PARKS v. WOODBRIDGE GOLF CLUB et al

Filing 30

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE R. BARCLAY SURRICK ON 3/24/17. 3/27/17 ENTERED AND COPIES EMAILED TO COUNSE AND COPY TO LEGAL.(jaa, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MEGAN PARKS
v.
WOODBRIDGE GOLF CLUB, INC.,
ET AL.

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CIVIL ACTION
NO. 11-0562

MEMORANDUM
SURRICK, J.

MARCH 24 , 2017

Presently before the Court is Plaintiff’s Motion for Reconsideration of the Court’s July
22, 2016 Order Dismissing Claims Against Defendants Filippini, Zettlemoyer, and Graff. (ECF
No. 26.) For the following reasons, Plaintiff’s Motion will be denied.
I.

BACKGROUND 1
Plaintiff Megan Parks filed a complaint against her former employer, Woodbridge Golf

Club, Inc.; her former supervisor, Thor Shaffer; and Woodbridge’s three corporate officers:
Helen Filippini, Carl Zettlemoyer, and Marlowe Graff. Plaintiff alleged that when she was
employed from April 2008 through November 2008 and from May 2009 through July 25, 2009,
she was subjected to a hostile work environment. (July 22 Mem. 1-2.) Plaintiff claims that
Shaffer groped her, repeatedly attempted to restrain her, and discussed with her a series of lewd
topics, including soliciting sexual favors and making inappropriate remarks about her body. Id.
Plaintiff also alleges that Filippini, Zettlemoyer, and Graff were responsible for the hostile work
environment and discriminatory employment practices at the golf club. (Id. at 2.) Plaintiff
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A more detailed factual and procedural background can be found in the Court’s July 22,
2016 Memorandum granting in part and denying in part Defendants’ motion for partial summary
judgment. (July 22 Mem., ECF No. 23.)

asserted the following claims against all Defendants: gender discrimination and hostile work
environment under Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000e-2, (Count I);
violations under the Pennsylvania Human Relations Act, 43 Pa. Stat. Ann. § 951 et seq., (Count
II); intentional infliction of emotional distress (Count III); assault and battery (Count IV); and
false imprisonment (Count V).
On July 22, 2016, we granted summary judgment in favor of Defendants Filippini,
Zettlemoyer, and Graff. (July 22 Mem.; July 22 Order, ECF No. 24.) We concluded that
Plaintiff had failed to present any evidence justifying piercing the corporate veil to hold these
shareholders/corporate officers liable. (July 22 Mem. 10-13.) On August 10, 2016, Plaintiff
filed this Motion to Reconsider the July 22, 2016 Order. (Pl.’s Mot., ECF No. 26.) On August
22, 2016, Defendants Filippini, Zettlemoyer, and Graff responded to the Motion. (Defs.’ Resp.,
ECF No. 28.)
II.

LEGAL STANDARD
A party is entitled to have a court reconsider a judgment in the following circumstances:

“(1) an intervening change in the controlling law; (2) the availability of new evidence that was
not available when the court granted the motion for summary judgment; or (3) the need to correct
a clear error of law or fact or to prevent manifest injustice.” Max’s Seafood Cafe by Lou-Ann,
Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (citing N. River Ins. Co. v. CIGNA
Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995)); see also Interdigital Comm., Corp. v. Fed.
Ins. Co., 403 F. Supp. 2d 391, 392 (E.D. Pa. 2005). Motions to reconsider will only be granted
for “compelling reasons . . . not for addressing arguments that a party should have raised
earlier.” United States v. Dupree, 617 F.3d 724, 732 (3d Cir. 2010) (internal quotation marks
omitted). “A motion to reconsider judgment is not a means to reargue matters already argued

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and disposed of or as an attempt to relitigate a point of disagreement between the Court and the
litigant.” Gavaghan v. Said, No. 12-3689, 2013 WL 3367267, at *1 (E.D. Pa. July 3,
2013) (internal quotation marks omitted and citation omitted); see also Mash v. Twp. of
Haverford Dep’t of Codes Enforcement, No. 06-4479, 2007 WL 2692333, at *3 (E.D. Pa. Sept.
11, 2007) (“It is improper on a motion for reconsideration to ask the court to rethink what it has
already thought through-rightly or wrongly.”) (citations omitted). “Because of the courts’
interest in the finality of judgments, motions for reconsideration should be granted sparingly.”
Tomasso v. Boeing Co., No. 03-4220, 2007 WL 2458557, at *2 (E.D. Pa. Aug. 24, 2007)
(citation omitted). 2
III.

DISCUSSION
Plaintiff requests that the Court reconsider its July 22, 2016 Order on the basis of alleged

new evidence. In support of this request, Plaintiff submits an August 2, 2016 letter that was sent
to her counsel by Defendants’ counsel. The letter states:
Please be advised that Woodbridge Golf Club, Inc. has no assets and has been
effectively dissolved. The bank previously initiated foreclosure on all assets of
the corporation and the property and personalty were sold. We are asking that
you withdraw the action based upon the Court’s order dismissing the other
parties. If we continue to participate in any trial, we will seek all attorneys’ fees
since this matter is for all intents and purposes non-justiciable. 3

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Plaintiff does not specify whether she brings her Motion to Reconsider under Rule
59(e) or 60(b) of the Federal Rules of Civil Procedure. However, “[t]he character of a motion is
determined by its function . . . .” United States v. Contents of Accounts Numbers at Merrill
Lynch, Pierce, Fenner & Smith, Inc., 971 F.2d 974, 987 (3d Cir. 1992) (citations omitted).
Given that Plaintiff’s Motion is based on new evidence, and “Rule 59(e) does not permit a party
to present additional evidence as a basis for relief,” id., we will evaluate Plaintiff’s Motion under
Rule 60(b).
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Research through Westlaw reveals that the property was sold in October 2014.
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(Aug. 2, 2016 Ltr., Pl.’s Mot. Ex. D.) Defendants assert that the letter was sent to Plaintiff as a
mere courtesy to advise Plaintiff that continued proceedings against the corporate Defendant
would be futile. (Defs.’ Resp. 7.)
Plaintiff argues that this letter constitutes new evidence, which was previously
unavailable during the time of discovery. Plaintiff argues that this new evidence supports
piercing the corporate veil so that her claims against the individual Defendants—Filippini,
Zettlemoyer, and Graff—should survive summary judgment. In their Brief in support of their
Motion for Partial Summary Judgment, Defendants argued, inter alia, that Plaintiff had failed to
plead facts or a cause of action that would justify piercing the corporate veil to impose personal
liability on the corporate officers, Filippini, Zettlemoyer, and Graff. Plaintiff responded that she
“is not attempting to pierce ‘the corporate veil.’” (Pl.’s SJ Resp. ¶ 3, ECF No. 20.)
In any event, in the July 22 Memorandum, notwithstanding Plaintiff’s failure to put forth
any evidence to justify piercing the corporate veil, we discussed the law in the Third Circuit
concerning the piercing of corporate veils as follows:
“A duly organized business corporation enjoys an identity separate and
apart from its stockholders, directors, and officers.” Gottlieb v. Sandia Amer.
Corp., 452 F.2d 510, 514 (3d Cir. 1971). As such, individuals do not bear
personal liability for the malfeasance or torts of a corporation. See Pearson v.
Component Tech. Corp., 247 F.3d 471, 484 (3d Cir. 2001). “In the absence of
extraordinary circumstances, a court will not disregard the corporate fiction [to]
hold a stockholder liable for the torts of the corporation.” Zubik v. Zubik, 384
F.2d 267, 273 n.14 (3d Cir. 1967). Piercing the corporate veil “is an equitable
remedy whereby a court disregards the existence of the corporation to make the
corporation’s individual principals and their personal assets liable for the debts of
the corporation.” Trustees of Nat’l Elevator Indus. Pension, Health Benefit and
Educ. Funds v. Lutyk, 332 F.3d 188, 192 (3d Cir. 2003). Courts generally apply
this remedy in order to “prevent fraud, illegality, or injustice, or when recognition
of the corporate entity would defeat public policy or shield someone from liability
for a crime.” Pearson, 247 F.3d at 484-85 (3d Cir. 2001).
The Third Circuit has not created a rigid test that courts should use when
determining whether the corporate veil should be pierced. Lutyk, 332 F.3d at 194.
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Factors that are to be considered in determining whether piercing is appropriate
are “gross undercapitalization, failure to observe corporate formalities,
nonpayment of dividends, insolvency of debtor corporation, siphoning of funds
from the debtor corporation by the dominant stockholder, nonfunctioning of
officers and directors, absence of corporate records, and whether the corporation
is merely a facade for the operations of the dominant stockholder.” Pearson, 247
F.3d at 484-85. The party seeking to pierce the corporate veil is required to “state
facts showing a reason” to do so. Shenango Inc. v. Am. Coal Sales Co., No. 06149, 2007 WL 2310869, at *4 (W.D. Pa. Aug. 9, 2007). “[S]imply alleging . . .
ownership and control over the corporation[] is irrelevant and immaterial.” Id.
(citations omitted).
(July 22 Mem. 10-11.)
Plaintiff now contends that the August 2 letter reveals that Woodbridge was “insolvent
and possibly undercapitalized” (Pl.’s Mot. 8), which justifies piercing the corporate veil.
Defendants respond that Plaintiff’s Motion is nothing more than an attempt to relitigate a claim
already rejected by the Court, after realizing that any judgment against Woodbridge would be
uncollectible. Defendants further contend that the August 2 letter does not constitute new
evidence because it does not show that Woodbridge was insolvent or undercapitalized.
The August 2 letter fails to demonstrate that Woodbridge was undercapitalized.
Undercapitalization occurs when a corporation lacks the capital needed to carry out its normal
business function and meet attendant risks. See generally William Meade Fletcher, Fletcher
Cyclopedia of the Law of Private Corporations § 41.33 (2002). 4 A “corporation that was
adequately capitalized when formed, but which subsequently suffers financial reverses is not
undercapitalized.” Trustees of Nat. Elevator Indus. Pension, Health Benefit & Educ. Funds v.
Lutyk, 332 F.3d 188, 196-97 (3d Cir. 2003) (quoting Fletcher, supra, § 41.33). The August 2
letter establishes only that Woodbridge may have been unable to pay its debts, which prompted
4

Fletcher’s encyclopedia on corporate law is often cited by the Third Circuit and is a
reputable source. See, e.g., In re Ressler, 597 F. App’x 131, 135 n.5 (3d Cir. 2015); Johnson v.
SmithKline Beecham Corp., 724 F.3d 337, 343 (3d Cir. 2013); Pharmacia Corp. v. Motor
Carrier Servs. Corp., 309 F. App’x 666, 672 (3d Cir. 2009).
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foreclosure proceedings. The letter does not reveal any evidence to suggest that Woodbridge
was inadequately funded. Determining whether a corporation is undercapitalized is “highly
factual and may vary substantially with the industry, company, size of the debt, account methods
employed, and like factors.” Id. (citation omitted). Evidence of a failure to pay debts alone is
not evidence of gross undercapitalization. See id. at 196-97 (finding that the district court erred
when it concluded that the corporation was grossly undercapitalized by relying solely on its
insolvency and the ratio of capital stocks to shareholder loans); see also Local Union No. 98,
Int’l Bhd. of Elec. Workers v. Garney Morris, Inc., No. 03-5272, 2004 WL 1151722, at *3 (E.D.
Pa. May 24, 2004) (finding that there was no evidence of undercapitalization where the plaintiff
pointed only to the defendant corporation’s possible insolvency).
In addition, Plaintiff’s contention that the August 2 letter reveals Woodbridge’s
insolvency is highly speculative. Insolvency refers to the inability to pay debts as they mature.
Moody v. Sec. Pac. Bus. Credit, Inc., 971 F.2d 1056, 1064 (3d Cir. 1992) (citing Larrimer v.
Feeney, 192 A.2d 351, 353 (Pa. 1963)). The August 2 letter states that Woodbridge underwent
foreclosure, not that it was insolvent during the course of Plaintiff’s litigation. In any event,
even if we were to assume that Woodbridge was insolvent, which ultimately led to the
foreclosure, this alone is not sufficient to pierce the corporate veil. See Lutyk, 332 F.3d at 195
(stating that “insolvency, without more, is not a factor which can justify piercing the corporate
veil”). Veil-piercing is only appropriate to “prevent fraud, illegality, or injustice, or when
recognition of the corporate entity would defeat public policy or shield someone from liability
for a crime.” Pearson, 247 F.3d at 484 (quoting Zubik, 384 F.2d at 273); see also Am. Bell Inc.
v. Fed’n of Tel. Workers of Pa., 736 F.2d 879, 886 (3d Cir. 1984) (noting that courts may only
“pierce the veil in specific, unusual circumstances”). Plaintiffs have offered no facts—and the

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August 2 letter reveals none—to demonstrate that Woodbridge or its corporate directors engaged
in fraud or illegal conduct, or otherwise disregarded recognition of the corporate form. 5
Plaintiff had every opportunity to seek discovery and make arguments in support of a
corporate veil-piercing theory during the course of this litigation. The Amended Complaint
includes no allegations related to piercing the corporate veil. Indeed, as noted above, in her
response to Defendants’ motion for partial summary judgment, Plaintiff specifically represents
that she is “not attempting to pierce the corporate veil.” (Pl.’s SJ Resp. ¶ 3.) Motions for
reconsideration are not tools for asserting new theories of liability. See Wallace v. Doe, 512 F.
App’x 141, 144 (3d Cir. 2013) (affirming denial of motion to reconsider where plaintiff
“attempted to introduce new theories of liability, all of which were available to him before he
filed this motion”); Dempsey v. Bucknell Univ., No. 11-1679, 2015 WL 999101, at *3 (M.D. Pa.
Mar. 6, 2015) (“To the extent that Plaintiff is now attempting to argue new theories of liability
under his fraud and breach of contract counts, a motion for reconsideration is not the appropriate
medium to do so.”).

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Plaintiff’s argument would also fail under Pennsylvania law, where “there is a strong
presumption . . . against piercing the corporate veil.” Lumax Indus., Inc. v. Aultman, 669 A.2d
893, 895 (Pa. 1995). Pennsylvania cases reveal that gross undercapitalization or insolvency must
be one of several factors present to pierce the veil. See, e.g., Accurso v. Infra-Red Servs., Inc.,
169 F. Supp. 3d 612, 617 (E.D. Pa. 2016) (applying Pennsylvania law and finding that the
corporate veil could be pierced where corporate formalities were not observed, meetings were
not held, bylaws were not generated, minutes were not kept, dividends were not paid, and capital
contributions were not made); Lomas v. Kravitz, 130 A.3d 107, 128 (Pa. Super. Ct. 2015)
(finding that the trial court correctly pierced the veil where it was shown that the corporation was
undercapitalized, corporate formalities were not adhered to, there was extensive intermingling of
funds, and the corporation was used to perpetuate a fraud); Com., Dep’t of Envtl. Res. v. Peggs
Run Coal Co., 423 A.2d 765, 768-69 (Pa. Commw. Ct. 1980) (finding that the plaintiff
sufficiently pled a cause of action to pierce the veil where it was alleged that the defendant
corporation failed to adhere to corporate formalities, there was substantial intertwining of
personal and corporate affairs, and undercapitalization was present).
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IV.

CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Reconsideration of the Court’s July 22,

2016 Order Dismissing Claims Against Defendants Filippini, Zettlemoyer, and Graff will be
denied.
An appropriate Order follows.

BY THE COURT:

_________________________
R. BARCLAY SURRICK, J.

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