Summary Judgment Granted to Ceramic Manufacturer Based on Asset Purchase Agreement

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Supreme Court of New York, New York County, March 10, 2021

Defendant Gare Incorporated filed this instant motion for summary judgment pursuant to CPLR 3212. The plaintiffs allege that Lorraine Berger’s (the decedent) June 22, 2018 diagnosis of mesothelioma was causally connected to her asbestos exposure from Gare asbestos-containing products. Gare’s motion contends that Gare has no liability for claims or litigation based on events occurring before July 21, 1983.

Here, Gare avers that it cannot be held liable for the decedent’s exposure to Gare products because it was not incorporated until after the decedent stopped working with ceramics. The decedent testified that she began working with ceramics in the mid to later 1970s while taking ceramics classes in peoples’ homes or in local ceramics shops. The decedent testified that while working in her home she began to use Gare slips product. In 1978, the decedent started her own ceramics company, “Ceramics by Lori, Inc.,” where she used Gare slips to make ceramic products until 1981 when she dissolved the company. The decedent worked from 1982 to 1983 as head of the ceramics department at Camp Venture, a home for adults with special needs, where she worked with Gare glaze. After the decedent finished working at Camp Venture in June 1983 she ceased working with any ceramic materials, and thus stopped using Gare products, in any capacity.

The court noted that as a general rule a corporation which acquires the assets of another is not liable for the torts of its predecessor (Schumacher v. Richards Shear Co., 59 N.Y.2d 239 1983) finding that “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.”

In support of their motion, Gare submits an Asset Purchase Agreement and the affidavit of David Alaimo, the President and Chief Operating Officer of Gare, which demonstrates that assets of Gare Incorporated, which later changed its name to Geeanna Incorporated (Old Gare) were purchased by Pequot Acquisitions Company Inc. on July 21, 1983. Mr. Alaimo testified that his father formed Pequot Acquisitions on July 19, 1983 in order to purchase assets from Old Gare. Pursuant to the agreement, Pequot Acquisitions did not assume “obligations and liabilities arising out of all claims or litigations now pending or threatened or which may be brought hereafter against Seller based upon events occurring prior to the Closing Date.” After the agreement was signed, Pequot Acquisitions changed its name to Gare Incorporated. The defendant has demonstrated that the decedent alleged to have been exposed to asbestos from Old Gare products before Gare purchased select assets from Old Gare on July 21, 1983. Gare has demonstrated that it did not assume any of Old Gare’s liabilities arising out of all claims or litigations which occurred prior to the closing date on July 21, 1983 and thus cannot be held liable for the plaintiffs’ alleged injuries.

The plaintiffs failed to demonstrate that Gare assumed the liabilities of Old Gare. Accordingly, Gare’s motion for summary judgment was granted. 

Read the full decision here.