SUPERIOR COURT OF THE VIRGIN ISLANDS
DIVISION OF ST CROIX
REGINF FITZNER
Case No SX 09 CV 00400
P! AINTIFF,
Action for Negligence, Product Liability,
V Breach of Warranty, and Personal Injuries
NEW WERNER HOLDING CO INC
NEW WERNER HOLDING (DE) LLC T
WERNER C0 GALLOWS BAY LL"3‘
—— Demand
“r ed
HARDWARE INC AND ORGILL INC CITED AS 2021 VI SUPER 6P
DEFENDANTS
Appearances
John K Dema, Esq
1236 Strand Street Suite 103
Christiansted St Croix V100823 5008
For Plamnfl
Richard H Hunter, Esq
1138 King Sheet
Christiansted V100820
For Defendant
MEMORANDUM OPINION & ORDER
f“ Willocks, Presiding Judge
<|[1 THIS MATTER is before the Court on a Motion for Summary Judgment filed on June
11 2015 by Defendant (hereinafter New Werner ) An Opposition was filed on July 1
2015 by
P1aintiff(hereinafter Fitzner ) The Court will GRANT Defendant 5 Motion
for Summary
Judgment for the reasons stated herein
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I Findings of Fact
(112 In 2006 Werner Co and several related entities filed for Chapter 11 Bankruptcy relief in
the United States Bankruptcy Court for the District of Delaware (See Plaintiff’s Response to
Defendant 8 Statement of Undisputed Material Facts) The April 25 2007 Bankruptcy Order
approved an internally referenced Asset Purchase Agreement dated March 20 2007 Id New
Werner DE punchased the assets of the bankruptcy entities for cash a credit bid and an
assumption of certain liabilities as limited and defined in the parties Asset Purchase Agreement
Id
‘I[3 Notably Section 2 3(d) of the APA provides that the Buyer and New Werner DE would
assume only the following liabilities All liabilities of any Selle1 in respect of the product
liability claims of the customers of Sellers listed on Schedule 2 3(d) that exist as of
immediately prior to the Closing provided however that Buyer will assume any Liability of
Sellers to any customer of any Selle: that is not listed on Schedule 2 3(d) but only to the extent
that such Liability is or becomes an allowed administrative expense claim of Sellers estates
pursuant to Section 503(b) of the Bankruptcy Code Id
11 Procedural History
‘][4 On September 5 2019 this Court held a Status Conference Hearing During the hearing
the Court granted leave to file supplements to their Summary Judgment briefs On November 8
2019 a Motion to Strike was made by Plaintiff A Reply to the Motion to Strike was filed on
December 19 2019 On September 10 2020 the Court had a hearing and ordered the parties to
file stipulated Exhibits to enter or contest by email no later than September 29 2020 The Court
then heard oral arguments on this matter on October 22 2020 via Zoom conference call At that
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hearing the issue involving the Motion to Strike was resolved and withdrawn Thus the Court
will only discuse the Motion for Summary Judgment The Court will GRANT Defendant 5
Motion for Summary Judgment for the reasons stated herein
[II Summary Judgment Standard
(115 Because summaly judgment is a drastic remedy 1‘66 N635 v Marshall, 660 F 2d 517 519
(3d Cir 1981) it should be granted only when the pleadings the discovery and disclosure
materials on file and any affidavits show there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law Williams v Untied Corp 50 V I 191
(V I 2008) (citing Fed R Civ P 56(c)) The moving party must identify those portions
of the
record that demonstrate the absence of a genuine issue of material fact at which point the burden
shifts to the non moving party to present affirmative evidence from which a jury might
reasonably return a verdict in his favor Chapman 1 Cornwall 58 V I 431 (V I 2013) (citing
Celotex Com 1 Curran 477 U S 317 322 25 106 5 Ct 2548 91 L Ed 2d 265 (1986))
1H6 lmp01tantly in its analysis the court may not itself weigh the evidence and determine the
tluth of the competing allegations rather it decides only whether there is a genuine issue for trial
such that a reasonable jury could return a verdict for the non moving party Kennedy t Fundmg
Inc 1 GB Pmpertzes Ltd
2020 VI 5 (V I May 20 2020) (citing Anderson t Libert) Lobby
Inc 477 U S 242 (VI 1986))
IV Banks Analysis
917 When confronted with issues of common law that have yet to be addressed or in the
absence of controlling precedence within the Virgin Islands jurisdiction the Court shall conduct
21 Banks analysis to determine applicable law DzamondRock Hospztalzry Co v Certain
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Underwriters at Lloyd 5 ofLondon 72 V I 185 (Super Ct 2019) The Banks analysis requires
the balancing of thiee non dispositive factors (1) whether any Virgin Islands courts have
previously adopted a particular rule (2) the position taken by a majority of courts
from other
jurisdictions and (3) determine which approach represents the soundest rule for the
Virgin
Islands [d
‘][8 Under the first Banks factor this Court notes the absence of any specific law within
this
jurisdiction regarding this interpretation issue Considering the second Banks factor
the Court
has found a majority of courts from other jurisdictions presented with the same or simiiai
issue
have held in favor of New Werner C0 Those jurisdictions are Alabama Oklahoma
and Texas
Accordingly the Court has taken these holdings into consideration when deciding
the soundest
rule for the Virgin Islands
‘19 In 30mm 12 Werner C0 the Court held in favor of summary judgment because there
was
no evidence or assertion that Borum 5 product liability claims against Werner Co (DE)
a wholly
owned subsidiary of the New Werner Co are allowed administrative expense claims
of the
bankrupt Old Werner C0 30mm v Werner C0 2020 U S Dist LEXIS 78545
(Alabama Dist
Ct 2012)
(mo Further in Doyle v New Werner Holding Co the Court held that New Werner had
adduced evidentiary materiais demonstrating that it did not design the ladder did
not
manufacture the ladder and did not place the ladder in the stream of commerce Doyle
v New
Werner Holding Co 2013 OK CIV APP 66 (Civil Appeals 2013) In short the Court held
that
New Werner did not design or distribute Plaintiff s ladder and did not agree in writing
to assume
F[I ner v New Werner Holdmg C0 et (II
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liability for any such claims against Old Ladder Co Id Therefore summaxy judgmen
t was a
proper remedy for New Werner Holding Co
(][11 In Hams v New Werner Holding Co the Court held in favor of summary judgment
for
New Werner Holding Co because nothing in the record established New Werner expressl
y
assumed any of Old Ladder 3 obligations or liability Harm t Ne» Werner Holdmg
C0 2009
U S Dist LEXIS 84043 (Texas Northern Dist Ct 2009)
‘][12 Finally pursuant to the third Banks factor thie Court considers the public policy
rationale It would be counterintuitive to hold otherwise considering othet jurisdictions
have
interpreted the issue similarly and have held in favor of summary judgment f0: New
Werner The
Court does not want litigants to forum shop in the Virgin Islands against New Werner
Further
holding for New Werner upholds the successor liability rules further discussed in detail
below
Thus the Court finds that this public policy rationale makes this rule favorable for the
Virgin
Islands
tH13 Weighing all the Banks analysis factors the Court finds it proper to follow the majority
ofjuriedictions and adopt as the soundest rule for the Virgin Islands that Plaintiff
5 do not have
a claim against New Werner because New Werner did not assume liability from Old
Werner
Co pursuant to the language of the APA agreement Thus the Court finds that other
jutisdiction s interpretations coupled with public policy weigh in favor of summary judgmen
t for
New Werner
V The issue is whether Summary Judgment is an appropriate remedy when
Defendant and Plaintiff are in dispute over whether there was an assumption of
liability depends on the language of the APA approved by the Bankruptcy Court
in Delaware
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‘H14 The Court will grant Defendant 5 Motion for Summary Judgment because the Court
finds
that Defendant has met the initial burden of showing that there are no genuine issues as
to any
material fact that exists concerning Plaintiff 5 claims The Court is persuaded by how
other
jurisdictions have held on this issue
‘1115 The Court in Palms ruled that it is a well settled rule of corporate law where one
company sells or transfers all of its assets to another the second entity does not become
liable for
the debts and liabilities including torts of the transferor Peters v VI Water & Power
Author”) 58 V I 49 (Super Ct 2013) (Citing Palms t Claik Equip C0 802 F 2d
75 78 (3d
Cir 1986))
‘fll6 This lute of successor liability has four generally recognized exceptions under which
the
purchasing corporation may be liable (1) if it assumes liability (2) if it merges 0r consolid
ates
with the selling corpomtion (3) where the sale of assets is fraudulent and done with
the intention
to escape liability and (4) when the purchasing corporation is a mere continuation of
the selling
corporation Id at 57
W7 First through the myriad of Exhibits that were submitted, the APA and the
Older from
the Bankruptcy Court of Delaware are important to the Court 5 analysis for summar
y judgment
See Plaintiff 5 Ex C and p l7(c) of Plaintiff’s Ex 4 For instance as the Court cannot
weigh the
evidence pursuant to Kennedy to make a determination of the truth of the allegati
ons albeit the
Court must resolve all disputes in favor of the non moving party
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(}{18 Here Plaintiff makes the assertion that pursuant to APA Schedule 2 3(d) the Werner
Defendants were not listed as an exception 1 Schedule 2 3 (d) is titled Assumed Customer
P1 oducts Liability Claims The language states All of Seller 5 customers with the exception of
Home Depot Kawan Lama MAP Paints and Sears 7 In support of these arguments Plaintiff’s
attorney submitted an affidavit that Exhibit 1 is a true copy of the Notice of Filing of Section
2 3(d) to the APA that was filed in the Bankruptcy Court for the District of Delaware ‘
‘1119 However and importantly Section 2 3(d) ends with but only to the extent that such
Liability is or becomes an allowed administrative expense claim of Sellers estates pursuant to
Section 503(b) of the Bankruptcy Code 4 When looking at 11 USCS § 503 (b) and taking all the
Exhibits affidavits and other submissions together there is no evidence that Plaintiff 8 claims
are allowed administrative expense claims of the bankrupt Werner Co Therefore the Court
cannot hold in favor of Plaintiff due to the language of the APA that was entered into by both
parties and pursuant to Section 503(b) of the Bankruptcy Code
(1120 After conducting a Bank 9 analysis this Court 5 holding represents the soundest rule for
the Virgin Islands and is consistent with other jurisdiction 5 holdings The Court is persuaded by
1 APA p l7 Qection (d) Customer Product Liability states All Liabilities of any Selim in respect of the product
liability claims oi the customers of gellers listed on Schedule 2 3(d) that exist as of immediately prior to the dosing
provided however Buyer will assume any Liability of Sellers [0 any customer of any Seller that is not listed on
Schedule 2 3(d) (which would otherwise have been assumed by Buyer has such customer been listed on Schedule
2 3(d) but only to the extent that such Liability is or becomes an allowed administrative expense claim of
Sellers’ estates pursuant to Section 503(b) of the Bankruptcy Code )
’ There is no issue for trial unless there is sutficient evidence favoring the nonmming party for a jury to return a
verdict for that party Saldaml 1 Kmart Corp 260 F 3d 228 4? VI 361 164 (V I 2001)
‘ See Plaintiff s Supplement to Opposition to Defendant 5 Motion for Summary Judgment Ex B
4 See 30mm 1 Wernel C0 where the Court held in favor of summary judgment because there was no evidence or
assertion that Borum s product liability claims acainst Warner Co (DE) a wholly ow ned subsidiary oi the New
Werner Co are allowed administrative expense claims 01 the bankrupt Old Werner Co 80mm 1 Werner C0
2020 U S Dist LEXIS 78545 (Alabama Dist Ct 2012) The Court held that Old Werner Co and Werner C0
(DE) assumed no liability as a wholly owned subsidiary of the successor company New Werner Holding Co (DE)
LLC and Plaintiff‘s claims tailed as a matter 01 law
F(I ner t New Wemer Holding C0 6! (II
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other jurisdictions interpretation of the APA agreement Thus the Court will GRAN
T
Defendant 5 Motion for Summary Judgment for the reasons stated herein
It is hereby
ORDERED that Defendant 5 Motion for Summary Judgment is GRANTED it is further
ORDERED that New Werner Holding Co Inc New Werner Holding
(DE) LLC and
Werner Co are DISMISSED it is further
ORDERED that the parties are to initiate mediation proceedings with the remaini
ng
Defendants Gallows Bay Hardware Inc and Orgiil Inc within forty five (45)
days from
the date of entry of this Order and to SERVE and FILE status notices every
thirty (30)
days thereafter until mediation has concluded
4M
DONE and so ORDERED this )5 day of EM? M 5 2021
N / .3 y ?\x /
a J/ / / /
HAR LD W L WILLOCKS
Presiding Judge of the Superior Court