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Hutton v. Hydra-Tech, Inc.

United States District Court, M.D. North Carolina

March 15, 2018

DANA LEAH PUCKETT HUTTON, as Executrix of the Estate of ROBERT JAMES HUTTON, JR., Plaintiff,


          LORETTA C. BIGGS, District Judge.

         Dana Leah Puckett Hutton (“Mrs. Hutton”), as Executrix of the estate of her husband, Robert James Hutton, Jr. (“Mr. Hutton”), initiated this action against several defendants, including Altec, Inc., Altec LLC, Altec Industries, Inc., and Altec NUECO, LLC (collectively, the “Altec Defendants”) alleging claims arising from the death of Mr. Hutton. (ECF No. 18.) The Altec Defendants are the only remaining defendants in this action. Before the Court are the Altec Defendants' Renewed Motion for Summary Judgment, [1] (ECF No. 204), and Motion to File a Document Under Seal (“Motion to Seal”), (ECF No. 206). For the reasons stated below, the Court grants each motion.

         I. BACKGROUND

         Hydra-Tech, Inc. (“Hydra-Tech”), “a global designer, manufacturer and distributor of aerial devices and digger derricks, ” (ECF No. 204-4 at 2), manufactured a Lift-All[2] Model LSS-60/70-1S aerial bucket lift (“Bucket Lift”) which was sold and delivered to The Davey Tree Expert Company (“Davey Tree”) in March 2007. (ECF No. 204-1 at 11; ECF No. 204-2 at 10, 37.) On March 13, 2013, Mr. Hutton, a tree-trimmer employed by Davey Tree, was operating the truck-mounted Bucket Lift when the lower boom lift cylinder (“Cylinder”) attached to the lifting mechanism failed, causing Mr. Hutton to fall approximately 35 feet to his death. (ECF No. 18 ¶¶ 14, 25; ECF No. 211-1 at 2-5; ECF No. 211-3 at 3.) The malfunctioning Cylinder was manufactured by Hyco International, Inc. n/k/a Weber-Hydraulik, Inc., Hyco Canada ULC, n/k/a Weber Hydraulik Hyco Canada and/or Hyco Alabama, LLC (collectively, “Hyco”). (ECF No. 211-3 at 5; ECF No. 18 ¶ 17.)

         On December 20, 2008-approximately five years prior to Mr. Hutton's fatal, work-related accident-Hydra-Tech and its sole shareholder, Jerry Hudson, entered into an Asset Purchase Agreement (“Purchase Agreement” or “Agreement”) with Altec, LLC for the sale of certain Hydra-Tech assets.[3] (ECF No. 204-4; see ECF No. 204-8 at 12-13.) Altec, LLC is among a number of subsidiary companies (including Altec Industries, Inc. and Altec NUECO, LLC) of Altec, Inc., a privately held parent company. (See ECF No. 204-1 ¶ 3; ECF No. 211-2 at 4.) These “subsidiaries provide equipment and services to the electric utility, telecommunications and construction industries.” (ECF No. 204-1 ¶ 3.)

         Under the Purchase Agreement, Altec, LLC's asset purchase did not include the assumption of liability related to the Hydra-Tech assets acquired unless such liability was expressly assumed by Altec, LLC.[4] (ECF No. 204-4 §§ 2.1, 2.4(a); see ECF No. 204-2 at 16.) Further, under the terms of the Agreement, Hydra-Tech retained liability for products that were manufactured or sold prior to 11:59 PM EST on December 31, 2008, the “Effective Time” of the acquisition. (See ECF No. 204-4 § 2.4(b)); ECF No. 204-5 at 39; ECF No. 204-2 at 36-37. See also ECF No. 204-4 at 35.) Hydra-Tech's retention of liability included, but was not limited to, “product liability and warranty claims [related] to products manufactured or sold by [Hydra-Tech] prior to the Effective Time.” (ECF No. 204-5 at 39.) The Agreement also stated that Altec, LLC “shall not be a successor to [Hydra-Tech] for any purpose related to any [l]iability for bodily injury or property damage arising out of or relating to [Hydra-Tech's] products . . . manufactured or sold prior to the Effective Time.” (ECF No. 204-4 § 2.4(c).) In addition, the Agreement required Hydra-Tech to purchase and maintain insurance that, among other things, would cover product liability or warranty claims regarding products manufactured by Hydra-Tech prior to closing. (ECF No. 204-4 §§ 3.16, 9.7; ECF No. 204-2 at 39; ECF No. 204-8 at 8.) Following Hydra-Tech's asset sale to Altec, LLC, Hydra-Tech, which had retained some of its assets, continued in existence from December 31, 2008 (the effective date of the purchase) until filing its Articles of Dissolution in June 2009, (ECF No. 204-9).

         Plaintiff filed the instant lawsuit seeking recovery from the Altec Defendants based on claims of successor liability, negligence, concealment of insurance policy, and violation of North Carolina's Unfair and Deceptive Trade Practices Act (“UDTPA”). (See ECF No. 18 ¶¶ 58-85.) The Altec Defendants have renewed their motion for summary judgment on each of the claims asserted against them by Plaintiff, and they have filed a motion to seal the unredacted copy of the Purchase Agreement.

         The Court will, first, address the Altec Defendants' motion for summary judgment.


         A. Standard of Review

         Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it might affect the outcome of the litigation, and a dispute is “genuine” if the evidence would permit a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The party seeking summary judgment bears the initial burden of “pointing out to the district court . . . that there is an absence of evidence to support the nonmoving party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In opposing a properly supported motion for summary judgment, the nonmoving party cannot rest on “mere allegations or denials, ” Liberty Lobby, 477 U.S. at 248 (internal quotation marks omitted), and “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, the party opposing summary judgment must designate “specific facts” in the record “showing that there is a genuine issue for trial.” Celotex Corp., 477 U.S. at 324 (internal quotation marks omitted). See Fed. R. Civ. P. 56(c)(1)(A) (stating that a party must “cit[e] to particular parts of . . . the record, including depositions, documents, . . . affidavits or declarations, . . . admissions, interrogatory answers, or other materials”). A genuine issue for trial exists only when “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Liberty Lobby, 477 U.S. at 249. “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Id. at 249-50 (citations omitted); see Ennis v. Nat'l Ass'n of Bus. & Educ. Radio, Inc., 53 F.3d 55, 62 (4th Cir. 1995) (finding that “unsupported speculation . . . is not enough to defeat a summary judgment motion”).

         The court must view the evidence and “resolve all factual disputes and any competing, rational inferences in the light most favorable” to the nonmoving party. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (quoting Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)). The role of the court is not “to weigh the evidence and determine the truth of the matter, ” but rather “to determine whether there is a genuine issue for trial.” Liberty Lobby, 477 U.S. at 249. “The summary judgment inquiry thus scrutinizes the plaintiff's case to determine whether the plaintiff has proffered sufficient proof, in the form of admissible evidence, that could carry the burden of proof of [her] claim at trial.” Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993).

         B. Discussion

         1. Successor Liability Claim

         The Altec Defendants argue that Plaintiff's successor-liability claim fails “because Plaintiff cannot satisfy any of the limited exceptions to North Carolina's default rule against successor liability on the part of one corporation that acquires assets from another.” (ECF No. 205 at 13-14.) In response, Plaintiff appears to concede that North Carolina law “may not permit [her] to withstand . . . summary judgment related to [s]uccessor [l]iability.” (ECF No. 211 at 21.) Yet, Plaintiff argues that “given the circumstances of this case and the actions taken by the Altec Defendants, the Court should extend the law to provide Plaintiff with an avenue by which the Altec Defendants can be held responsible as Hydra-Tech's successor.” (Id.)

         As an initial matter, it is well-settled that a federal court sitting in diversity is obligated to “interpret and apply the substantive law of each state.” Food Lion, Inc. v. Capital Cities/ABC, Inc., 194 F.3d 505, 512 (4th Cir. 1999) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). See Brendle v. Gen. Tire & Rubber Co., 505 F.2d 243, 245 (4th Cir. 1974) (explaining that “[a] federal court, sitting in North Carolina in a diversity case, must apply the law as announced by the highest court of that state”); Anderson v. Piedmont Aviation, Inc., 68 F.Supp.2d 682, 688 n.3 (M.D. N.C. 1999) (“Sitting in diversity this court is bound to apply the applicable state law as it exists and cannot create or expand the common law.”). In instances where state law is unclear, such as where a state's highest court “has spoken neither directly nor indirectly on the particular issue before us, ” federal courts must “predict how that court would rule if presented with the issue.” Private Mortg. Inv. Servs., Inc. v. Hotel & Club Assocs., Inc., 296 F.3d 308, 312 (4th Cir. 2002). This Court, therefore, will not “extend the law, ” as Plaintiff requests; rather, the Court will apply existing North Carolina law to each claim asserted by Plaintiff.

         In North Carolina, “[a] corporation which purchases all, or substantially all, of the assets of another corporation is generally not liable for the old corporation's debts or liabilities.” Budd Tire Corp. v. Pierce Tire Co., 370 S.E.2d 267, 269 ( N.C. Ct. App. 1988). North Carolina courts have recognized four exceptions to this general rule: (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.” Id. (citation omitted).

         Here, although Plaintiff alleges, in her Amended Complaint, that the Altec Defendants should be liable under the “mere continuation” exception, (see ECF No. 18 ¶ 60), Plaintiff seems to abandon this theory in her response brief and, instead, argues that the Altec Defendants implicitly agreed to assume the liabilities of Hydra-Tech, (ECF No. 211 at 21-24).

         First, the evidence in the record does not support Plaintiff's allegation, found in her Amended Complaint, that the “mere continuation” exception applies here. Under North Carolina law, “[t]he traditional rule regarding mere continuation is that a corporate successor is the continuation of its predecessor if only one corporation remains after the transfer of assets and there is identity of stockholders and directors between the two corporations.” G.P. Publ'ns, Inc. v. Quebecor Printing-St. Paul, Inc., 481 S.E.2d 674, 680 ( N.C. Ct. App. 1997) (internal quotation marks omitted). The evidence reveals that prior to, and following, the closing of the asset sale, there was no overlapping of stockholders, directors, or officers between Altec, LLC and Hydra-Tech. (ECF No. 204-1 ¶¶ 15, 17-19; ECF No. 204-8 at 15-20.) Hydra-Tech's sole shareholder, Jerry Hudson, testified that, following the asset sale to Altec, LLC, he never held any ownership stake or employment position in Altec, LLC or any of its entities. (ECF No. 204-8 at 15-20.) Also, there is no evidence in the record of any transfer of ownership interest between Hydra-Tech and Altec, LLC, (id.), nor did any corporate officers of Hydra-Tech hold any board positions with any Altec entity. (ECF No. 204-2 at 35.)

         The record further reveals that the transaction between Altec, LLC and Hydra-Tech involved the sale of certain-not all-Hydra-Tech assets. (See ECF No. 204-4 § 2.2; 204-5 at 36-37; ECF No. 204-8 at 13.) Pursuant to the Purchase Agreement, Hydra-Tech retained some of its assets, [5] and following the sale, Hydra-Tech continued in existence until filing its Articles of Dissolution in June 2009, (ECF No. 204-9). Thus, “the evidence demonstrates . . . that two independent corporations continued to exist . . . ...

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