133 Conn. App. 577
Conn. App. Ct.2012Background
- Plaintiff settled with Shoreline Obstetrics and Gynecology, P.C. and its employees and signed covenants not to sue; the covenants expressly reserved rights against the defendants (Physicians for Women's Health, LLC, and Women's Health USA, Inc.).
- Shoreline sold its assets to the defendants in July 2006; Elijah Robbins Martin was born in October 2005 and died shortly after birth due to alleged malpractice by Shoreline employees.
- Plaintiff asserted successor liability against the defendants under mere continuation and continuity of enterprise theories; the trial court denied summary judgment to the defendants.
- Plaintiff later sought to proceed against the defendants despite the covenants not to sue Shoreline; the covenants did not name the defendants but preserved claims against them.
- Defendants renewed summary judgment, arguing that successor liability derives solely from Shoreline and that the covenant against Shoreline bars any such liability; trial court granted summary judgment.
- The Connecticut Appellate Court reversed, holding that a covenant not to sue a predecessor does not foreclose successor liability as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a covenant not to sue foreclose successor liability as a matter of law? | Robbins contends covenants not to sue do not extinguish underlying liability for successors. | Defendants contend successor liability is unavailable if Shoreline is discharged by the covenant. | No; covenant not to sue does not bar successor liability. |
| Is successor liability barred when the predecessor remains a viable source of recovery after settlement? | Even with a predecessor, successor liability may apply to cover any remaining damages. | If the predecessor is a viable recovery source, successor liability should not attach. | Not foreclosed as a matter of law; however, unresolved damages evidence may affect viability at summary judgment. |
| Should the settlement with Shoreline and its employees affect liability of the successors under mere continuation/continuity theories? | Settlement with Shoreline does not automatically shield successors if covenants reserve rights against others. | Settlement discharged Shoreline’s liability, thus discharging successors under derivative theories. | The agreements do not foreclose successor liability as a matter of law; remand for further proceedings. |
Key Cases Cited
- Chamlink Corp. v. Merritt Extruder Corp., 96 Conn.App. 183 (2006) (two theories of successor liability: mere continuation and continuity of enterprise)
- Alvarez v. New Haven Register, Inc., 249 Conn. 709 (1999) (joint tortfeasor context; covenant not to sue and release distinctions)
- Turner v. Bituminous Casualty Co., 397 Mich. 406 (1976) (continuity/defunct predecessor as condition for successor liability; remedy against predecessor essential)
- Foster v. Cone-Blanchard Machine Co., 460 Mich. 696 (1999) (successor liability applies when transferor is no longer viable)
- Craig v. Oakwood Hospital, 471 Mich. 67 (2004) (court endorses limits on successor liability where predecessor has remedies)
- Voris v. Molinaro, 302 Conn. 791 (2011) (settlement can extinguish derivative liability in related contexts)
- United States v. General Battery Corp., Inc., 423 F.3d 294 (3d Cir. 2005) (policy rationale of successor liability and prohibition on externalizing tort costs)