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Ryan v. Smith

March 4, 2010

DAVID RYAN, ET AL., PLAINTIFFS,
v.
T.L. SMITH, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

I. INTRODUCTION

This matter comes before the Court on the Motion for Summary Judgment filed by Defendants McNeilus Truck & Manufacturing, Inc. and Oshkosh Truck Corporation (hereinafter collectively referred to as "McNeilus Defendants"), the Motion for Summary Judgment filed by Defendants Trinity Industries, Inc., Transit Mix Concrete & Materials Company, and TEMCO (hereinafter collectively referred to as "Trinity Defendants"), and the Cross-Motion for Summary Judgment filed by Plaintiffs David Ryan and Anna Mae Ryan. For the reasons set forth below, the motions of both McNeilus Defendants and Trinity Defendants will be granted, while Plaintiffs' cross-motion will be denied.

II. BACKGROUND

Plaintiff David Ryan alleges that on December 2, 2003, while working as a cement truck driver, he fell when the "pull down" ladder attached to the rear of his "Rex 770" model cement mixer broke free from the vehicle while he was standing on it. As a result of the fall, Plaintiff David Ryan alleges that he suffered, inter alia, serious bodily injuries. Plaintiff Anna Mae Ryan, David Ryan's wife, alleges that she suffered a loss of consortium as a result of his injuries from the fall.

The Rex 770 model cement mixer at issue was manufactured by Rexworks, Inc. (hereinafter, "Rexworks") in 1988. On March 8, 2000, Rexworks entered into a purchase and sale agreement with TEMCO, whereby it sold that company certain assets. Pursuant to the agreement, TEMCO received the right to use the Rex and Rexworks names, as well as its cement mixer designs, customer lists, and certain raw materials (hereinafter, "the Assets"). Rexworks kept its factory and was required to change its name.

The agreement between Rexworks and TEMCO expressly provided that TEMCO was not "assuming any liabilities [of Rexworks], whether known or unknown," except as specifically provided by the agreement. The agreement also included an indemnity clause benefitting TEMCO, although product liability claims were not included in the clause. Further, the agreement provided that TEMCO would not obtain the Assets until after Rexworks completed the backlog of orders it had at the time of the closing on the agreement. TEMCO ultimately took possession of the Assets in June 2000.

Following TEMCO's acquisition of the Assets from Rexworks, Mark Stiles, an executive at Trinity Industries, Inc. (hereinafter, "Trinity"), TEMCO's parent company, issued a press release stating, in relevant part, that "these purchases significantly expand on our product offerings." The press release also provided that "Rexworks good reputation and relationship with its customer network will enhance our sales efforts." In a separate press release, Stiles said that "[i]n addition to expanding our existing product lines in the area, Rexworks provides access to an established distribution channel."

TEMCO manufactured its own line of cement mixers prior to the purchase of the Rexworks's assets, and continued to do so following the purchase. After the purchase, TEMCO never manufactured concrete mixers using the Rex or Rexworks trademarks. Nor did TEMCO ever pursue any Rexworks customers directly. Although Rexworks had the right to act as a distributor for TEMCO under the agreement, neither TEMCO nor Rexworks ever sold any cement mixers under the distribution agreement. With respect to the raw material it acquired, TEMCO scrapped some of it, used some of it to build products for sale, and stored the balance.

TEMCO asserts that its primary objective in purchasing the Assets from Rexworks was to acquire the ability to manufacture the Rexworks transmission, or "gearbox." TEMCO intended to incorporate this transmission, which had a reputation for quality, into its own cement mixer lines. Following the transaction, TEMCO began to produce Rex transmissions using the design documents it acquired from Rexworks. TEMCO also advertised that it was able to furnish the Rex transmission in its TEMCO mixers.

TEMCO shut down its cement mixer business only a few months after purchasing the Assets from Rexworks. It stopped pursuing new cement mixer orders in February, 2001. On March 6, 2001, TEMCO sold all of the assets of its cement mixer business, including those acquired from Rexworks, to Oshkosh Truck Corporation (hereinafter, "Oshkosh"). The asset purchase agreement between Oshkosk and TEMCO expressly excluded any liabilities or obligations of TEMCO. Oshkosh asserts that its primary motivation for the purchase was to obtain more work selling parts for concrete trucks. Additionally, the purchase would eliminate TEMCO as a competitor of Oshkosk.

Oshkosh never made any use of the Rex or Rexworks trademarks, and let the trademarks lapse. Both Oshkosh and McNeilus Truck & Manufacturing (hereinafter, "McNeilus"), a wholly owned subsidiary of Oshkosh, manufactured their own cement mixers prior to the purchase, and continued to do so afterwards. Neither Oshkosh, nor McNeilus took over Rexworks's operations, and by the date of the purchase, the Rex product line was no longer being manufactured by anyone. All Rexworks parts and equipment included as part of the purchase from TEMCO were either sold or scrapped.

On November 18, 2005, Plaintiffs filed suit in the Superior Court of New Jersey - Law Division, Burlington County against Trinity Defendants. The Complaint was subsequently amended on two separate occasions to include additional claims and name McNeilus Defendants. The action was removed to this Court on December 7, 2006. After obtaining leave of Court, Plaintiffs filed a Third Amended Complaint on March 31, 2008 naming Rexworks as a defendant.*fn1

In response to a motion to dismiss from the Trinity Defendants, Plaintiffs moved for summary judgment against Defendants on the issue of successor liability on June 2, 2008. Thereafter, on August 26, 2008, the Court held that "because discovery has not taken place, [P]laintiffs have not provided any evidence that [D]efendants have continued to 'manufacture essentially the same line of products as its predecessor,' and have benefitted 'from trading its product line on the name of its predecessor.'" Ryan v. T.L. Smith, No. 06-cv-5866-NLH-AMD, slip op. at 19 (D.N.J. Aug. 26, 2008). The Court ...


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