, as a matter of law, that the water heater was not defective by reason of failure to warn.
Bradford White asserts that plaintiffs cannot maintain its failure to warn claim as Bradford White did not owe a legal duty to warn with respect to the mixing valve, as it is not a component of the water heater that Bradford White manufactured. Bradford White further contends that even assuming that it owed a duty to warn with respect to the mixing valve, plaintiffs cannot demonstrate that the infant's injury was caused by failure to warn and because of the open and obvious danger presented by hot water.
"[F]ailure-to-warn claims grounded in strict liability and negligence are functionally equivalent, as both forms of a failure-to-warn claim depend on the principles of reasonableness and public policy at the heart of any traditional negligence action. Given that failure-to-warn cases are governed by negligence principles, it is incumbent on the court in such cases, as in any case featuring a claim of negligence, to decide whether an applicable legal duty exists." (In re New York City Asbestos Litig., 27 NY3d at 787 [internal citations omitted].)
"A manufacturer has a duty to warn against latent dangers resulting from foreseeable uses of its product of which it knew or should have known. Additionally, the manufacturer must warn of dangers arising from the product's intended use or a reasonably foreseeable unintended use" (id. at 788 [internal citations omitted]).
"However, where the person who would benefit from a warning is already aware of the specific hazard, the manufacturer cannot be held liable for failing to warn of that known hazard" (Stalker v Goodyear Tire and Rubber Co., 60 AD3d 1173, 1175-76 [3d Dept 2009] [internal brackets, quotation marks and citations omitted]).
With respect to the duty to warn "against the danger inherent in using the manufacturer's product together with a product designed and produced by another company," the Court of Appeals has held that "the manufacturer of a product has a duty to warn of the danger arising from the known and reasonably foreseeable use of its product in combination with a third-party product which, as a matter of design, mechanics or economic necessity, is necessary to enable the manufacturer's product to function as intended" (In re New York City Asbestos Litig., 27 NY3d at 778).
Bradford White demonstrated, through the sworn testimony of its quality assurance manager, Jonathan Soler, that the water heater can be installed without a mixing valve, a mixing valve is not required for the safe operation of the water heater and a mixing valve is not necessary to enable the water heater to perform its intended function of heating water. As such, Bradford White did not owe any legal duty to warn with respect to the mixing valve, which was manufactured by a different entity.
Mr. Soler also testified that the mixing valve is not provided with the water heater and can be installed in different areas, including at the point of use of water.
Moreover, even if Bradford White owed a duty to warn with respect to the mixing valve, it demonstrated that a lack of such warning was not a proximate cause of the accident and the infant's injuries. The water heater contained warnings about hot water. However, plaintiff never saw those warnings, or even the water heater itself, prior to the accident (cf. Fredette v Town of Southampton, 95 AD3d 940, 941 [2d Dept 2012] [plaintiff failed to raise triable issue of fact as to alleged failure to warn; plaintiff conceded had "just looked through" motorcycle's manual and did not recall particular pages or entries; therefore, he could not have relied upon any particular warnings that might be proximately related to failure-to-warn cause of action]). Further, the danger of being scalded by hot water is open and obvious, not hidden or latent.
Bradford White met its initial burden of establishing prima facie entitlement to judgment as a matter of law on plaintiffs' failure to warn claim, shifting the burden to plaintiffs to demonstrate a triable issue of fact (see Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 49 [2015]; Alvarez v. Prospect Hosp., 68 NY2d 320, 323 [1986]). Even viewing the evidence in a light most favorable to plaintiffs, as the nonmovants, the Court finds that plaintiffs failed to meet that burden.
In opposition to the motions, plaintiffs offer, inter alia, an affidavit from their expert, who opines that the mixing valve may have failed due to a lack of maintenance and argue that, based upon the lack of warning about the danger of failure to service the mixing valve, and the fact that the system as a whole failed to provide what was intended and caused water to be delivered at 144 degrees — 24 degrees higher than what was safe — a jury must resolve all questions as to Bradford White's liability. However, plaintiffs have offered no evidence that Bradford White had a duty to warn about the mixing valve, which was manufactured by a different entity, or that the system "as a whole" failed.
Since plaintiffs failed to establish a material triable issue of fact, summary judgment for Bradford White is appropriate (see Nomura, 26 NY3d at 49; Alvarez, 68 NY2d at 324).
With respect to Honeywell's motion, plaintiffs contend that it is unknown when the mixing valve was installed, and whether it was installed, or replaced, before or after the effective date of the APA. Plaintiffs further argue that questions exist, including with respect to the relationship between defendant corporations, that require discovery and it is premature to discharge Honeywell from this litigation. In their reply, plaintiffs further argue that a question of fact exists with respect to whether Honeywell had a duty to warn with respect to the mixing valve.
"'On a motion to dismiss under CPLR 3211, the pleading is to be given a liberal construction, the allegations contained within it are assumed to be true and the plaintiff is to be afforded every favorable inference'" (Vestal v Pontillo, 158 AD3d 1036, 1038 [3d Dept 2018], quoting Simkin v Blank, 19 NY3d 46, 52 [2012] [citation omitted]). "At the same time, however, allegations consisting of bare legal conclusions as well as factual claims flatly contradicted by documentary evidence are not entitled to any such consideration" (Simkin, 19 NY3d at 52 [internal quotation marks and citation omitted]; see also Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d 137, 141 [2017]). "The liberal construction and favorable inferences to which a plaintiff is entitled will nevertheless fail to save claims that are conclusively refuted by documentary evidence (see CPLR 3211 [a] [1]) or based on indisputably incredible factual allegations (see CPLR 3211 [a] [7] . . . " (Vestal, 158 AD3d at 1038 [internal citations omitted]).
A motion to dismiss pursuant to CPLR 3211 [a] [1], on the ground that the action is barred by documentary evidence, "may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mut. Life Ins. Co. of New York, 98 NY2d 314, 326 [2002], citing Leon v Martinez, 84 NY2d 83, 88 [1994]; see also Santander Consumer USA, Inc. v Kobi Auto Collision & Paint Ctr., Inc., 183 AD3d 984 [3d Dept 2020], quoting Goshen). On a motion to dismiss for failure to state a cause of action (pursuant to CPLR 3211 [a] [7]), "the question is whether plaintiffs have a cause of action, not whether they have properly labeled or artfully stated one" (Chanko v Am. Broadcasting Companies Inc., 27 NY3d 46, 52 [2016], citing Leon).
In this case, the documentary evidence submitted by Honeywell utterly refutes plaintiffs' allegations and conclusively establishes a defense as a matter of law. It is undisputed that the mixing valve was manufactured by Sparco. The evidence offered by Honeywell indicates that the mixing valve was installed in the late 1990s and, as such, the mixing valve must have been manufactured before January 4, 2000, the Closing Date of the APA. The APA unequivocally states that Honeywell did not assume liability for product liability claims for products manufactured or sold by Sparco "on or prior to the Closing Date."
Honeywell further demonstrated that it cannot be held liable to plaintiffs under a theory of successor liability. "A corporation that purchases another corporation's assets is not liable for the seller's torts, subject to four exceptions outlined in Schumacher v. Richards Shear Co., 59 NY2d 239, 464 N.Y.S.2d 437, 451 N.E.2d 195 [1983]" (Semenetz v Sherling & Walden, Inc., 7 NY3d 194, 196 [2006]). Honeywell demonstrated that none of the exceptions set forth in Schumacher apply, including the "de facto merger" and "mere continuation" theories advanced by plaintiffs.
In Schumacher, the Court of Appeals stated, "A corporation may be held liable for the torts of its predecessor if (1) it expressly or impliedly assumed the predecessor's tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations" (Schumacher, 59 NY2d at 245).
"Factors to be considered in determining whether a de facto merger has occurred include whether there was any continuity of ownership, management, personnel, physical location, assets or general business operations" (Rosplock v Upstate Mgt. Assoc., Inc., 108 AD3d 825, 827 [3d Dept 2013], citing State Farm Fire & Cas. Co. v. Main Bros. Oil Co., 101 AD3d 1575, 1578 [3d Dept 2012]), as well as "cessation of ordinary business and dissolution of the predecessor as soon as possible [and] assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor" (Bonanni v Horizons Inv'rs Corp., 179 AD3d 995, 998 [2d Dept 2020] [internal brackets, quotation marks and citations omitted]; see also R & D Elecs., Inc. v NYP Mgt., Co., Inc., 162 AD3d 1513, 1515 [4th Dept 2018]).
"Generally, New York courts have looked to the four traditional common-law factors: whether there is continuity of ownership, continuity of management, a dissolution of the selling corporation, and the assumption of liabilities by the purchaser" (New York v Natl. Serv. Indus., Inc., 460 F3d 201, 210 [2d Cir 2006]).
The undisputed documentary evidence submitted by Honeywell establishes that it paid cash for Sparco's assets and, as such, there was no continuity of ownership, which has been held to be an essential element of de facto merger (see Dritsas v Amchem Products, Inc., 169 AD3d 526, 527 [1st Dept 2019]; Oorah, Inc. v Covista Communications, Inc., 139 AD3d 444, 445 [1st Dept 2016]). Further, the assets retained by Sparco included "minute books, stock books, shareholder lists and similar corporate records" (APA § 2.1(b)).
"Continuity of ownership is an essential element of de facto merger (see e.g. TBA Global, 132 AD3d at 209-210). "[C]ontinuity of ownership . . . exists where the shareholders of the predecessor corporation become direct or indirect shareholders of the successor corporation" (Matter of New York City Asbestos Litig., 15 AD3d 254, 256 [1st Dept 2005]). Plaintiff has not alleged this. The documentary evidence submitted by [the purchaser corporation] shows that it paid cash for [the seller corporation]'s assets; hence, there was no continuity of ownership (see e.g. id.)]." (Oorah, Inc. v Covista Communications, Inc., 139 AD3d 444, 445 [1st Dept 2016].)
Federal courts have also held that the doctrine of de facto merger cannot apply in absence of continuity of ownership (see Xue Ming Wang v Abumi Sushi Inc., 262 F Supp 3d 81, 87 [SDNY 2017]; Priestley v Headminder, Inc., 647 F3d 497, 505-06 [2d Cir 2011]; New York v Natl. Serv. Indus., Inc., 460 F3d at 215 ["New York would not depart from the traditional common law to find a de facto merger in the absence of any evidence of continuity of ownership"]).
The evidence in the record demonstrates that Sparco was not extinguished by the asset purchase and survived the transaction and therefore, the exception to the general rule against successor liability when "the purchasing corporation was a mere continuation of the selling corporation" does not apply in this case (see Schumacher, 59 NY2d at 245 ["exception refers to corporate reorganization, however, where only one corporation survives the transaction; the predecessor corporation must be extinguished"] [internal citations omitted]). Honeywell offered evidence that on the Closing Date of the APA, Sparco filed articles of amendment changing its corporate name to Rapsco, Inc. and that Rapsco was not dissolved until December 21, 2001 (almost two years after the APA was executed).
On the issues of de facto merger and mere continuation, in what can be characterized as a sur-sur-reply, which the court did not authorize, but nevertheless considered, plaintiffs offer the affidavit of Hans Kuster, who was the sole shareholder and President of Sparco. While Mr. Kuster claims that there was continuity of personnel, assets and general business operations of Sparco and cessation of business and dissolution of Sparco at the conclusion of a required "hold back" period, his affidavit does not raise any issue of fact concerning continuity of ownership, management, physical location, or assumption by Honeywell of "the liabilities ordinarily necessary for the uninterrupted continuation of the business of" Sparco. In fact, Mr. Kuster's affidavit is silent on those issues. Balancing the various factors, the Court finds that Mr. Kuster's affidavit is insufficient to raise an issue of fact regarding successor liability under the de facto merger and mere continuation theories (cf. Ivory Dev., LLC v Roe, 135 AD3d 1216, 1223 [3d Dept 2016] [while continuity of ownership and management existed, plaintiffs failed to establish existence of any other factors indicating de facto merger; predecessor corporation was not legally dissolved until several years after contract was assigned to successor, was not a "mere shell" and continued to own and sell real property after assignment; "[u]nder these circumstances, [defendant]'s mere common ownership and management of the two entities is insufficient to establish the existence of issues of fact as to a de facto merger"] [internal citations omitted]).
To the extent that plaintiffs rely upon the "product line" exception to the general rule against successor liability applies, the argument is unavailing, as the Court of Appeals has unequivocally declined to adopt that exception (Semenetz, 7 NY3d at 196, 201).
Plaintiffs' assertions that questions of fact exist with respect to whether the mixing valve was installed, or replaced, before or after the effective date of the APA and with respect to the relationship between defendant corporations amount to mere hope or speculation, which are insufficient to defeat Honeywell's motion (see Mandarin Trading Ltd. v Wildenstein, 65 AD3d 448, 451 [1st Dept 2009], affd, 16 NY3d 173 [2011] [dismissal of complaint pursuant to CPLR 3211 [a] [1] and [7] affirmed; "the mere hope that discovery might provide some factual support for a cause of action is insufficient to avoid dismissal of a patently defective cause of action"] [internal brackets, quotation marks and citations omitted]; see also Citibank, NA v Abrams, 144 AD3d 1212, 1213—14 [3d Dept 2016] [mere hope or speculation that evidence sufficient to defeat motion may be uncovered during discovery "insufficient to postpone determination" on motion for summary judgment] [internal quotation marks and citations omitted]; Concord Assoc., L.P. v EPT Concord, LLC, 130 AD3d 1404, 1407 [3d Dept 2015] [motion to dismiss converted to motion for summary judgment; motion not premature where record contained all of necessary documents to determine adequacy of claims, and claims that conducting additional discovery could yield material and relevant evidence were, "at best, speculative"]). In fact, "[p]laintiff[s] failed to show that discovery on continuity of ownership would be anything other than a fishing expedition" (Dritsas, 169 AD3d at 527; see also Oorah, 139 AD3d at 445).
In sum, the Court agrees with Honeywell that "no amount of discovery will change the fact that Sparco manufactured the subject valve and the terms of the APA make Sparco responsible for the valve at issue."
Finally, Honeywell demonstrated that it did not owe a duty to warn plaintiffs. "While a successor corporation may be liable for a failure to warn of an alleged defect in the product, such liability cannot attach without a showing that the successor corporation had sufficient contacts with the current owner of the product so as to create a special relationship between the parties which would trigger the duty to warn" (Goldman v Packaging Indus., Inc., 144 AD2d 533, 535 [2d Dept 1988]). "The duty commonly is imposed because of some special relationship, frequently economic . . . Several factors may be considered in determining whether there exists a sufficient link to create a duty to warn, among them succession to a predecessor's service contracts, coverage of the particular machine under a service contract, service of that machine by the purchaser corporation, and a purchaser corporation's knowledge of defects and of the location or owner of that machine" (Schumacher, 59 NY2d at 246-47 [internal brackets, quotation marks and citation omitted]). Plaintiffs have not alleged in their opposition, nor pled in their amended complaint, let alone demonstrated, that any of these factors are applicable in this case. Honeywell has demonstrated that no special relationship existed between it and plaintiffs or the Brookline defendants and, therefore, it did not owe a duty to warn plaintiffs.
Even assuming that Honeywell owed a duty to warn with respect to the mixing valve manufactured by Sparco, as set forth above with respect to Bradford White's motion, a lack of such warning was not a proximate cause of the accident and the infant's injuries. The water heater contained warnings about hot water, yet plaintiff never saw those warnings, or even the water heater itself, prior to the accident (cf. Fredette, 95 AD3d at 941). Further, the danger of being scalded by hot water is open and obvious, not hidden or latent.
With respect to that portion of its motion which seeks dismissal upon conversion to a motion for summary judgment, pursuant to CPLR 3211 [c], Honeywell met its initial burden of establishing prima facie entitlement to judgment as a matter of law on plaintiffs' failure to warn claim, shifting the burden to plaintiffs to demonstrate a triable issue of fact (see Nomura, 26 NY3d at 49; Alvarez, 68 NY2d at 323). Even viewing the evidence in a light most favorable to plaintiffs, as the nonmovants, the Court finds that plaintiffs failed to meet that burden.
Plaintiffs have also asserted three causes of action against Sparco/Rapsco: negligence; strict products liability; and breach of the warranties of merchantability and fitness for a particular purpose. Plaintiffs allege, generally, that Sparco/Rapsco manufactured, designed, marketed, tested, inspected, sold distributed and/or placed in the stream of commerce an allegedly defective mixing valve and that the valve was being used by plaintiffs for its intended use and purpose and in the manner intended, when the infant sustained his injuries (see Amended Verified Complaint dated September 11, 2019, ¶¶ 66-72, 76-79).
In its motion, Sparco/Rapsco asserts that Sparco was incorporated under the laws of the State of Rhode Island on or about June 8, 1983 and, as a Rhode Island corporation, the existence of Sparco/Rapsco is governed by the laws of the State of Rhode Island.
R.I.G.L. § 7-1.2-1324 provides that a dissolved corporation, its directors, officers, or shareholders are only amenable to suit with regard to claims or liability incurred prior to dissolution, for a period of two years after the date of dissolution of the corporation. Sparco/Rapsco contends that, bsed upon that statute, the last day on which Sparco/Rapsco, its directors, officers, or shareholders were amenable to suit was December 21, 2003; yet, this action was not commenced against Sparco/Rapsco until September 13, 2019 and, as such, the action may not be maintained against Sparco/Rapsco "as it was commenced over 15 years after the complete extinguishment of any and all claims against Sparco/Rapsco under the Rhode Island statute defining its existence."
In opposition, plaintiffs argue that under New York law, in products liability cases, the choice of law is determined by the location where the product was sold and consumed and, in New York, Business Corporation Law § 1006 [b] governs the time period within which to sue a dissolving corporation. Plaintiffs contend that it is for the Court to determine whether Sparco/Rapsco's affairs were fully wound up by the time the action was commenced against it.
Honeywell opposes Sparco/Rapsco's motion only to the extent that it contends that if Honeywell's motion is denied, its potential indemnification claim against Sparco/Rapsco should not be barred by R.I.G.L. § 7-1.2-1324.
Honeywell also argues that in its motion, Sparco/Rapsco has demonstrated there was no continuity of ownership of Sparco by Honeywell (which supports Honeywell's motion to dismiss).
As Sparco/Rapsco correctly points out, "[t]he existence and the powers of any foreign corporation coming into this state to do business are at all times subject to the law of its creation and of its domicile" (Sinnott v Hanan, 214 NY 454, 458 [1915]). Thus, the Rhode Island dissolution statute governs in this case (see In re New York City Asbestos Litig., 116 AD3d 571, 572 [1st Dept 2014]). Sparco/Rapsco is not "amenable to suit pursuant to the laws of the state of its incorporation" (cf. id., citing Sinnott, 214 NY at 458—59).
Moreover, even assuming, arguendo, that New York law applied, Sparco/Rapsco would not be amenable to suit.
"Business Corporation Law § 1006 permits a dissolved corporation to be sued as part of the winding up of its affairs" (Briere v Barbera, 163 AD2d 659, 660 [3d Dept 1990]; see also Cava Const. Co., Inc. v Gealtec Remodeling Corp., 58 AD3d 660, 661 [2d Dept 2009] ["a dissolved corporation may sue or be sued on its obligations, including contractual obligations and contingent claims, until its affairs are fully adjusted"] [internal citations omitted]).
However, "the winding up of affairs cannot continue indefinitely. BCL § 1006 does not include any time limit for winding up the dissolved corporation's affairs. When a statute is silent, the courts will imply a reasonable period of time" (Lance Intern., Inc. v First Nat. City Bank, 86 AD3d 479, 480 [1st Dept 2011]).
Sparco/Rapsco was dissolved on December 21, 2001. There is simply no evidence that more than fifteen years later, when plaintiffs brought suit against it, the corporation was still in the process of winding up of its affairs. Therefore, plaintiffs cannot maintain this action against the dissolved corporation, Sparco/Rapsco.
The remaining arguments advanced, to the extent not specifically addressed, have been examined and found to be unavailing. Any requested relief not specifically addressed herein has nonetheless been considered and is hereby denied.
Accordingly, it is hereby
ORDERED that Bradford White's motion is granted; and it is further
ORDERED that the amended complaint is dismissed as to defendant Bradford White; and it is further
ORDERED that Honeywell's motion is granted; and it is further
ORDERED that the amended complaint is dismissed as to defendant Honeywell; and it is further
ORDERED that Rapsco's and Sparco's motion is granted; and it is further
ORDERED that the amended complaint is dismissed as to defendants Rapsco and Sparco.
The within constitutes the Decision and Order of this Court.
Signed this 8th day of September, 2020, at Lake George, New York. ENTER: __________ HON. MARTIN D. AUFFREDOU JUSTICE OF THE SUPREME COURT List of papers considered: Regarding Bradford White Corporation's motion: • Notice of Motion, dated October 16, 2019; • Affirmation of Rafael Vergara, Esq., dated October 16, 2019, with Exhibits 1-15; • Bradford White's Brief in Support of Motion to Dismiss, dated October 16, 2019; • Affirmation of Paul H. Wein, Esq., dated February 13, 2020, with Exhibits A-D; • Plaintiff's Memorandum of Law in Opposition to Bradford White's Motion for Summary Judgment, dated February 13, 2020; • Affidavit of Dale J. Cagwin, P.E., C.F.E.I., sworn to February 13, 2020; and • Reply Brief in Support of Bradford White's Motion to Dismiss, dated February 18, 2020. Regarding Honeywell International Inc.'s motion: • Notice of Motion, dated December 20, 2019; • Attorney Affidavit of Brian D. Carr, Esq., sworn to December 20, 2019, with Exhibits A-F;Memorandum of Law in Support of Honeywell's Motion to Dismiss, dated December 20, 2019; • Affidavit of Susan Giniger, sworn to December 19, 2019, with Exhibits A and B; • Attorney Affirmation of Paul H. Wein, Esq., dated February 13, 2020, with Exhibits A-D; • Plaintiff's Memorandum of Law in Opposition to Honeywell's Motion to Dismiss, dated February 13, 2020; • Affidavit of Jeannine L. Lee, Esq., sworn to February 18, 2020, with Exhibits A-C; • Affidavit of Susan Giniger, sworn to February 19, 2020 with, Exhibit A; • Affirmation of Neil L. Sambursky, Esq., dated February 19, 2020, with Exhibits A and B (the affidavit of Suzanne Williams, sworn to February 18, 2020, with Exhibit A; • Reply Memorandum of Law in Support of Honeywell's Motion to Dismiss, dated February 19, 2020; • Plaintiff's Reply Memorandum of Law to Honeywell, dated March 17, 2020; • Affirmation of Neil L. Sambursky, Esq., dated June 30, 2020, with Exhibit 1; • Supplemental Memorandum of Law in Support of Honeywell International Inc.'s Motion to Dismiss, dated June 30, 2020; • Letter from Neil L. Sambursky, Esq. to Court, dated July 1, 2020; • Attorney Affirmation of Paul H. Wein, Esq., dated July 27, 2020, with Exhibit A, the affidavit of Hans Kuster, sworn to July 23, 2020; • Affirmation in Opposition of Neil L. Sambursky, Esq., dated August 12, 2020, with Exhibits A and B; • Correspondence from Paul H. Wein, Esq., dated August 14, 2020; and • Correspondence from Neil L. Sambursky, Esq., dated August 14, 2020. Regarding Sparco/Rapsco's motion: • Notice of Motion, dated March 30, 2020; • Affirmation in Support of Defendant's Motion to Dismiss Plaintiff's [sic] Complaint as Untimely Filed, of Elizabeth J. Grogan, Esq., dated March 30, 2020, with Exhibits A-D; • Memorandum of Law in Support of A Motion to Dismiss on Behalf of Rapsco, Inc. and Sparco, Inc., dated March 30, 2020; • Attorney Affirmation of Paul H. Wein, Esq., dated July 27, 2020, with Exhibit A, the affidavit of Hans Kuster, sworn to July 23, 2020; • Affirmation in Opposition of Neil L. Sambursky, Esq., dated August 12, 2020, with Exhibits A and B; • Correspondence from Paul H. Wein, Esq., dated August 14, 2020; • Correspondence from Neil L. Sambursky, Esq., dated August 14, 2020; • Affirmation in Reply to Plaintiff's [sic] Opposition and In Further Support of Defendant's Motion to Dismiss Plaintiff's [sic] Complaint as Untimely Filed of Elizabeth J. Grogan, Esq., dated August 20, 2020; • Memorandum of Law Reply to Plaintiff's [sic] Opposition and in Further Support of A Motion to Dismiss on Behalf of Rapsco, Inc. and Sparco, Inc., dated August 20, 2020; • Affirmation in Reply to Honeywell's Opposition To and In Further Support of Defendant's Motion to Dismiss Plaintiff's [sic] Complaint as Untimely Filed of Elizabeth J. Grogan, Esq., dated August 20, 2020.