Davis v. The Terminix International Co., LLP (Maryland U.S.D.C.)

Filed: January 27, 2010
Opinion by Judge Frederick Motz

Held:

1. Purchaser of all of the assets of a business is not liable for liabilities arising prior to the date of purchase unless it expressly assumes those liabilities.

2. The Maryland Bulk Transfers Act, Title 6 of the Maryland Commercial Law Article, does not subject bulk transferees to claims for personal injury or property damage caused by the negligence of the transferor.

Facts and Analysis: The Plaintiffs’ asserted claims for property damage and personal injury arising from a pest control application at their home on August 11, 2006. The application was performed by Safeguard Pest control, not by The Terminix International Co., LLP. Thereafter, Terminix purchased Safeguard’s assets. The Asset Purchase Agreement obligated Terminix to continue to perform services at the accounts that were acquired from Safeguard. However, Terminix did not assume Safeguard’s liabilities in the Asset Purchase Agreement. Indeed, the Asset Purchase Agreement expressly excluded Terminix’s assumption of any Safeguard liability arising prior to the Agreement’s closing date. Thus, the Plaintiffs have no claim against Terminix under the Agreement.

The Plaintiffs also raised a claim under the Bulk Transfers Act. Citing Fico, Inc. v. Ghingher, 287 Md. 150 (1980), and Chromacolour Labs, Inc. v. Snider Bros. Prop. Mgmt., 66 Md. App. 320 (1986). The Court held that the Bulk Transfers Act was designed to protect a merchant’s unsecured creditors from his disposition of inventory outside the ordinary course of business, not to subject bulk transferees to claims for personal injury or property damage caused by the negligence of the transferor.

The opinion is available in PDF.