Appeal from the Iowa District Court for Plymouth County, John D. Ackerman, Judge.
Floyd Valley Grain, LLC appeals from the district court's summary judgment ruling in favor of CTB, Inc. on a question of successor liability for an allegedly defective product.
Brett J. Beatie of Beatie Law Firm, P.C., Des Moines, for appellant.
Andrew D. Hall and Laura N. Martino of Grefe & Sidney, P.L.C., Des Moines, for appellees.
Heard by Potterfield, P.J., and Danilson and Mullins, JJ.
Floyd Valley Grain, LLC (Floyd) appeals from the district court's summary judgment ruling in favor of CTB, Inc. (CTB) on a question of successor liability for an allegedly defective product. Floyd contends Indiana law governs this dispute and has adopted, or would adopt, an exception to the general rule that a successor is not liable for its predecessor's defective products. Alternatively, should this court find Iowa law applies, Floyd urges us to overrule Pancratz v. Monsanto Co., 547 N.W.2d 198 (Iowa 1996), and adopt the product line exception and the continuity of enterprise exception to the general rule of nonliability. We affirm.
I. Background Facts & Proceedings
This case arises out of a dispute over whether Floyd may hold a successor, CTB, liable for damages sustained from an allegedly defective product that a predecessor, Beard Industries, Inc. (Beard), sold to Floyd. The material facts in this case are not in dispute.
In 1998, Beard sold a grain dryer to Floyd. Beard was incorporated in Indiana and was in the business of manufacturing and selling grain dryers. Floyd was a limited liability company organized in Iowa and was in the business of buying and selling corn and soybeans for its customers.
In 2002, Beard sold its assets and trade names to CTB, an Indiana corporation with its principal place of business in Indiana. Pursuant to the sale agreement, CTB assumed certain operating liabilities but did not assume any "product liability claims or lawsuits relating to products manufactured or sold by [Beard] prior to the closing." In addition, Beard's owners agreed to work for CTB for one year after the sale and thereafter agreed not to compete against CTB. Beard's owners did not become directors or officers of CTB nor did they obtain any ownership interest in CTB. After the sale, CTB continued to produce and market grain dryers under the same trade names and in the same Indiana factory Beard had used. Beard then wound up its business, published a notice of its dissolution in March 2002, and subsequently dissolved.
In 2009, the grain dryer that Beard sold to Floyd caught fire. The fire caused extensive damage to Floyd's property.
In 2011, Floyd sued both Beard and CTB. Floyd alleged the grain dryer caused the fire and pleaded claims of failure to warn, design defect, manufacturing defect, and breach of implied warranty. Floyd then voluntarily dismissed its claim against Beard pursuant to Indiana Code section 23-1-45-7 (2011), barring all claims against a dissolved corporation unless the claim is commenced within two years after the required notice of dissolution is published.
CTB filed a motion for summary judgment asserting that under Iowa law a corporation purchasing the assets of another corporation does not assume liability for the transferring corporation's debts and liabilities unless one of four exceptions ...