Opinion
Civil Action No. 99-3754 Section "K"(3).
October 20, 2000.
ORDER AND REASONS
Before the Court is the motion of ERC Industries, Inc. d/b/a Wood Pressure Control ("ERC") and Wood Group Light Industrial Turbines, Inc. for summary judgment against plaintiff Jeffrey Joyner ("Joyner") (Doc. #91). The Court finds that the motion has merit for the reasons that follow.
Background
Plaintiff Joyner was employed by Cooper Cameron Corporation as a field service technician. His duties included servicing wellheads both offshore and on land. This action arises out of an incident on or about March 22, 1999 in which Joyner alleges that he injured his back while installing a tubing spool head on an offshore wellhead serviced from a Hall-Houston fixed platform. The tubing spool head (part no. 001837-SUB) and tubing hanger (part no. 008022-HH) that Joyner was working with at the time of his injury were sold to Hall Houston in June 1995 by Premium Valve Services, L.L.C. ("Premium") (Defense Exhibits I 1A).
On March 23, 1998, almost three years after having sold the tubing spool and tubing hanger at issue here, Premium Valve entered into an Asset Purchase Agreement ("APA") with ERC Industries, a company that also sells and services wellhead equipment. ERC did not merge with Premium Valve. Rather, ERC purchased certain assets from Premium Valve's facility in Harvey, Louisiana. Those assets consisted of furniture, fixtures, machinery, equipment, computers, software, miscellaneous items, and inventory as of the date of sale (Defense Exhibit 1).
On August 13, 1999 Joyner filed suit against his employer and several different entities for alleged negligence in repairing or refurbishing the tubing spool head upon which he was working at the time of his injury. The action was brought in the 25th Judicial District Court for the Parish of Plaquemines and timely removed to this Court on December 15, 1999. On June 20, 2000 this Court dismissed Joyner's employer on motion for summary judgment.
Although it is undisputed that Premium Valve sold the tubing spool head and tubing hanger almost three years prior to the asset sale to ERC, plaintiff claims that ERC and Wood Group Light Industrial Turbines, Inc. should be liable under the doctrine of successor liability. Plaintiffs argument is based on the confidential nature of the Asset Purchase Agreement, the logic being that ERC's inability to produce the agreement is evidence that the APA was something more than a limited asset purchase. As such, plaintiff claims that ERC is a successor corporation to Premium and thus should be cast with Premium's liabilities. Plaintiff was unable to inspect the Asset Purchase Agreement during discovery because the contract was confidential and could not be revealed without the consent of both ERC and Premium Valve. As the two remain separate entities, ERC was unable to waive Premium's contractual right to maintain the confidentiality of the agreement. However, the Court reviewed the aforementioned document in camera, and found that as a matter of undisputed fact, the agreement was limited to movables at the Harvey, Louisiana facility (and expressly excluded assets at another facility) and did not include a contractual assumption of liabilities or a merger of organizations. The Court has also found that the APA makes no reference to Wood Group Light Industrial Turbines.
Defendant argues that there are no genuine issues of fact before this Court, and that therefore judgment as a matter of law is appropriate. It is undisputed that ERC did not assemble, distribute, maintain, work on, or sell the relevant tubing spool head (part no. 001837-SUB) or tubing hanger (part no. 008022-HH). It is also undisputed that Wood Group Light Industrial Turbines is in the business of servicing turbines, not tubing spool heads. Likewise, there is no issue as to the separate identities of ERC and Premium Valve (Defense Exhibits 1 and 6). Furthermore, after examining the APA in camera, the Court finds that there remains no question of fact as to the limited nature of the Asset Purchase Agreement. With these facts in mind, we now turn to the applicable legal standards.
Standard for Motion for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions; answers to interogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56 (c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651, 655-56 (5th Cir. 1996) (citing Skotak v. Tenneco Resins. Inc., 953 F.2d 909, 912-13 (5th Cir. 1992) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53 (1986))). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial."Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356 (1986); Tubacex, Inc. v. MN Risan, 45 F.3d 951, 954 (5th Cir. 1995).
Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356-57 (1986). Finally, the Court notes that the substantive law determines materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986).
The Court now turns to the merits.
Doctrine of Successor Liability
In Louisiana, "a newly organized corporation is liable for the debts of the old one . . . where it is shown that the succession was the result of a transaction entered into in fraud of the creditors of the old corporation, or that the circumstances attending creation of the new . . . were of such a character as to warrant a finding that the new, is merely a continuation of the old corporation." Hollowell v. Orleans Regional Hosp., 217 F.3d 390-91 (5th Cir. 2000) (citing Wolff v. Shreveport Gas. Elec., Light Power Co., 70 So.2d 789, 794 (La. 1916); Indus. Equip Sales Serv. Co. v. Sec. Plumbing Inc., 666 So.2d 1165, 1166-67 (La.App. 5 Cir. 1995)). Plaintiff is unable to present a fact issue as to the existence of "new" or "old" corporations because there was no merger here. La. R.S. 12:115(B) instructs that "[t]he separate existence of the constituent business . . . shall cease . . . except that of the surviving business . . . in the case of a merger." La. R.S. 12:115(B). Here, Premium Valve remains an active business entity with a registered agent for service of process in Louisiana (Defense Exhibit 6). Plaintiffs contentions to the contrary have no merit. Plaintiff offers no genuine issue of fact that a merger or consolidation between Wood Group and Premium Valve ever occurred. As there were two separate business entities at all times, and plaintiff has offered no evidence to show that one was the successor corporation to the other, there can be no successor liability under the "new organization" theory. See e.g., Equip Sales Serv. Co. v. Sec. Plumbing Inc., 666 So.2d 1165, 1167 (La.App. 5 Cir. 1995).
As to the primary issue before this court, liability in connection with an asset transfer,
[W]hen a corporation sells all of its assets to another, the latter is not responsible for the seller's debts or liabilities, except where (1) the purchaser expressly or impliedly agrees to assume the obligations; (2) the purchaser is merely a continuation of the selling corporation; or (3) the transaction is entered into to escape liabilityAllstate Insurance Co. v. Wal-Mart, 2000 WL 388844 at *3 (E.D. La. 2000) (quoting Golden State Bottling Co. v. National Labor Relations Board 414 U.S. 168, 182 n. 5, 94 S.Ct. 414, 424 n. 5 (1973)); See generally Glenn Morris Wendell Homes, 8 Louisiana Civil Law Treatise § 37.02, pp. 280-81 (West 1999) (stating that Louisiana courts recognize rule of nonliability in an asset sale with certain exceptions).
ERC contends that it is entitled to summary judgment because it did not manufacture the equipment at issue and it is not liable under successor liability theory. Plaintiff fails to offer a genuine issue of fact as to any of the three recognized exceptions. The Court, through its in camera review of the Asset Purchase Agreement, has found that the APA expressly insulates ERC from Premium's liabilities. Therefore there is no liability under the first exception. See Simpson v. Derussy, 1990 WL 357272 at *2 (E.D. La. 1990). As to the second, Premium Valve remains a separate, unrelated entity to E.R.C (Defense Exhibit 1). Plaintiff has provided no evidence of common shareholders, directors, officers or employees between ERC and Premium. See Joseph v. Apache Stainless, 1999 WL 1049830 at *4 (E.D. La. 1999); Murray v. B R Machine. et al., 1995 WL 133346 (ED. La. 1995). Nor has it presented proof of prior business relationships or continuity of the identity of the business in the eyes of the public. Id. Moreover, the assets at the Harvey facility were purchased for cash rather than stock and therefore Premium Valve did not acquire any ownership interest in ERC. See Simpson v. Derussy, 1990 WL 357272 at *2 (ED. La. 1990). Finally, there is no evidence or contention that the asset sale was designed to escape liability to third persons. ERC purchased a limited universe of assets from Premium and the agreement specifically provided that Premium would retain all liabilities. As to plaintiffs injury, it is impossible that the APA could have been designed to avoid liability to Joyner as the APA was perfected more than a year prior to the injury. See Joseph v. Apache Stainless, 1999 WL 1049830 at *4 (E.D. La. 1999). The undisputed facts provide the Court with no reason to depart from the general rule, that an asset purchase, by its terms, does not encompass liabilities.
Additionally, as to Wood Group Light Industrial Turbines, Inc., plaintiff has not raised an issue disputing defendants contentions that Wood Group Light Industrial Turbines was not involved in any way with the equipment at issue in this case, or the APA. Accordingly,
IT IS ORDERED that the Motion for Summary Judgment filed by ERC Industries d/b/a Wood Pressure Control and Wood Group Light Industrial Turbines, Inc. is GRANTED.