Hughes et al v. Bentley Industries, LLC et al
ORDER granting 49 Motion for Summary Judgment; Plaintiffs' claims against Marine East, Inc. are dismissed with prejudice. Signed by Honorable Robert T. Dawson on September 25, 2013. (src)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
HOT SPRINGS DIVISION
SAMUEL HUGHES AND AMANDA HUGHES,
Individually, and as parents of
________, a minor
CASE No. 11-6025
BENTLEY INDUSTRIES, LLC, et al
MEMORANDUM OPINION & ORDER
Before the Court are Separate Defendant Marine East, Inc.
d/b/a MarineEast.com’s (“Marine East” Motion for Summary Judgment
and supporting documents (docs. 49-51), Plaintiffs’ Response and
supporting documents (doc. 54) and Marine East’s Reply (doc. 55).
For the reasons reflected below, the motion (doc. 49) is GRANTED,
and Plaintiffs’ claims against Marine East are DISMISSED WITH
A. Standard of Review
Summary Judgment is appropriate only where there is no genuine
issue of material fact and the moving party is entitled to judgment
as a matter of law. Fed. R. Civ. P. 56(c).
The burden of proof is
on the moving party to set forth the basis of its motion.
Corp. v. Catrett, 477 U.S. 317 (1986).
The Court must view all
facts and inferences in the light most favorable to the nonmoving
Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574
Once the moving party has met its burden, defeating
summary judgment requires “sufficient evidence favoring the nonAO72A
moving party for a jury to return a verdict for that party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
B. Background & Facts
This litigation arises from an injury sustained by Plaintiffs’
minor son while jumping off a pontoon boat on July 5, 2010.
minor’s pinkie finger was caught in the hinge area of the boat’s
gate resulting in the loss of his finger.
Plaintiffs allege the
injury was a result of a defective and dangerous “pinch guard” in
the hinge area of the gate.
For purposes of summary judgment, the
Court views the evidence and recites the facts in the light most
undisputed, except where noted.
Plaintiffs Samuel and Amanda Hughes live in Tennessee
with their minor child. On July 5, 2010, the minor child
was injured as he jumped from his grandfather, Lloyd
Mcleod’s, pontoon boat on Sardis Lake in Mississippi.
Plaintiffs allege that the minor child’s hand was stuck
in the gate hinges of the pontoon boat, severing his
manufactured, and sold a finger pinch guard that was on
the gate near the hinge and that such hinge caused the
The finger pinch guard at issue, however, was designed,
manufactured, and sold prior to Marine East’s existence.
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The relationship between Marine East and finger pinch
guards manufactured and sold prior to December 19, 2007,
litigation which revealed many of the following facts.
According to Marine East, David Thompson was the sole
owner and stockholder of Separate Defendants, Mariner
Sail & Power Yachts, Inc. (“Mariner Sail”) and Marine
Tool, Inc. (“Marine Tool”) and these companies were
physically located in Brick, New Jersey with warehouses
in Florida, New Jersey, and Bourbon, Indiana.
According to Marine East, Mr. Thompson obtained a patent
for the finger pinch guard he designed to prevent fingers
from catching in the hinges of pontoon boat gates.
Separate Defendants Bentley Industries, LLC d/b/a Bentley
Pontoons and Bentley Marine Group, LLC d/b/a Bentley
Pontoons (“Bentley”, collectively) purchased finger pinch
guards from Marine Tool and Mariner Sail and installed
them on their pontoon boats.
On August 30, 2006, Bentley sold a pontoon boat to a
retailer, Separate Defendant Power Boats, Inc., in Hot
On August 4, 2007, Power Boats sold
the boat to Lloyd McLeod.
Plaintiffs deny all of the following facts asserted by Marine
East stating they have no prior knowledge of such testimony, have
not been provided a full transcript of the cited depositions, and
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have not been afforded the opportunity to conduct further discovery
from the named witnesses.
The facts asserted by Marine East were
revealed in discovery in another lawsuit.
The Court notes that
Plaintiffs filed their response on December 14, 2012 and have made
no attempt to supplement their response throughout the discovery
On December 19, 2007, David Thompson, on behalf of
Mariner Sail and Marine Tool, entered into an agreement
called “Agreement of Purchase of Certain Assets” with
Paragraph 3 of the agreement states as follows:
Buyer agrees to assume the specific liabilities as
described in Exhibit “C”, attached hereto, described as
trade payables, accruals and taxes. Seller represents
and warrants that the liabilities described in Exhibit C
represent the complete and accurate list of liabilities
that exist as of the last financial statement of Seller
dated the 31st day of December, 2006. There has been no
material change in the liabilities of Seller outside of
the ordinary course of business.
According to Ken Coates, the buyer and owner of Marine
East, no Exhibit “C” ever became part of the contract.
The Seller, David Thompson, testified he did not know
where the Exhibit “C” was or if it ever existed and did
not have a copy of it.
Marine East was incorporated on September 27, 2007, in
Indiana, where it is located.
Ken Coates is the sole
owner, officer and director of Marine East.
Subsequent to the asset purchase, Marine East did not
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retain any of Marine Tool or Mariner Sail’s employees or
Marine East moved all of the inventory to
Mr. Thompson retained no ownership after selling Marine
Tool and Mariner Sail’s assets to Marine East.
Mariner Sail and Marine Tool had no officers, directors,
owners, managers or shareholders in common with Marine
East, and Marine East uses different computer software
Subsequent to the asset purchase by Marine East, Mariner
Sail and Marine Tool were dissolved in New Jersey on
February 7, 2011.
Marine East sells many of the same products previously
sold by Mariner Sail and Marine Tool, however, Marine
East has developed approximately one hundred (100) new
products since its inception.
Marine East paid Mariner
Sail and Marine Tool for the right to utilize their d/b/a
name and used the “MarineEast.com” website and logo as
provided for in the agreement. Marine East also utilized
Mr. Thompson as an adviser/consultant.
Plaintiff admits the following facts.
Marine East did not design, manufacture, or sell the
finger pinch guard that allegedly injured Plaintiffs as
the finger pinch guard was purchased by Bentley prior to
Marine East’s existence and before Marine East purchased
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the assets of Marine Tool and Mariner Sail on December
The United States District Court for the District of
South Carolina has previously held that Marine East is
not liable for damages caused by finger pinch guards sold
prior to the asset purchase.
See Grady v. Deese, No.
3:11-cv-232-CMC, 2012 U.S. Dist. LEXIS 46059 (D.S.C.
April 2, 2012); Knott v. Deese, No. 3:11-cv-158-CMC, 2012
U.S. Dist. LEXIS 46077 (D.S.C. April 2, 2012).
1. Successor Liability
Marine East contends it did not design, manufacture, or sell
the finger pinch guard at issue in this case and that it was
manufactured and sold prior to Marine East’s existence.
East contends Plaintiffs have not pled any theory of successor
liability, however, addresses it in an abundance of caution.
their responsive brief, Plaintiffs admit they do not state a cause
of action for successor liability, yet contend that a genuine
material fact issue exists.
corporation which purchases the assets of another corporation does
not succeed to the liabilities of the selling corporation.
Motor Co. v. Nuckolls, 894 S.W.2d 897 (Ark. 1995).
exceptions are: (1) where the transferee assumes the debts and
obligations of the transferor by express or implied agreement; (2)
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where there is a consolidation or merger of the two corporations;
(3) where the transaction is fraudulent or lacking in good faith;
and (4) where the purchasing corporation is a mere continuation of
the selling corporation.
Id. at 903 citing Swayze v. A.O. Smith
Corp., 694 F.Supp. 619, 622 (E.D. Ark. 1988).
Plaintiffs contend there is a genuine issue of material fact
as to whether or not Marine East expressly or impliedly assumed the
liabilities of Mariner Sail and whether Marine East is a mere
continuation of Mariner Sail.
agreement is drafted without language clearly assigning liability
for product liability claims, courts generally hold the purchaser
accepted such claims.
Restatement (Third) Property: Prods. Liab.
However, the agreement clearly states that the specific
accruals, and taxes.”
Paragraph 3 of the asset purchase agreement between Marine
East and Mariner Sail and Marine Tool states:
BUYER agrees to assume the specific liabilities as
described in Exhibit “C” attached hereto, described as
trade payables, accruals, and taxes. SELLER represents
and warrants that the liabilities described in Exhibit
“C” represent the complete and accurate list of
liabilities that exist as of the last financial statement
of SELLER dated the 31st day of December, 2006. There
has been no material change in the liabilities of SELLER
outside the ordinary course of business.
No Exhibit “C” was ever created or attached, apparently.
it is clear that any liabilities that Marine East was to assume
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were “trade payables, accruals, and taxes”.
There is no genuine issue of material fact as to whether
liability for any torts committed by Mariner Sail or Marine Tool.
As for their argument that Marine East is a mere continuation
of Mariner Sail, Plaintiffs point out that Marine East retained the
considering the “mere continuation” exception emphasize a common
identity of officers, directors, and stock between the selling and
Campbell v. Davol, Inc., 620 F.3d 887,
892 (applying Arkansas law and quoting Swayze, 694 F.Supp. at 62223).
Plaintiffs contend that Marine East retained David Thompson as
a consultant, sells the same products and uses the same website and
These facts are insufficent to establish that Marine
East is a mere continuation of Mariner Sail and Marine Tool.
Swayze, 694 F.Supp. at 623-24 (E.D. Ark. 1988)(rejecting the
argument that use of the same logo and sale of the same products
creates an issue of fact as to successor liability).
successor liability claim (which they admit they did not), such
Marine East is entitled to summary judgment on the
issue of successor liability.
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2. Duty to Warn
Plaintiffs contend Marine East is not entitled to summary
judgment on their failure to warn claim as Marine East was aware of
potential harms at the time the Asset Purchase Agreement was
executed between Marine East and Mariner Sail and Marine Tool.
However, Plaintiffs admit that Marine East did not sell the
pinch guard at issue, therefore, it had nothing to do with any
warnings accompanying it. Further, Arkansas law does not recognize
a post-sale failure to warn claim.
See Campbell, 620 F.3d at 894.
Plaintiffs have provided no evidence that Marine East had a legal
duty to warn of defects for products sold prior to its existence or
of any contractual relationship between Marine East and previous
customers of Mariner Sail and Marine Tool.
East is entitled to summary judgment on the failure to warn claim.
Based on the above, Marine East’s Motion for Summary Judgment
Defendant Marine East are DISMISSED WITH PREJUDICE.
IT IS SO ORDERED this 25th day of September, 2013.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge
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