CSX Transporation, Inc. v. Taylor

Filing 63

Opinion and Order. Plaintiff's Motion for Summary Judgment (Related doc # 56 ) is denied. Judge Christopher A. Boyko on 6/12/2015. (H,CM)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

CSX TRANSPORTATION, INC.,
Plaintiff,
vs.
GLENN R. TAYLOR, III, etc., et al.,
Defendants.

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CASE NO. 4:12CV2111
JUDGE CHRISTOPHER A. BOYKO
OPINION AND ORDER

CHRISTOPHER A. BOYKO, J.:
This matter comes before the Court upon the Motion (ECF DKT #56) of Plaintiff,
CSX Transportation, Inc. (“CSX”), for Summary Judgment. For the following reasons, the
Motion is denied.
I. BACKGROUND
In late 2002, Defendant, Glenn R. Taylor, III (“Taylor”), incorporated a transportation
broker company called Intermodal USA, Inc. (“Intermodal”). Taylor was the sole owner and
President of Intermodal. The attorney and statutory agent for Intermodal was David A. Detec.
In July of 2008, CSX entered into a Trucking Credit Agreement with Intermodal for motor

carrier transportation services. Taylor executed the contract in his capacity as President.
CSX transported hundreds of loads of freight pursuant to this Agreement between 2008 and
2011. Between January and February 2011, CSX transported more than ninety loads of
freight for Intermodal, but Intermodal failed to pay the corresponding freight charges, totaling
$117,263.00.
CSX filed suit in this Court for payment of the outstanding freight charges. (Case No.
4:11CV1016, U.S. District Judge Benita Pearson). Although service was perfected,
Intermodal failed to answer and default judgment was entered on January 27, 2012, in the
amount of $117,263.00, plus prejudgment interest. Thereafter, CSX discovered that the Ohio
Secretary of State had cancelled Intermodal’s Articles of Incorporation in January of 2007 for
failure “to file necessary corporate franchise tax reports.”
CSX instituted the above-captioned lawsuit on August 16, 2012, seeking to hold
Taylor personally liable for the existing judgment against Intermodal. On October 9, 2012,
Taylor answered and filed a Third-Party Complaint against Macy’s, Inc., alleging that CSX’s
claim is for goods shipped on behalf of Macy’s. At the same time, Taylor paid Intermodal’s
franchise tax obligation, reinstating the corporate Articles of Incorporation. Two months
later, the Court allowed another of Taylor’s companies, GRT Transportation, Inc., to
intervene as Defendant and Third-Party Plaintiff, in order to allege that GRT was actually the
entity doing business with both CSX and Macy’s during the relevant time period.
CSX now moves for summary judgment, arguing that Taylor is personally liable for
its judgment against Intermodal.

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II. LAW AND ANALYSIS
Standard of Review
Summary judgment shall be granted only if “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” See Fed.R.Civ.P. 56(a). The burden is on the moving party to conclusively show no
genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986);
Lansing Dairy. Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir.1994). The moving party must
either point to “particular parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations, admissions,
interrogatory answers, or other materials” or show “that the materials cited do not establish
the absence or presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” See Fed.R.Civ.P. 56(c)(1)(A), (B). A court
considering a motion for summary judgment must view the facts and all inferences in the light
most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). Once the movant presents evidence to meet its burden, the
nonmoving party may not rest on its pleadings, but must come forward with some significant
probative evidence to support its claim. Celotex, 477 U.S. at 324; Lansing Dairy, 39 F.3d at
1347.
This Court does not have the responsibility to search the record sua sponte for genuine
issues of material fact. Betkerur v. Aultman Hospital Ass 'n., 78 F.3d 1079, 1087 (6th Cir.
1996); Guarino v. Brookfield Township Trustees, 980 F.2d 399, 404-06 (6th Cir.1992). The
burden falls upon the nonmoving party to “designate specific facts or evidence in dispute,”

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986); and if the nonmoving party
fails to make the necessary showing on an element upon which it has the burden of proof, the
moving party is entitled to summary judgment. Celotex, 477 U.S. at 323. Whether summary
judgment is appropriate depends upon “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party must
prevail as a matter of law.” Amway Distributors Benefits Ass 'n v. Northfield Ins. Co., 323
F.3d 386, 390 (6th Cir. 2003) (quoting Anderson, 477 U.S. at 251-52).
Relevant Corporation Law
R.C. § 1701.88(A) provides in part:
When a corporation is dissolved voluntarily, when the articles of a corporation
have been canceled, or when the period of existence of the corporation
specified in its articles has expired, the corporation shall cease to carry on
business and shall do only such acts as are required to wind up its affairs, or to
obtain reinstatement of the articles. . .

R.C. § 1701.922(B)(1) recites:
The exercise of or an attempt to exercise any rights, privileges, or franchises
on behalf of the corporation or association by the officer, agent, or employee
of the corporation or association has the same force and effect that the exercise
of or an attempt to exercise the right, privilege, or franchise would have had if
the corporation’s or association’s articles had not been canceled, if both of the
following apply:
(a) The exercise of or an attempt to exercise the right, privilege, or franchise
was within the scope of the corporation’s or association’s articles of
incorporation that existed prior to cancellation;
(b) The officer, agent, or employee had no knowledge that the corporation’s or
association’s articles of incorporation had been canceled. (Emphasis added).

When the articles of a corporation are cancelled, “the authority of the corporation to

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do business ceases and after such termination officers who carry on new business do so as
individuals, lose the protection of the Corporation Act, and are personally responsible for
such obligations as they incur.” Boards of Trustees of the Ohio Laborers’ Fringe Benefit
Programs v. Jenkins, No. 2:05-CV-54, 2007 WL 1026740, at *3 (S.D.Ohio Mar.30, 2007),
citing Chatman v. Day, 7 Ohio App.3d 281, 282 (Montgomery County 1982).
The evidence before the Court demonstrates that Intermodal’s Articles of
Incorporation were cancelled as of January 4, 2007. (ECF DKT #56-3). The Ohio Secretary
of State sent notice to the corporation’s statutory agent, David A. Detec, on that date. Id.
Intermodal, through Taylor as President, entered into a Trucking Credit Agreement with CSX
on or about July 14, 2008; and CSX provided freight transportation services through early
2011.
The Trucking Credit Agreement was not an action consistent with winding up
corporate affairs. As an officer acting on behalf of Intermodal, Taylor carried on new
business. Thus, he lost the benefit of the corporate shield and became personally responsible.
Jenkins, supra; R.C. § 1701.88(A).
When Intermodal’s Articles of Incorporation were reinstated on October 9, 2012, any
exercise of corporate rights and authority during the cancellation period had “the same force
and effect as if the articles had never been cancelled,” if such exercise was within the scope of
the corporation’s articles and if the officer had no knowledge that the articles had been
cancelled. R.C. § 1701.922(B)(1).
CSX submits a copy of the Ohio Secretary of State’s January 4, 2007 notification to
Intermodal’s statutory agent, David A. Detec, that the corporation’s Articles were cancelled

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for failure to report and pay franchise taxes. (ECF DKT #56-3). When the Secretary of
State’s letter was shown to Taylor at his deposition, he did not dispute that the document
recited that the Articles of Incorporation were cancelled and that it appeared to be forwarded
to Detec. (ECF DKT #56-2 at 15).
However, Taylor counters with this exchange from his deposition:
Q. And I don’t want to get into any communications between you and your
attorney, but do you recall ever receiving a copy of this document?
A. No, I do not.
(ECF DKT #56-2 at 15).
Also, Taylor offers the Affidavit (ECF DKT #59-1) of David A. Detec, which says in
pertinent part:
5. Upon review of the file I maintained as Statutory Agent for Intermodal
USA, I find no evidence indicating that I ever received the Notice from the
Ohio Secretary of the State of the cancelling of Intermodal USA’s Articles of
Incorporation.
******
8. Additionally, it was my policy and procedure to immediately froward such
documents received by me as statutory agent for Intermodal USA onto Glenn
Taylor. Upon review of both the Intermodal USA file and our firm’s computer
document retention system, I find no evidence of any cover letter from me
forwarding the subject Notice to Glenn Taylor for Intermodal USA.
******

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10. Based on my review of my file, it is my belief that I never received a copy
of the January 4, 2007 Notice from the Secretary of State cancelling
Intermodal’s Articles of Incorporation.
CSX contends that Taylor “feigned” not learning of the Articles’ cancellation from
Detec. (ECF DKT #56-1 at 9). CSX also characterizes Taylor’s statements of ignorance
about his corporation’s status as “inconceivable” (ECF DKT #56-1 at 10) and “implausible”
(ECF DKT #62 at 4). CSX likewise criticizes Detec’s Affidavit, calling it a “carefullyworded” attempt to create an issue of fact. (ECF DKT #62 at 4).
Taylor’s personal liability for the outstanding freight charges owed to CSX hinges
entirely on whether Taylor can take advantage of the benefit of the reinstatement statute, R.C.
§ 1701.922(B)(1). The deposition testimony and the statutory agent/attorney’s affidavit are
key pieces of evidence bearing directly on Taylor’s knowledge of the cancellation of
Intermodal’s Articles of Incorporation. CSX insists that it strains credulity to accept that
Taylor had no knowledge that the Articles were cancelled. Nonetheless, the Court cannot,
and will not, “determine whose version is more credible on summary judgment.” Lott v. ICS
Merrill, 483 F.App’x 214, 220 (2012), citing Anderson, 477 U.S. at 255.
Credibility determinations, the weighing of the evidence, and the drawing of
legitimate inferences from the facts are jury functions, not those of a judge,
whether he is ruling on a motion for summary judgment or for a directed
verdict. The evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor. Anderson, id.
III. CONCLUSION
Viewing all inferences in a light most favorable to Defendant, Glenn R. Taylor, III,
and finding that the evidence presents sufficient disagreement requiring submission to the

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fact-finder, the Court, therefore, denies the Motion (ECF DKT #56) of Plaintiff, CSX
Transportation, Inc., for Summary Judgment.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: June 12, 2015

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