Opinion
Civil Action No. 98-1923 Section "F".
April 13, 2000.
April 14, 2000.
ORDER AND REASONS
Before the Court are two motions: (1) the plaintiffs' motion to strike defendant's untimely motion for summary judgment; and (2) motion for summary judgment by Power Sentry. For the reasons that follow, the plaintiffs' motion is DENIED and the motion by Power Sentry is GRANTED.
Background
Scott and Shondi Mulkey state that they bought a power strip made by One Ten Corporation from a Wal-Mart in Oklahoma in 1990. On July 2, 1997, a fire, allegedly caused by the One Ten power strip, damaged the Mulkeys' Louisiana residence. Allstate paid the Mulkeys $154,583.72 under their insurance policy.
On July 1, 1998, Allstate and the Mulkeys filed suit against Wal-Mart, One Ten Corporation, and Power Sentry. Stating that it was subrogated under Louisiana laws to the rights, interests, and causes of action of the Mulkeys, Allstate sued under the Louisiana redhibition laws and, alternatively, under the Louisiana Products Liability Act. The Mulkeys also seek damages for emotional distress resulting from the fire.
I. Plaintiff's Motion to Strike
The plaintiffs seek to strike Power Sentry's motion for summary judgment as untimely. However, the Advisory Committee Notes for the 1963 amendment to Federal Rule of Civil Procedure 56 state that" [t]he very mission of the summary judgment procedure is . . . to assess the proof in order to see whether there is a genuine need for trial." Thus, the Court will consider the motion for summary judgment by Power Sentry, and the plaintiffs' motion to strike is denied.
II. Motion for Summary Judgment
Federal Rule of Civil procedure 56 instructs that summary judgment is proper if the record discloses no genuine issue as to any material fact such that the moving party is entitled to judgment as a matter of law. No genuine issue of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio., 475 U.S. 574, 586 (1986). A genuine issue of fact exists only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party."Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The Court emphasizes that the mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. See id. Therefore, "[i]f the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50 (citations omitted). Summary judgment is also proper if the party opposing the motion fails to establish an essential element of his case. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In this regard, the non-moving party must do more than simply deny the allegations raised by the moving party. See Donaghey v. Ocean Drilling Exploration Co., 974 F.2d 646. 649 (5th Cir. 1992). Rather, he must come forward with competent evidence, such as affidavits or depositions, to buttress his claims. Id. Hearsay evidence and unsworn documents do not qualify as competent opposing evidence.Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir. 1987). Finally, in evaluating the summary judgment motion, the Court must read the facts in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255.
A. Choice of Law
Louisiana Civil Code Article 3537 states that:
Except otherwise provided in this Title, an issue of conventional obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue. That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the transaction, including the place of negotiation, formation, and performance of the contract, the location of the object of the contract, and the place of domicile, habitual residence, or business of the parties; (2) the nature, type, and purpose of the contract; and (3) the policies referred to in Article 3515, as well as the policies of facilitating the orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other.
Article 3545 of the Louisiana Civil Code provides that:
Delictual and quasi-delictual liability for injury caused by a product, as well as damages, whether compensatory, special, or punitive, are governed by the law of this state: (1) when the injury was sustained in this state by a person domiciled or residing in this state; or (2) when the product was manufactured, produced, or acquired in this state and caused the injury either in this state or in another state to a person domiciled in this state.
The preceding paragraph does not apply if neither the product that caused the injury nor any of the defendant's products of the same type were made available in this state through ordinary commercial channels.
Under Article 3537 of the Louisiana Civil Code, Power Sentry contends that because One Ten's assets were in Minnesota, and Power Sentry negotiated and performed the contract to buy the assets in Minnesota, Minnesota law should apply. The plaintiffs counter that under Article 3545 of the Louisiana Civil Code, Louisiana law applies because the fire occurred in Louisiana and the Mulkeys are residents of the state.
If a plaintiff sues in redhibition and under the Louisiana Products Liability Act to recover for damage to the product itself, Article 3537 applies. R-Square Investments, Inc. Et Al. v. Teledyne Industries, Inc., Et Al., 1997 WL 436245 (E.D.La.). Article 3545 does not apply because Louisiana's policy to protect its injured consumers is not implicated if the damage is only to the product itself. Id. In contrast to R-Square, however, Allstate is seeking to recover for damages to the home of Louisiana residents, allegedly caused by the product. Thus, in the present case, Louisiana's policy to protect its consumers is implicated and Article 3545 applies. Under Article 3545, the Court finds that Louisiana law governs.
Even under Article 3575, Louisiana law governs. In arguing that Minnesota law applies, Power Sentry misdirects its attention to the contract to purchase One Ten's assets. But the plaintiffs have no contacts with Minnesota. The majority of the pertinent contacts were with Louisiana. The cause of the lawsuit, the injury, occurred in Louisiana to Louisiana residents, allegedly by a product available in the state through ordinary commercial channels. Furthermore, Louisiana's policy of consumer protection behind its products liability act and its redhibition law would be "most seriously impaired if its laws were not applied" to this case. Therefore, the Court finds that Louisiana law governs.
B. Successor Liability
[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 liability.Golden State Bottling Co. v. National Labor Relations Board, 414 U.S. 168, 182 n. 5, 94 S.Ct. 414, 424 n. 5 (1973)). In determining whether the purchaser is a continuation of the selling corporation, courts consider whether:
the successor corporation retains the predecessor corporation's employees; represents that it is a continuation of the predecessor enterprise; retains the supervisory personnel of the predecessor; retains the same production facilities in the same physical location; produces the same product; retains the predecessor's name; and continues the predecessor's general business operations.Royal Insurance Co. v. Smatco Industries, Inc., 201 B.R. 755, 758 (E.D.La. 1996)
Relying on the testimony of Timothy Walsh, the plaintiffs contend that Bob Lovett was involved with both One Ten and its successor, Power Sentry, and both companies manufactured surge protection devices. Power Sentry counters that Timothy Walsh's testimony is inadmissible as hearsay. In any case, Robert Lovett states in his affidavit that he was involved with both One Ten and Power Sentry. Specifically, he states that he worked at One Ten, although he never had an ownership interest. Subsequently, he worked at and became part owner of Power Sentry.
Relying on Royal Insurance, the plaintiffs urge that "the connection of the same person within both the predecessor and successor corporations . . . is sufficient to find successor liability." However, in Royal Insurance, the court found that numerous factors favored the finding of successor liability.Royal Insurance Co. v. Smatco Industries, Inc., 201 B.R. 755, 758-9 (E.D.La. 1996). Specifically, the court held that; the same person was actively involved with both companies, one third to one fourth of the employees of the successor corporation worked for the predecessor corporation, the successor corporation used the predecessor's name, and finally, the successor corporation occupied the same plant and had the same address of the predecessor corporation before it went bankrupt. Id. The Court cannot find successor liability based solely on Lovett's involvement with One Ten and Power Sentry and no authority has been relied on to support that position.
For the foregoing reasons, the plaintiffs' motion to strike defendant's untimely motion for summary judgment is DENIED and the motion for summary judgment by Power Sentry is GRANTED.
New Orleans, Louisiana, April 12, 2000.