United States District Court, M.D. North Carolina
DANA LEAH PUCKETT HUTTON, as Executrix of the Estate of ROBERT JAMES HUTTON, JR., Plaintiff,
HYDRA-TECH, INC., JERRY L. HUDSON, AMERICAN ASSURANCE CORPORATION, ALTEC, INC., ALTEC, LLC, ALTEC INDUSTRIES, INC., ALTEC NUECO, LLC, HYCO INTERNATIONAL, INC. n/k/a WEBER-HYDRAULIK, INC., HYCO CANADA ULC, n/k/a WEBER HYDRAULIK HYCO CANADA, HYCO ALABAMA, LLC and SUPERIOR AERIAL AND EQUIPMENT REPAIR, INC., Defendants.
MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
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,  (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
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 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.)
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. (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.)
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. (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).
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.
Court will, first, address the Altec Defendants' motion
for summary judgment.
MOTION FOR SUMMARY JUDGMENT
Standard of Review
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).
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”).
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).
Successor Liability Claim
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.”
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
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
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).
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.)
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,
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 . . . ...