Opinion
No. CV 05 4006895
July 7, 2009
MEMORANDUM OF DECISION
On December 14, 2004, the plaintiff, Americo Beriguette, commenced this action by service of process against the two original defendants, Innovative Waste Systems, Inc. (Innovative) and Anthony Czepiga. On February 2, 2007, the court granted the plaintiff's motion to cite in USA Hauling Recycling, Inc. (USA Hauling), All Waste, Inc. (All Waste) and Carmine Esposito as defendants. Before this court are three motions for summary judgment filed by the defendants, USA Hauling, All Waste and Esposito, the accompanying memoranda of law as to each motion, as well as the plaintiff's objections and memoranda of law as to each respective defendant.
On June 7, 2007, the plaintiff filed the operative amended complaint. In the amended complaint, the plaintiff alleges the following: he was employed as a truck driver and helper with Innovative, a waste removal and recycling company, under the supervision of Czepiga. While at work on December 18, 2002, the plaintiff injured his left knee. Subsequently, the plaintiff filed a workers' compensation claim. The plaintiff's treating physician recommended that he work a lighter schedule, with only light lifting, and receive physical therapy. The complaint alleges that shortly thereafter, Czepiga began to engage in retaliatory conduct against the plaintiff for filing the claim. This conduct included forcing the plaintiff to work very long hours, belittling him for his injuries, harassing him on the job and terminating him on or about April 28, 2004. Subsequently, the plaintiff returned to work on May 4, 2004, seeking to get his job back, and was told by both Czepiga and Esposito that he was fired.
The amended complaint contains three counts, with the first count alleging retaliation by an employer in response to an employee's workers' compensation claim, in violation of General Statutes § 31-290a as against Innovative, All Waste, USA Hauling and Esposito and the second count alleging negligent infliction of emotional distress as to Innovative, All Waste and USA Hauling. The third count alleges negligent infliction of emotional distress by the defendant, Anthony Czepiga, who has filed on June 15, 2009 a claim for stay as a result of his voluntary filing for bankruptcy under Chapter 7 of the United States Bankruptcy Code.
In the prayer for relief, the plaintiff seeks compensatory damages, punitive damages, reinstatement, attorneys fees and costs.
I STANDARD FOR SUMMARY JUDGMENT CT Page 11541
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted 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. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007)."The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . Once the moving party has met its burden . . . the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
II MOTION FOR SUMMARY JUDGMENT AS TO USA HAULING AND ALL WASTE
With respect to the motions for summary judgment as to USA Hauling and All Waste, the following additional undisputed facts and procedural history are relevant. On August 31, 2004, Innovative and USA Hauling and All Waste entered into a purchase and sale agreement providing that Innovative would sell its "company and assets" to USA Hauling and All Waste. (Amended Complaint, ¶ 6.) The plaintiff alleged in its amended complaint that by purchasing Innovative, USA Hauling and All Waste assumed, under the doctrine of successor liability, all of Innovative's liabilities. The plaintiff argues that this doctrine applies to USA Hauling and All Waste because: (1) they assumed the liabilities expressly in the agreement, (2) they are a "mere continuation" of Innovative, or (3) because they "hold themselves out as being the same operation, perform the same services to the same business customers, and offer the same products as [Innovative], without any interruption of services, thereby receiving the benefit of past goodwill." (Amended Complaint, ¶ 8.)
The third ground for the application of the doctrine of successor liability in the amended complaint refers to the "product line continuation" exception to the general rule against successor liability that has been recognized by the Superior Court. See Chamlink Corp. v. Merritt Extruder, Superior Court, judicial district of New Haven, Docket No. CV 04 4000037 (April 11, 2005, Devlin, J.).
USA Hauling and All Waste filed a joint answer on August 21, 2007, in which they denied liability for any acts of Innovative or Czepiga. The answer included a special defense in which USA Hauling and All Waste asserted that the purchase and sale agreement contains a clause absolving them of responsibility for any liability arising out of Innovative's business activities occurring before August 31, 2004. Thus, they argue, they cannot be liable for Innovative's actions leading up to, and including, the alleged wrongful termination of the plaintiff on or about April 28, 2004.
On November 25, 2008, USA Hauling and All Waste filed separate but nearly identical motions for summary judgment with memoranda of law. In the memoranda, they argue that there is no genuine issue of material fact and that, as a matter of law, the doctrine of successor liability does not render them liable because (1) they did not explicitly agree to assume liability, (2) neither of them is a mere continuation of Innovative and (3) because the "product line continuation" exception to the general rule against successor liability is inapplicable. On March 13, 2009, the plaintiff filed a joint objection to both motions for summary judgment. Notwithstanding his allegations to the contrary, the plaintiff did not brief his apparent claims that either the defendants agreed to assume liability or that the product line continuation exception applied here. As such, this court considers those claims abandoned and addresses only the question of whether the defendants are a mere continuation of Innovative.
In his amended complaint, the plaintiff alleges that USA Hauling and All Waste explicitly assumed the liability of Innovative in the purchase and sale agreement. In their memoranda of law and documents in support of their motions for summary judgment, however, USA Hauling and All Waste assert that in the purchase and sale agreement, they explicitly disclaim liability for any past activities conducted by Innovative. As noted above, the plaintiff fails to brief this issue and as such, this court considers that claim abandoned.
Instead, the plaintiff alleges that USA Hauling and All Waste are liable because they are mere continuations of Innovative. USA Hauling and All Waste argue that this exception does not apply because they merely purchased Innovative's assets, hired some of its former employees and provided the same services to some of its former customers — actions that do not amount to sufficient continuity between their businesses and Innovative's business. The plaintiff, however, contends that these similarities are enough to create a genuine issue of material fact.
As a general rule, "[t]he mere transfer of the assets of one corporation to another corporation or individual . . . does not make the latter liable for the debts or liabilities of the first corporation . . ." (Internal quotation marks omitted.) Chamlink Corp. v. Merritt Extruder Corp., 96 Conn.App. 183, 187, 899 A.2d 90 (2006). An exception to this principle exists "whenever the successor corporation more closely resembles a reorganized version of its predecessor than an entirely new corporate entity." (Internal quotation marks omitted.) Kelly v. Kercher Machine Works, Inc., 910 F.Sup. 30, 36 (D.N.H. 1995). It is not the purpose of the exception to expose to liability any company that merely purchases assets from another company. See Collins v. Olin Corp., 434 F.Sup.2d 97, 104 (D.Conn. 2006) (implying that the mere continuation exception should not be applied in a way that "likely would expose most assets purchasers to post-acquisition successor liability"). Instead, the mere continuation exception seeks to determine whether "the purchasing corporation [is] merely a `new hat' for the seller." (Internal quotation marks omitted.) Ladjevardian v. Laidlaw-Coggeshall, Inc., 431 F.Sup. 834, 839 (S.D.N.Y. 1977).
In Chamlink Corp. v. Merritt Extruder Corp., supra, 96 Conn.App. 188, the court articulated two tests to determine whether one corporation is a mere continuation of another. The first test is the "common law" theory, where "successor liability attaches when the plaintiff demonstrates the existence of a single corporation after the transfer of assets, with an identity of stock, stockholders, and directors between the successor and predecessor corporations." (Internal quotation marks omitted.) Id. The plaintiff, in his brief, concedes that this theory is inapplicable to this case. Instead, he claims that the defendants are liable based on the "continuity of enterprise" theory. Under that theory, there is liability "if the successor maintains the same business, with the same employees doing the same jobs, under the same supervisors, working conditions, and production processes, and produces the same products for the same customers." (Internal quotation marks omitted.) Id.
Given the above legal framework, this court finds the following material facts are not in dispute. On August 31, 2004, USA Hauling and All Waste each purchased the assets of Innovative. Subsequent to this purchase, each company hired some of Innovative's former employees but declined to hire others including Czepiga. Neither All Waste nor USA Hauling used a facility formerly used by Innovative or any of Innovative's trade names. Although USA Hauling and All Waste purchased customer accounts from Innovative and divided the accounts between themselves, each retained its own billing practices and garbage collection routes in servicing the accounts.
USA Hauling hired ten former employees while All Waste hired eight former employees.
Although the plaintiff in his brief consistently describes the activities of USA Hauling and All Waste as if they were inseparable, he conceded in argument and does not otherwise challenge the fact that USA Hauling and All Waste maintain their own separate, pre-existing businesses. Nor do the same employees do the same jobs under the same supervisors — those employees that were actually hired were hired by one of two separate companies. USA Hauling and All Waste do provide the same services to some of the same customers as Innovative did, but they run their businesses out of separate locations using their pre-existing business practices. The plaintiff has not demonstrated how USA Hauling and All Waste, which are separate companies, have together preserved Innovative's business instead of integrating Innovative's assets into their own business operations. The evidence demonstrates nothing more than a company selling its assets — including equipment, employee contracts and customer contracts — to other companies and then going out of business, which is a situation in which the law declines to impose successor liability. See Collins v. Olin Corp., supra, 434 F.Sup.2d 104. Given these undisputed, material facts, the plaintiff has failed to show that USA Hauling or All Waste are mere continuations of Innovative. As such, as a matter of law, this court finds that the defendants are not liable as successor companies.
III MOTION FOR SUMMARY JUDGMENT AS TO CARMINE ESPOSITO
The defendant, Carmine Esposito, also moves for summary judgment, claiming that there are no material issues of fact in dispute and that as such, the plaintiff cannot prevail as a matter of law. In this case, the plaintiff has alleged that the defendant violated General Statutes § 31-290 which provides that "[n]o employer who is subject to the provisions of this chapter shall discharge, or cause to be discharged or in any manner discriminate against any employee because the employee has filed a claim for workers' compensation or otherwise exercised the rights afforded to him pursuant to the provisions of this chapter."
"The plaintiff bears the initial burden of proving by the preponderance of the evidence a prima facie case of discrimination . . . In order to meet this burden, the plaintiff must present evidence that gives rise to an inference of unlawful discrimination . . . If the plaintiff meets this initial burden, the burden then shifts to the defendant to rebut the presumption of discrimination by producing evidence of a legitimate, nondiscriminatory reason for its actions . . . If the defendant carries this burden of production, the presumption raised by the prima facie case is rebutted, and the factual inquiry proceeds to a new level of specificity . . . The plaintiff then must satisfy [his] burden of persuading the factfinder that [he] was the victim of discrimination either directly by persuading the court [or jury] that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer's proffered explanation is unworthy of credence." (Citations omitted; internal quotation marks omitted.) Erisoty v. Merrow Machine Co., 34 Conn.App. 708, 710-11, 708 A.2d 643, cert. denied, 231 Conn. 908, 648 A.2d 151 (1994).
"In order to establish a prima facie case under General Statutes § 31-290a, the plaintiffs bear the initial burden of demonstrating discrimination by a preponderance of the evidence. The plaintiffs must present some evidence from which a trier of fact could infer that the employer discharged or discriminated against the employees because they had exercised their rights under the Workers' Compensation Act." (Citations omitted.) Chiaia v. Pepperidge Farm, Inc., 24 Conn.App. 362, 366, 588 A.2d 652, cert. denied, 219 Conn. 907, 593 A.2d 133 (1991). More specifically, "the plaintiff must first present sufficient evidence . . . that is, evidence sufficient to permit a rational trier of fact to find [1] that [he] engaged in protected [activity] . . . [2] that the employer was aware of this activity, [3] that the employer took adverse action against the plaintiff and [4] that a causal connection exists between the protected activity and the adverse action, i.e., that a retaliatory motive played a part in the adverse employment action." (Internal quotation marks omitted.) Mele v. Hartford, 270 Conn. 751, 776, 855 A.2d 196 (2004).
In his motion for summary judgment, the defendant claims that the plaintiff has failed to produce any evidence that would support the allegation that the defendant violated General Statutes § 31-290a in his individual capacity. Specifically, the defendant asserts that the defendant played no role in actually terminating the plaintiff and as such, the plaintiff cannot establish that the employer took adverse action against the plaintiff. The evidence, while not overwhelming and somewhat ambiguous, must nevertheless be viewed in the light most favorable to the non-moving party. The deposition testimony indicates that Esposito did press the plaintiff over some period of time to ask his doctor to release him to work full duty and that eventually Czepiga told him he was fired. The plaintiff, having some difficulty believing he was fired by Esposito, attempted to call Esposito over the next two days, leaving him messages that were not returned. The plaintiff further testified that "I never thought that that was going to come from him . . . that [Esposito] going to fire me — he was going to have [Czepiga] fire me like that." After being questioned, "[b]ut [Czepiga] already fired you, correct?" the plaintiff responded, "[y]es. So [Esposito] said, `Well whatever [Czepiga] did.'" When questioned further as to "[w]hat did [Esposito] say?" the plaintiff responded, "[t]hat I was fired. He said whatever [Czepiga] did, that what he had said." Based on this deposition testimony and inferences which might reasonably be made, a jury could credit the plaintiff's apparent belief as true that Esposito, as principal and owner of the company, had the final say as to his employment and was thus a party to the decision to terminate and/or in a position to confirm or vacate his termination. Under these circumstances, this court finds that there is a material issue of fact as to whether Esposito took adverse action against the plaintiff.
As such, this court denies the motion for summary judgment filed by the defendant, Esposito.
This court notes that the plaintiff's objection to the motion for summary judgment and memorandum of law in support focus on claims that the defendant is personally liable pursuant to General Statutes § 33-1178 and in the alternative that the plaintiff may pierce the corporate veil and find the defendant personally liable on that basis. This court rejects both claims to the extent that plaintiff failed to raise these claims in his complaint and failed to allege any facts that would support either claim. Balboni v. Ensign-Bickford Industries, Inc., Superior Court, judicial district of Hartford, Docket No. CV 07 5009832 (April 11, 2008, McWeeny, J.).
CONCLUSION
This court grants the motions for summary judgment filed by the defendants, All Waste and USA Hauling, and denies the motion for summary judgment filed by the defendant, Carmine Esposito.