Hugo P. Gonzalez v. Standard Tools and Equipment Co. d/b/a/ Eagle Equipment and Eagle Life Manufacturing Corp.

Plaintiff appeals the trial court's judgment dismissing

his claims with prejudice. He asserts that the trial

court erred in its conclusion that "Oregon appellate courts

would not be likely to adopt the product line exception to the

general rules of successor liability.” As explained below, we

affirm.

Plaintiff was injured while working at B & R Auto

Wrecking (B & R) on an automobile secured by an automotive

lift manufactured by Eagle Lift Manufacturing Corp.

(Eagle Lift), and sold to B & R in 1998. Plaintiff brought

claims for his injuries against several defendants, including

Standard Tools and Equipment Co. (Standard Tools) and

Eagle Equipment Co. (Eagle Equipment), who were successor

entities to Eagle Lift (collectively, the Standard Tools

defendants). In particular, in 2005, Eagle Lift's successor

entity, Minuteman Distributors, Inc., sold its assets to Eagle

Equipment, which, later, merged with Standard Tools, who

continued to distribute the automotive lifts.

Plaintiff alleged that,

"[b]y carrying on the product line of Eagle automotive

lifts after May 25, 2005, [the Standard Tools defendants]

are liable for the injuries suffered by plaintiff, even though

those entities did not manufacture, distribute, or sell the

automotive lift that injured plaintiff, because they carried

on the same product line under the same or similar

name ('Eagle Lift'), and benefitted from the good will of

Minuteman, which had become a mere corporate shell after

substantially all of its assets had been purchased by defendant

Eagle Equipment Co., and Minuteman had assigned

its remaining assets for the benefit of creditors.”

The Standard Tools defendants moved to dismiss plaintiff's

claims against them, asserting that Oregon follows the traditional

rule of successor liability under which, where one

corporation transfers its assets to another, the latter does

not assume the liabilities of the transferor corporation,

with four specific exceptions. The Standard Tools defendants

asserted that Oregon had not adopted the "product

line exception” alleged in plaintiff's complaint, and was

unlikely to do so. The trial court agreed, concluding that

Cite as 270 Or App 394 (2015) 397

"the product line exception to the successor liability rule

had not been expressly adopted by the Oregon appellate

courts or enacted into law by the Oregon legislature[.]”

Accordingly, the court entered a judgment dismissing with

prejudice plaintiff's claims against the Standard Tools

defendants.

On appeal, plaintiff asserts that the "trial court

erred in granting the Standard Tools defendants' ORCP

21A(8) Motion to Dismiss on the basis that Oregon appellate

courts would not be likely to adopt the product line exception

to the general rules of successor liability.”

" 'The general rule is that where one corporation sells or

otherwise transfers all of its assets to another corporation,

the latter is not liable for the debts and liabilities of the

transferor. * * *

" 'To this general rule there are four well recognized

exceptions, under which the purchasing corporation

becomes liable for the debts and liabilities of the selling

corporation. (1) Where the purchaser expressly or impliedly

agrees to assume such debts; (2) where the transaction

amounts to a consolidation or merger of the corporations;

(3) where the purchasing corporation is merely a continuation

of the selling corporation; and (4) where the transaction

is entered into fraudulently in order to escape liability

for such debts.' ”

Erickson v. Grande Ronde Lbr. Co., 162 Or 556, 568, 92 P2d

170, reh'g den, 162 Or 556, 94 P2d 139 (1939) (quoting West

Texas Refining & D. Co. v. Commissioner of Int. Rev., 68

F2d 77, 81 (10th Cir 1933)) (omission in Erickson). Plaintiff

asserts, however, that a "number of courts from around

the country have adopted a fifth exception to the general

rule of successor liability, one known as the 'product line'

exception.” Under that proposed exception to the general

rule, where a successor company continues to produce the

same type of product as the original company, the successor

assumes tort liability for defects in units of the same product

line previously manufactured. According to plaintiff,

"the public policy underlying products liability law would be

well served by extending the 'product line' exception to this

case, consistent with Oregon's policy to protect consumers

injured by defective products.”

398 Gonzalez v. Standard Tools and Equipment Co.

We have previously considered a proposal that we

adopt the "product line exception” in Dahlke v. Cascade

Acoustics, Inc., 216 Or App 27, 171 P3d 992 (2007), rev den,

344 Or 401 (2008). In that case, the plaintiff asserted that

we should follow the lead of other jurisdictions that had

modified the traditional rules of successor liability and concluded

that, "where a successor company continues to produce

the same type of product as the original company, the

successor, having received the benefits of a going concern,

should also assume the costs which all other going concerns

must ordinarily bear.” Id. at 37.

"In Tyree Oil, Inc. v. BOLI, 168 Or App 278, 282, 7 P3d

571 (2000), we explained that, apart from the four exceptions

identified in Erickson, '[i]t has long been the general

rule in Oregon that, when one corporation purchases all of

the assets of another corporation, the purchasing corporation

does not become liable for the debts and liabilities of

the selling corporation.' (Emphasis in original.) Plaintiff's

proposed modification of successor liability would require

us to depart from that established rule. Moreover, liability

for defective products—asbestos-related products, in

particular—is a subject that the legislature has addressed

by statute. See ORS 30.900 to 30.927. If we were to expand

successor liability in this particular area of the common

law, we risk potential conflict with the policies expressed

by the legislature in that regard.”

Dahlke, 216 Or App at 38 (brackets in Dahlke). However,

that reasoning in Dahlke was dictum because we went on to

conclude that, "even if [the] plaintiff's proposed modification

of the common-law rules of successor liability were appropriate

in a particular product liability case,” "any reason for

following the lead of other states in modifying the commonlaw

rule in Oregon [was] not supported by the evidence” presented

in the case. Id.

Here, we adhere to the reasoning set forth in the

Dahlke dictum and, accordingly, reject plaintiff's contention

that we should adopt the "product line” exception to

the traditional rules of successor liability. That is to say,

plaintiff's proposed modification of successor liability would

require us to depart from the long-established rule and

would "risk potential conflict with the policies expressed by

Cite as 270 Or App 394 (2015) 399

the legislature” with regard to products liability. Id. Thus,

we reject plaintiff's contention and conclude that the trial

court did not err in granting the Standard Tools defendants'

motion to dismiss.

Affirmed.