United States District Court, D. Massachusetts
MEMORANDUM OF DECISION
RYA W. ZOBEL SENIOR UNITED STATES DISTRICT JUDGE
subrogation action, plaintiff Chubb National Insurance
Company (“Chubb”) seeks to hold defendant Watts
Regulator Company (“Watts”) liable for damage
caused to property of Chubb's insureds. Watts has moved
for summary judgment on the basis that it has no liability as
a matter of law. Docket # 24.
summarize the relevant facts in the light most favorable to
plaintiff, the non-moving party. See Planadeball v.
Wyndham Vacation Resorts, Inc., 793 F.3d 169, 172 (1st
a company incorporated in Indiana with a principle place of
business in New Jersey, provided an insurance policy to Carl
and Sherry Hilbert for their property in Pennsylvania. Under
the terms of the policy, Chubb would become subrogated to the
Hilberts' claims and rights to the extent of payments
Chubb made for losses caused by third parties.
December 30, 2014, water leakage at the Hilberts'
property caused substantial damage. The Hilberts submitted a
claim to Chubb, and Chubb paid to or on behalf of the
Hilberts a total of $462, 475.13. The damage was caused by
the failure of a connector hose that had been used as a
toilet water supply line. The hose was manufactured and sold
by CalFlex Manufacturing, Inc. (“CalFlex”).
relevant to the instant motion, CalFlex was incorporated in
Nevada, and through 2006, had its principal place of business
in California. Around 2004, CalFlex became the wholly owned
subsidiary of Barbour Corporation (“Barbour”), a
Massachusetts corporation with its principal place of
business in Massachusetts. Barbour and CalFlex entered into a
Purchase and Sale Agreement (“P&S”) in 2006,
under which substantially all of CalFlex's operating
assets were sold to Watts.
August 26, 2016, Chubb, as the Hilberts' subrogee,
brought an action against Watts alleging product liability.
Watts moves for summary judgment.
judgment is appropriate when the moving party “shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “An issue is ‘genuine'
for purposes of summary judgment if ‘the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party, ' and a ‘material fact' is one
which ‘might affect the outcome of the suit under the
governing law.'” Poulis-Minott v. Smith,
388 F.3d 354, 363 (1st Cir. 2004) (quoting Hayes v.
Douglas Dynamics, Inc., 8 F.3d 88, 90 (1st Cir. 1993)).
case turns on which state's corporate successorship law
applies. The parties agree that if Massachusetts law governs,
Watts is entitled to summary judgment; if Pennsylvania law
controls, the case continues. See Docket #
“follow[s] the traditional corporate law principle that
the liabilities of a selling predecessor corporation are not
imposed upon the successor corporation which purchases its
assets, unless” one of four exceptions applies.
Guzman v. MRM/Elgin, 567 N.E.2d 929, 931 (Mass.
1991) (explaining the exceptions apply when “(1) the
successor expressly or impliedly assumes liability of the
predecessor, (2) the transaction is a de facto merger or
consolidation, (3) the successor is a mere continuation of
the predecessor, or (4) the transaction is a fraudulent
effort to avoid liabilities of the predecessor”). Watts
maintains that none of these exceptions apply and it is
therefore not liable for the property damage under
other hand, Pennsylvania courts have “recognized a
‘product-line' exception to the general rule
against successor liability.” See Cont'l Ins.
Co. v. Schneider, Inc., 873 A.2d 1286, 1291 n.8 (Pa.
2005). This exception “permits successor liability to
be imposed for injuries caused by defective products
manufactured by a predecessor if the successor continues to
manufacture the product.” Id. Chubb contends
that under Pennsylvania law, Watts can ...