Lyons v. Rienzi & Sons, Inc.
863 F. Supp. 2d 213
E.D.N.Y2012Background
- Genmar built Brianna; Staten Island Yacht Sales purchased it; Rienzi bought Brianna in 2006.
- Brianna’s limited warranty covered material defects, not design defects like slippery decks; forum clause required Wisconsin courts.
- Genmar filed bankruptcy in 2009; asset sale to J&D Acquisitions (later Marquis) approved under §363.
- Approval Order stated buyers would not assume Genmar liabilities except expressly assumed liabilities; assets sold free and clear of liens and claims.
- Bankruptcy court later allowed Lyons and Rienzi to pursue claims against third parties using insurance proceeds; stay relief granted in 2011.
- Marquis moved for summary judgment, arguing no direct liability and no successor liability under federal common law and New York law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Direct liability of Marquis | Lyons/Rienzi allege Marquis directly liable for design/manufacturing defects. | Marquis contends no direct liability; not designer/seller; liability arises only as successor, if at all. | Direct claims against Marquis are dismissed; no direct liability found. |
| Successor liability under federal common law | Lyons/Rienzi argue Marquis is successor and liable under federal common law or FELA/Jones Act. | Marquis argues traditional rule applies; no de facto merger or mere continuation; liability not imposed. | Marquis not liable as successor under federal common law or NY law. |
| Effect of bankruptcy sale order on successor liability | Approval Order and sale could extend liability to Marquis; debtors’ liabilities discharged except assumed. | Sale free and clear; explicitly disclaims successor liability unless assumed; stay relief later clarified. | Sale order and related documents negate successor liability to Marquis. |
| Forum enforcement considerations | Not central; forum clause not argued to enforce here. | Not central; issues do not rely on forum clause. | Not dispositive; ignored for decision on summary judgment. |
Key Cases Cited
- Am. Dredging Co. v. Miller, 510 U.S. 443 (U.S. 1994) (Jones Act follows FELA doctrine)
- New York v. Nat’l Servs. Indus., Inc., 460 F.3d 201 (2d Cir. 2006) (traditional successor liability exceptions)
- Arnold Graphics Indus., Inc. v. Indep. Agent Ctr., Inc., 775 F.2d 38 (2d Cir. 1985) (de facto merger continuity test)
- In re Chrysler LLC, 576 F.3d 108 (2d Cir. 2009) (bankruptcy sale impact on liabilities)
- Doktor v. Werner Co., 762 F. Supp. 2d 494 (E.D.N.Y. 2011) (asset purchase agreements may negate successor liability)
- In re Motors Liquidation Co., 428 B.R. 43 (Bankr.S.D.N.Y. 2010) (sale free and clear; enjoins successor claims)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (forum-selection clause enforceability test)
- EEOC v. G-K-G, Inc., 39 F.3d 740 (7th Cir. 1994) (successor liability traditions)