Robbins v. Physicians for Women's Health, LLC
Executing a covenant not to sue a predecessor corporation does not prevent the imposition of liability upon a successor corporation as a matter of law. Lisa Robbins' child died shortly after birth. She brought suit, individually and as administratrix of the estate of her son, against the obstetrician, Jonathan Levine, certified nurse midwife, Donna Burke-Howes, their employer, Shoreline Obstetrics and Gynecology, P.C. and the Lawrence and Memorial Hospital. The plaintiff also brought suit against the corporation which purchased Shoreline, the successor defendants, Physicians for Women's Health, LLC and Women's Health USA, Inc. The trial court denied the successor defendants' initial motion for summary judgment but granted their second motion after the plaintiff reached a settlement agreement, executed two covenants not to sue and withdrew her claims against Levine, Burke-Howes and Shoreline. The plaintiff appealed claiming that her execution of a covenant not to sue Shoreline did not prevent her from seeking recovery from the defendants under a theory of successor liability. The majority of the Appellate Court panel reversed the judgment concluding that the trial court incorrectly concluded that a covenant not to sue a corporate tortfeasor forecloses the imposition of successor liability, as a matter of law, on the subsequent purchaser of that company's assets. The majority agreed with the defendant that a case premised on the mere continuation or continuity of enterprise theories of successor liability may not be maintained when the predecessor corporation constitutes a viable source of recovery. However, the undisputed evidence in the record did not establish that the plaintiff failed to meet this requirement as a matter of law. The record indicated that both Levine and Burke-Howes were insured against medical malpractice for up to $1 million and that these limits were tendered in the settlement. The record did not reveal undisputed evidence demonstrating the amount of damages suffered by the plaintiff. Further, the covenant not to sue constituted a bilateral contract in which the plaintiff agreed not to pursue her claims against Shoreline. In contrast to a release, however, the covenant did not discharge Shoreline's liability for underlying causes of action. Given the retention of rights, the majority concluded that the covenant did not foreclose the imposition of successor liability against the defendants as a matter of law. Judge Bear dissented.