July 7, 2008
GHATTAS HABASHI AND NASTASIA HABASHI, PLAINTIFFS-APPELLANTS,
INTERBAKE FOODS, INC., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-327-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 29, 2008
Before Judges Stern, Sapp-Peterson and Messano.
Plaintiffs Ghattas and Nastasia Habashi appeal from the July 25, 2005, order granting defendant Interbake Foods, Inc., summary judgment.*fn1 Plaintiff contends that the judge erred in applying the exclusivity bar of the Workers' Compensation Act, N.J.S.A. 34:15-8, under the facts of this case.*fn2 We have considered this argument in light of the motion record and applicable legal standards. We affirm substantially for the reasons expressed by Judge Nicholas J. Stroumtsos in his oral opinion.
When reviewing a grant of summary judgment, we employ the same standards used by the motion judge. Atlantic Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J. Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006). We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts; we then decide whether the motion judge's application of the law was correct. Id. at 230-31. In this case, the facts contained within the motion record were essentially undisputed and the issues presented were solely legal ones. Therefore, we owe no particular deference to the conclusions reached by the judge. Id. at 231 (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
On September 12, 2003, plaintiff, who had been employed by defendant for approximately eight years, was working as a maintenance mechanic responsible for maintaining and repairing conveyors and other equipment used in defendant's commercial baking business in Elizabeth. Plaintiff was repairing a conveyor when his hands and arms were caught in the machine and crushed, resulting in severe and permanent injuries. Plaintiff applied for and received workers' compensation benefits for the injuries he sustained.
On January 16, 2004, plaintiff filed suit against defendant and other fictitious parties. He alleged in the first count that the fictitious defendants "manufactured, designed, modified, sold, maintained and controlled" the machine upon which he was injured. In the second count, plaintiff alleged that defendant "altered the machine . . . by removing a safety device and had actual knowledge of the risk to workers . . . ." He also claimed defendant and the fictitious defendants were liable for the "intentional destruction of evidence by modifying the machine . . . subsequent to [his] accident  while having knowledge of probable litigation." Defendant answered and asserted among other affirmative defenses the exclusivity bar contained in N.J.S.A. 34:15-8.
Discovery ensued, and the motion record in this regard revealed that the conveyor at issue was manufactured approximately forty years ago. Robert Zaborowski, an engineer employed by defendant, testified in depositions that he had been employed at defendant's plant since 1971 when it was owned and operated by General Biscuit Brands, Inc. (General Biscuit), who manufactured various cookies and crackers for retail distribution by companies such as Quaker Oats and Burry's. During all times, the plant contained a machine shop that frequently employed more than a dozen workers and fabricated necessary production equipment, including the various conveyors. Zaborowski testified that he was "pretty sure that [the conveyor at issue] was built" at the plant. In 1989, defendant purchased the Elizabeth plant, its equipment, product lines, and other assets pursuant to an "asset purchase agreement" between it and "BSN and General Biscuit."*fn3
Defendant moved for summary judgment, noting that plaintiff had "conceded . . . that [it] ha[d] not engaged in an intentional wrong . . . ." See Millison v. E.I. du Pont de Nemours & Co., 101 N.J. 161, 169 (1985) (holding an employer who commits an "intentional wrong" will not be insulated by N.J.S.A. 34:15-8 from a common law suit). Defendant further argued that plaintiff's claim was now one of "third party tortfeasor liability" and that defendant could not be liable under that theory because it never placed the conveyor at issue "in the stream of commerce," thus distinguishing the facts of the case from those in Petrocco v. AT&T Teletype, Inc., 273 N.J. Super. 613 (Law Div. 1994), and likening them instead to those presented in Kaczorowska v. National Envelope Corp., 342 N.J. Super. 580, 587 (App. Div. 2001). Plaintiff countered by arguing the case was "on all fours with the Petrocco decision." He argued that because defendant purchased General Biscuit's business and equipment, the conveyor was "in the stream of commerce." The judge denied defendant's motion without prejudice, permitted additional discovery as to the nature of the transaction between General Biscuit and defendant, and entertained further argument on July 22, 2005.
On July 25, 2005, in an oral opinion placed on the record, Judge Stroumtsos granted defendant's motion for summary judgment. He concluded that the facts of the case were dissimilar from those presented in Petrocco because there, the defective product was "placed in the stream of commerce  which then allowed the employee to have  recourse against the original manufacturer of the [product]." The judge found the facts presented here were more similar to those in Kaczorowska where the "machine itself never entered . . . the stream of commerce." He concluded that "since this was a unique machine manufactured solely for the purpose of . . . this . . . biscuit company, Petrocco  cannot rule, [Kaczorowska] controls[,]" and granted defendant's motion.*fn4 This appeal followed plaintiff's settlement with other defendants in the case.*fn5
As he did below, plaintiff argues before us that the conveyor at issue was not a unique instrument, but rather was manufactured by defendant's predecessor in interest and placed in the stream of commerce when defendant purchased General Biscuits' assets. He further contends that "liability [for the defective conveyor] now attached to defendant  as a matter of law," because of "its independent assumption, by contract or operation of law, of the liabilities of a third-party tortfeasor." We disagree.
Plaintiff's claim is not based upon defendant's status as his employer, but rather upon a variation of the so-called "dual capacity" doctrine. "The 'dual capacity' doctrine stands for the proposition that an employer normally shielded from tort liability by the exclusive remedy principle in Workers' Compensation may be liable in tort to its own employee if it occupies, in addition to its capacity as an employer, a second capacity that confers on it obligations independent of those imposed on him as an employer." Kaczorowska, supra, 342 N.J. Super. at 592 (citations omitted). Plaintiff contends defendant's "second capacity" in this case was as successor to the liabilities of the manufacturer of the machine, General Biscuit, an independent third-party tortfeasor.
However, we have noted the dual capacity doctrine "is disfavored, if not outright disapproved," in New Jersey. Ibid.; see also Holliday v. Personal Products Co., 939 F. Supp. 402 (E.D.Pa. 1996), aff'd, 114 F.3d 1172 (3d Cir. 1997)(noting disapproval of the doctrine in New Jersey); De Figueiredo v. U.S. Metals Refining Co., 235 N.J. Super. 458, 461-63 (Law Div. 1988)(discussing the doctrine, noting general disapproval, and specifically holding it inapplicable to plaintiff's negligence claim against employer based upon common law duty to maintain safe premises), aff'd o.b., 235 N.J. Super. 407 (App. Div. 1989); Doe v. St. Michael's Med. Ctr., 184 N.J. Super. 1, 8-9 (App. Div. 1982)(criticizing the doctrine and finding it inapplicable to plaintiff's claim against her employer based upon landlord/tenant principles of habitability).
Plaintiff contends the facts presented here are similar to those presented in Petrocco. There, AT&T, the plaintiff's employer, purchased a key board from AT&T Teletype, a separate corporation that subsequently merged with AT&T. Petrocco, supra, 273 N.J. Super. at 614. The plaintiff claimed she was injured through the use of the defective keyboard and brought suit against her employer. While finding the dual capacity doctrine inapplicable because the question involved not one corporation but rather "the merger of formerly separate corporations, each of which acted in a different capacity," the court nevertheless permitted the suit to proceed, reasoning,
To allow the defendant to hide behind the exclusive remedy provision in this situation would effectively allow a manufacturer who had already put defective products into the stream of commerce to shield itself from injuries those products may later cause by virtue of subsequently entering into a business transaction with someone other than the injured party. The exclusive remedy provision of the Worker's Compensation Act was not intended to immunize a third-party manufacturer in such a situation. [Id. at 616 (emphasis added).]
However, we agree with Judge Stroumtsos that the facts presented here are quite similar to those presented in Kaczorowska, and distinguishable from those in Petrocca, thus compelling dismissal of plaintiff's complaint. In Kaczorowska, plaintiff's arm became caught in an unguarded drive belt on an envelope gluing machine. 342 N.J. Super. at 584. The machine was originally sold by its manufacturer to a predecessor corporation of plaintiff's employer, which in turn modified the safety mechanism, allegedly resulting in a defective product. Id. at 584-85.
We rejected plaintiff's argument that the exclusivity bar did not foreclose her complaint against her employer, noting, "[N]o case in this State has ever invoked the 'dual capacity' doctrine to impose common law liability on an employer who modifies or alters a machine used exclusively in its plant." Id. at 592. We further distinguished the facts from those presented in Petrocco, observing that the "[plaintiff's employer] did not introduce the  machine into the stream of commerce or modify it other than solely for its own use and not for distribution to the general public." Id. at 593 (emphasis added).
We agree with the motion judge that the conveyor at issue here was especially made for the commercial bakery operation at the plant, and functioned in that capacity while the business was owned by General Biscuit and by defendant. The mere fact that the plant fabricated many of its own machine components does not change the basic character of the conveyor from an essential part of the bakery operations into a product manufactured, sold, or distributed as those terms are usually understood "in the sense of an ordinary commercial or business transaction." Kaczorowska, supra, 342 N.J. Super. at 595. Unlike the keyboard in Petrocco, this conveyor was not introduced into the stream of commerce with the purpose that it be employed by some other end-user. Indeed it apparently never left the facility in which it was made and in which it was always used. If the asset purchase had never occurred, we can say without doubt that plaintiff, if employed by General Biscuit, would simply not have a cognizable claim based upon an alleged defect in the conveyor.
The fact that defendant acquired the conveyor pursuant to an asset purchase agreement consummated with General Biscuit does not then create a cause of action that survives the exclusivity bar. Although independent values were assigned to the various assets conveyed by the sales agreement, including equipment, defendant did not separately purchase the machinery. The asset purchase agreement clearly indicates that defendant was buying General Biscuit's commercial products operation at the Elizabeth plant as an ongoing concern, and the equipment purchased included that contained in the entire plant, not simply specific machinery of which this conveyor was a part. The purchase agreement did not serve to somehow transport the conveyor into the stream of commerce, suddenly providing a cognizable claim against defendant to those employees who now worked with the conveyor as part and parcel of their employment.
Lastly, the decision in Petrocco was firmly grounded in an equitable policy that provided plaintiff a remedy when one otherwise might not have existed if the exclusivity bar applied. We recognized as much when we noted that Petrocco "informs that employers may be held liable for the torts of defunct 'third-party manufacturers' that had ceased to be third parties and had become unincorporated parts of the employer long before the injury occurred and indeed before the employment relationship even began." Kaczorowska, supra, 342 N.J. Super. at 593 (emphasis added); see also Billy v. Consolidated Machine Tool Corp., 432 N.Y.S.2d 879, 884 (noting if exclusivity bar applied, plaintiff was unable to hold predecessor tortfeasor corporations liable because of subsequent merger).
Here, however, defendant's acquisition of the Elizabeth plant and its machinery did not serve to deny plaintiff the opportunity to proceed directly against the alleged tortfeasors. In fact, plaintiff ultimately settled his suit against them for a sizeable sum.
In short, under the facts presented, we find no principled reason to carve out an exception to the exclusivity bar contained in N.J.S.A. 34:15-8 thereby permitting plaintiff to pursue a products liability claim against his employer based upon a theory of successor liability.