        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1148
CA 15-00221
PRESENT: SMITH, J.P., PERADOTTO, CARNI, WHALEN, AND DEJOSEPH, JJ.


BRIAN LIPPENS, PLAINTIFF-RESPONDENT,

                    V                               MEMORANDUM AND ORDER

WINKLER BACKEREITECHNIK GMBH, WERNER & PFLEIDERER
INDUSTRIELLE BACKTECHNIK GMBH, BAKERY
ENGINEERING/WINKLER, INC., DEFENDANTS-APPELLANTS,
WINKLER INTERNATIONAL CORPORATION, ET AL.,
DEFENDANTS.
(APPEAL NO. 2.)


LECLAIR RYAN, A PROFESSIONAL CORPORATION, NEW YORK CITY (LESLIE F.
RUFF OF COUNSEL), FOR DEFENDANTS-APPELLANTS WINKLER BACKEREITECHNIK
GMBH AND WERNER & PFLEIDERER INDUSTRIELLE BACKTECHNIK GMBH.

OSBORN, REED & BURKE, LLP, ROCHESTER (JEFFREY P. DIPALMA OF COUNSEL),
FOR DEFENDANT-APPELLANT BAKERY ENGINEERING/WINKLER, INC.

MACCARTNEY, MACCARTNEY, KERRIGAN & MACCARTNEY, NYACK (WILLIAM K.
KERRIGAN OF COUNSEL), FOR PLAINTIFF-RESPONDENT.


     Appeals from an order of the Supreme Court, Monroe County (J.
Scott Odorisi, J.), entered November 19, 2014 in a personal injury
action. The order, among other things, denied the motions of
defendants Bakery Engineering/Winkler, Inc., Winkler Backereitechnik
GmbH and Werner & Pfleiderer Industrielle Backtechnik GmbH for summary
judgment dismissing plaintiff’s amended complaint.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by granting those parts of the motion
of defendant Bakery Engineering/Winkler, Inc. with respect to the
fourth and fifth causes of action in the amended complaint, and
dismissing those causes of action, and as modified the order is
affirmed without costs.

     Memorandum: Plaintiff, a New York State resident, commenced this
products liability action seeking damages for injuries he sustained in
Rochester, New York, in September 2006 when his arm was caught in a
component of a commercial bread-making machine known as a “proofer”
during the course of his employment with Wegmans Food Market, Inc.
(Wegmans), a nonparty. The proofer was sold to Wegmans in 1994 by
defendant Winkler USA LP (Winkler USA). The proofer was manufactured
by a German company, Winkler GmbH, which filed for bankruptcy in
Germany in 2000. The Winkler GmbH German bankruptcy proceeding
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                                                         CA 15-00221

resulted in three separate asset sales, two of which are relevant to
this action. Defendant Bakery Engineering/Winkler, Inc. (Bakery)
purchased, inter alia, Winkler GmbH’s customer lists, customer
contracts, accounts receivable, and balance sheet assets. In a
separate sale, defendant Winkler Backereitechnik GmbH (Winkler)
purchased, inter alia, Winkler GmbH’s entire manual and industrial
machinery program and equipment, a component program for bread and
cookies, as well as an industrial proofing cabinet. Winkler is wholly
owned by defendant Werner & Pfleiderer Industrielle Backtechnik GmbH
(Werner).

     Inasmuch as they did not design, manufacture, sell, or distribute
the product at issue, plaintiff’s amended complaint against Winkler,
Werner, and Bakery is based in part upon theories of successor tort
liability. The parties agree that, under German law, a purchaser of
assets from a bankruptcy trustee is immune from successor liability
for the pre-sale torts of the seller. Thus, Winkler, Werner, and
Bakery contend that there can be no successor liability here because,
inter alia, they purchased the assets of Winkler USA and/or Winkler
GmbH from the German bankruptcy trustee.

     Winkler and Werner together, and Bakery separately (hereafter,
moving defendants), moved for summary judgment dismissing the amended
complaint against them on the ground, inter alia, that comity and
choice of law principles require New York courts to apply German
bankruptcy law to plaintiff’s successor tort liability claims.
Supreme Court applied New York’s law of successor tort liability and
denied both motions. The court also determined that Winkler and
Werner failed to meet their burden with respect to the “de facto
merger” theory of successor liability under New York law, and that
Bakery failed to meet its burden with respect to both the “de facto
merger” and “mere continuation” theories of successor liability.
Lastly, the court denied that part of Bakery’s motion seeking summary
judgment dismissing the fourth cause of action based upon failure to
warn, and the fifth cause of action based upon the theory that Bakery
launched an instrument of harm. We conclude that the court erred in
denying those parts of Bakery’s motion with respect to the fourth and
fifth causes of action, and we therefore modify the order accordingly.

     Initially, we reject the moving defendants’ contention that
comity requires the application of German bankruptcy law to the issue
of successor tort liability in this New York action. It is well
settled that laws of foreign governments have extraterritorial
jurisdiction only by comity (see J. Zeevi & Sons v Grindlays Bank
[Uganda], 37 NY2d 220, 227-228, cert denied 423 US 866; see also
Huntington v Attrill, 146 US 657, 669; Mertz v Mertz, 271 NY 466,
470). “The principle which determines whether we shall give effect to
foreign legislation is that of public policy and, where there is a
conflict between our public policy and application of comity, our own
sense of justice and equity as embodied in our public policy must
prevail” (J. Zeevi & Sons, 37 NY2d at 228). Contrary to the public
policy reflected by German law, New York’s public policy provides for
successor tort liability in asset purchase transactions from bankrupt
corporations, but only if one or more well-defined exceptions apply
                                 -3-                          1148
                                                         CA 15-00221

(see Sweatland v Park Corp., 181 AD2d 243, 245-246). In light of the
foregoing, we decline to extend comity to German bankruptcy law. We
further conclude that, inasmuch as plaintiff is a New York domiciliary
and the situs of the alleged tort is in New York (see Burnett v
Columbus McKinnon Corp., 69 AD3d 58, 59-60), choice of law principles
also compel the application of New York’s successor tort liability
rules (see Neumeier v Kuehner, 31 NY2d 121, 128).

     With respect to successor tort liability under New York law, we
are concerned here only with the de facto merger and mere continuation
exceptions (see Sweatland, 181 AD2d at 245-246; Wensing v Paris
Indus.-N.Y., 158 AD2d 164, 167). We reject the contention of the
moving defendants that there was no de facto merger herein because
there was no continuity of ownership. Even assuming, arguendo, that
the moving defendants established a lack of such continuity, we
conclude that the court nonetheless properly denied the motions (see
Sweatland, 181 AD2d at 245-246). “Public policy considerations
dictate that, at least in the context of tort liability, courts have
flexibility in determining whether a transaction constitutes a de
facto merger. While factors such as shareholder and management
continuity will be evidence that a de facto merger has occurred . .
. , those factors alone should not be determinative” (id. at 246).
Instead, the court should analyze each situation on a case-by-case
basis and thus, contrary to the contention of the moving defendants,
the presence or absence of continuity of ownership is not
determinative (see id.).

     We likewise reject Bakery’s contention that there was no de facto
corporate merger herein because it purchased assets from a “natural
person,” i.e., the German bankruptcy trustee. The asset sale
agreement specifically identified “Winkler USA” as the seller.
Moreover, the agreement conveyed Winkler USA’s inventory, contracts,
and commitments with customers, accounts receivable, balance sheet
assets, and the exclusive right to use the Winkler logo and name in
certain markets. It also obligated Bakery to assume all employees of
Winkler USA and obligated Winkler USA to assign to Bakery the lease
for Winkler USA’s facility in Rockaway, New Jersey. Under those
circumstances, we conclude that the court properly denied that part of
Bakery’s motion based on the theory of de facto merger (see generally
Hoover v New Holland N. Am., Inc., 71 AD3d 1593, 1594). We reject
Bakery’s further contention that it established prima facie
entitlement to summary judgment with respect to the mere continuation
exception. We conclude that, on this record, Bakery failed to
establish that it was not a mere continuation of Winkler USA (see
generally Martorel v Tower Gardens, Inc., 74 AD3d 651, 652).

     We agree with Bakery, however, that the court erred in denying
that part of its motion seeking to dismiss the fourth cause of action
based on an alleged failure to warn. We conclude that Bakery met its
initial burden by establishing that it did not service or repair the
proofer and therefore had no duty to warn (see Ward v Lithibar-Matik,
Inc., 6 AD3d 424, 425), and we further conclude that plaintiff failed
to raise an issue of fact (see generally Zuckerman v City of New York,
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                                                         CA 15-00221

49 NY2d 557, 562). We also agree with Bakery that the court erred in
denying that part of its motion seeking to dismiss the fifth cause of
action based on the theory that, although plaintiff was not a party to
the service contract between Bakery and Wegmans, Bakery could still be
held liable to plaintiff because Bakery “ ‘launched a force or
instrument of harm’ ” that injured plaintiff (see Espinal v Melville
Snow Contrs., 98 NY2d 136, 141-142, quoting Moch Co. v Rensselaer
Water Co., 247 NY 160, 168). Inasmuch as it is undisputed that Bakery
did not service or repair the proofer, Bakery established that it did
not create or exacerbate any alleged dangerous condition in that
machine, and plaintiff failed to raise an issue of fact (see generally
Zuckerman, 49 NY2d at 562).




Entered:   April 29, 2016                      Frances E. Cafarell
                                               Clerk of the Court
