United States District Court, W.D. North Carolina, Charlotte Division
C. Mullen United States District Judge
matter is before the Court upon Defendant Team Company's
Motion to Dismiss for Lack of Personal Jurisdiction and
Plaintiff's Motion to Strike or, in the Alternative, for
Leave to File Sur-reply. These motions are fully briefed and
ripe for disposition.
Synergy Insurance Company (“Synergy”) is a
Charlotte, North Carolina insurance company that provides
workers compensation insurance to employers. Plaintiff filed
this lawsuit against its customer Defendant Unique Personnel
Consultants, Inc. (“UPC”), an Illinois
corporation that offers staffing services in Illinois and
Indiana. Plaintiff provided UPC with workers compensation
insurance coverage and administration for two years.
Plaintiff alleged that UPC stopped paying Synergy premiums
and stopped reimbursing Synergy for the deductible amounts
advanced on its behalf. Plaintiff is seeking recovery of
amounts due under the policies. UPC moved to dismiss for lack
of personal jurisdiction and this Court denied that motion on
December 13, 2016.
18, 2017, Plaintiff amended its Complaint to add Team Company
as a Defendant. Plaintiff's First Amended Complaint
alleges that Team Company is the successor to UPC and thus
stands in the shoes of UPC for purposes of personal
jurisdiction analysis. See City of Richmond, Va. v.
Madison Mgmt. Grp., Inc., 918 F.2d 438, 454-55 (4th Cir.
1990). Team Company has moved to dismiss for lack of personal
jurisdiction, asserting that it is not the successor
corporation to UPC and is not otherwise subject to personal
jurisdiction in this Court.
great weight of persuasive authority permits imputation of a
predecessor's actions upon its successor
whenever forum law would hold the successor liable
for its predecessor's actions.” Id. at 454
(internal quotation marks omitted) (emphasis in original). In
City of Richmond, the successor company argued that
although the predecessor company had committed sufficient
acts within Virginia to support personal jurisdiction over
the predecessor, the court could not assert jurisdiction over
the successor merely because it purchased the
predecessor's assets. See id. The Fourth Circuit
disagreed and concluded that the district court properly
asserted personal jurisdiction over the defendant under a
theory of successor liability. The court reasoned that
“[a]ny other ruling would allow corporations to
immunize themselves by formalistically changing their
titles.” Id. at 455; see also Leonard v.
Bed, Bath & Beyond, Inc., No. 5:15-CV-00284-F, 2016
WL 158587, at *3 (E.D. N.C. Jan. 8, 2016).
(“Nonetheless, the court notes that it may exercise
personal jurisdiction over a successor corporation to the
extent that such jurisdiction exists over its predecessor
corporation.”) As the Court has already determined that
it has personal jurisdiction over UPC, the only issue is
whether in Team Company is a successor to UPC and thus stands
in UPC's shoes for purposes for personal jurisdiction.
as here, the court rules on a 12(b)(2) motion relying on the
complaint, briefs, and affidavits alone, without conducting
an evidentiary hearing, the burden is on the plaintiff to
make a prima facie showing that personal
jurisdiction exists. Mylan Laboratories, Inc. v. Akzo,
N.V., 2 F.3d 56, 59-60 (4th Cir. 1993). As for the
facts, “the court must construe all relevant pleading
allegations in the light most favorable to the plaintiff,
assume credibility, and draw the most favorable inferences
for the existence of jurisdiction.” Combs v.
Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
in both North Carolina and Illinois have recognized numerous
circumstances in which an entity that succeeds to the assets
of a company also succeeds to its liabilities. Thus,
successor liability exists “(1) where there is an
express or implied agreement by the purchasing corporation to
assume the debt or liability; (2) where the transfer amounts
to a de facto merger of the two corporations; (3)
where the transfer of assets was done for the purpose of
defrauding the corporation's creditors; or (4) where the
purchasing corporation is a ‘mere continuation' of
the selling corporation in that the purchasing corporation
has some of the same shareholders, directors, and
officers.” G.P. Publ'ns, Inc. v. Quebecor
Printing, 481 S.E.2d 674, 679 ( N.C. Ct. App. 1997);
see also Steel Co. v. Morgan Marshall Indus., Inc.,
662 N.E.2d 595, 599 (Ill.App.Ct. 1996) (describing the same
four exceptions under Illinois law). Here, Synergy's
First Amended Complaint alleges facts that establish
successor liability under the second, third, and fourth
circumstances described by the courts in G.P.
Publications and Steel Company.
Company has submitted an affidavit of Dixie Ladd, its
majority shareholder and sole director, refuting some of the
allegations that Team Company is the successor to UPC and
stating that Team Company purchased the assets of UPC
pursuant to an asset sale conducted by the IRS. Team Company
also submitted a supplemental affidavit of Ms. Ladd with its
Reply brief indicating that it has an ongoing dispute with
the Illinois Department of Employment Services with regard to
whether Team Company bears any successor liability for the
obligations of UPC. Plaintiff, in a separate motion, seeks to
strike the supplemental affidavit along with its 39 pages of
supporting documents as untimely because it was not submitted
with Team Company's original brief, in violation of Rule
6(c)(2) of the Federal Rules of Civil Procedure. In the
alternative, Plaintiff requests leave to file a sur-reply to
address issues that Team Company raised for the first time in
its Reply and supplemental affidavit. While the supplemental
affidavit was clearly untimely, the Court, in its discretion,
will allow it but will also allow Plaintiff the opportunity
to file its sur-reply.
as here, “the existence of jurisdiction turns on
disputed factual questions, the court may resolve the
challenge on the basis of a separate evidentiary hearing, or
may defer ruling pending receipt at trial of evidence
relevant to the jurisdictional question.” Combs v.
Baker, 886 F.2d 673, 676 (4th Cir. 1989). However, when
the jurisdictional facts are so intertwined with issues going
to the merits of the dispute, the preferred course is to
require only a prima facie showing of personal
jurisdiction and to defer a full hearing on the facts until
trial. See Adams v. Bain, 697 F.2d 1213, 1220 (4th
Cir. 1982) (reversing district court's denial of subject
matter jurisdiction after evidentiary hearing and remanding
for resolution “only after a full trial”);
see also 2 James Wm. Moore, et al.
Moore's Federal Practice ¶ 12.31 (3d ed.
Court finds that Plaintiff's First Amended Complaint
makes out a prima facie showing of personal
jurisdiction over Team Company as the successor corporation
to UPC. In its responsive brief (Doc. No. 41), Synergy
cataloged the numerous, specific factual allegations in its
Amended Complaint that established successor liability
between UPC and Team Company. (Id. at 7-8.) Synergy
pointed out, for example, that UPC and Team Company shared
the same headquarters, satellite branches, website content
and phone numbers; that the transaction by which UPC sold all
of its assets to Team Company-headed by a UPC insider- was
accomplished within just weeks of UPC s having been served
with Synergy's Amended Complaint; and that Team Company
paid inadequate consideration of the purchase of UPC s
considerable assets. (Id.) Taken as a whole, these
extensive factual allegations amply make out a prima
facie showing of personal jurisdiction. Of course, Team
Company is free to raise this issue again at trial.
THEREFORE ORDERED that Defendant's Motion to Dismiss for
lack of personal jurisdiction is hereby DENIED at this time;
FURTHER ORDERED that Plaintiff s Motion to Strike is hereby
DENIED, but ...