Clayton et al v. Air & Liquid Systems Corporation et al

Filing 58

ORDER granting Defendant Saberhagen's 39 Motion for judgment on the pleadings; denying Plaintiffs' request for a Rule 56(d) continuance; denying as moot Plaintiffs' 47 Motion for relief from a deadline. Signed by Judge James L. Robart. (PM)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 WILLIAM R. CLAYTON, et al., Plaintiffs, 11 CASE NO. C18-0748JLR ORDER v. 12 13 AIR & LIQUID SYSTEMS CORPORATION, et al., 14 Defendants. 15 I. INTRODUCTION 16 Before the court are two motions: (1) Defendant Saberhagen Holdings, Inc.’s 17 (“Saberhagen”) motion for judgment on the pleadings or, alternatively, for summary 18 judgment (MJOP (Dkt. # 39)); and (2) Plaintiffs William R. Clayton and Jill D. Clayton’s 19 (collectively, “Plaintiffs”) motion for relief from a deadline (MFR (Dkt. # 47)). The 20 court has considered the motions, the parties’ submissions in support of and in opposition 21 to the motions, the relevant portions of the record, and the applicable law. Being fully 22 ORDER - 1 1 advised,1 the court GRANTS Saberhagen’s motion and DENIES as moot Plaintiffs’ 2 motion for the reasons set forth below. 3 4 II. BACKGROUND Plaintiffs allege that Mr. Clayton developed mesothelioma after exposure to 5 asbestos-containing products during his military service.2 (See SAC (Dkt # 1-1) § III.) 6 Plaintiffs assert that various defendants—including Saberhagen—“minted, manufactured, 7 produced, and/or placed into the stream of commerce” the asbestos-containing products 8 that caused Mr. Clayton’s disease or that Mr. Clayton was exposed to those products on 9 the defendants’ premises. (Id.) 10 Saberhagen, a Washington corporation, dissolved on August 22, 2013.3 (Thorson 11 Decl. (Dkt. # 40) ¶ 2, Ex. A (“Articles”).) Plaintiffs allege that the dissolution is “legally 12 invalid” because Saberhagen “failed to furnish proper notice to known creditors under 13 Washington law.” (SAC § IV.) They also contend that on January 2, 2015, Saberhagen’s 14 former shareholders formed “a new Saberhagen entity”—Saberhagen-Matson LLC 15 (“Saberhagen-Matson”). (MJOP Resp. at 3 (citing 1st Aliment Decl. (Dkt. # 48) ¶ 3, Ex. 16 1 17 No party requests oral argument (see MJOP at 1; MJOP Resp. (Dkt. # 53) at 1; MFR at 1; MFR Resp. (Dkt. # 55) at 1), and the court determines that oral argument would not be helpful to its disposition of the motions, see Local Rules W.D. Wash. LCR 7(b)(4). 18 2 19 20 21 22 Plaintiffs brought this case in King County Superior Court on April 10, 2018. (See Not. of Rem. (Dkt. # 1).) On May 23, 2018, Defendant Vigor Shipyards, Inc. (“Vigor”) removed the case to federal court. (See id.) The court has federal question jurisdiction based on Vigor’s contention that it was acting under an officer of the United States pursuant to 28 U.S.C. § 1442(a)(1). (Id. at 2); 28 U.S.C. § 1442(a)(1). “A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs . . . .” RCW 23B.14.050. 3 ORDER - 2 1 3); see also 2d Aliment Decl. (Dkt. # 54) ¶ 4.) Based on those alleged facts, Plaintiffs 2 contend that despite the dissolution, they may nevertheless still recover against 3 Saberhagen. (See MJOP Resp. at 6.) 4 Plaintiffs assert several theories of tort liability, including: product liability, 5 negligence, premises liability, conspiracy, and strict liability for abnormally dangerous 6 activities. (SAC § V.) They seek general and special damages for pain, suffering, “loss 7 of spousal relationship,” disability, medical expenses, and economic loss. (Id.) 8 9 Saberhagen moves for judgment on the pleadings, or, in the alternative, summary judgment. (See MJOP at 2.) Plaintiffs move for an extension of time to respond to that 10 motion (see MFR), but because they noted their motion for the same day as Saberhagen’s 11 (id. at 1 (noting on July 13, 2018)), Plaintiffs nonetheless responded to Saberhagen’s 12 motion (see MJOP Resp.). The court now considers the motions. 13 14 III. A. ANALYSIS Saberhagen’s Motion 15 1. Legal Standard 16 As a threshold matter, the court decides whether to treat Saberhagen’s motion as 17 one for judgment on the pleadings or for summary judgment. (See MJOP at 8 (stating 18 that Saberhagen “believes the present motion is appropriate for consideration under Rule 19 12(c),” but if the court treats it as a motion for summary judgment, Saberhagen 20 nevertheless prevails); MJOP Resp. at 6, 11 (citing Rule 12(c) and requesting a Rule 21 56(d) continuance to conduct discovery).) “After the pleadings are closed—but early 22 enough not to delay trial—a party may move for judgment on the pleadings.” Fed. R. ORDER - 3 1 Civ. P. 12(c). If the court considers matters outside of the pleadings, the motion becomes 2 one for summary judgment. See Fed. R. Civ. P. 12(d). However, in ruling on a Rule 3 12(c) motion, the court may consider material properly submitted as part of the 4 complaint, documents incorporated into a complaint by reference, and matters subject to 5 judicial notice. See Risos-Camposano v. Nev. Sys. of Higher Educ., 6 No. 3:14-cv-00181-RCJ-VPC, 2014 WL 5503128, at *3 (D. Nev. Oct. 29, 2014). 7 In support of its motion, Saberhagen submits its articles of dissolution, published 8 notice of its dissolution, and several court orders dismissing Saberhagen from similar 9 asbestos-related cases. (Articles; Thorson Decl. ¶ 3, Ex. B (“Notice”); id. ¶¶ 5-12, Exs. 10 D-K.) Plaintiffs do not question the authenticity of those documents (see MJOP Resp.), 11 and so the court may take judicial notice of them, see Fed. R. Evid. 201(b)(2); Crosby v. 12 Wells Fargo Bank, N.A., 42 F. Supp. 3d 1343, 1345 (C.D. Cal. 2014) (citing Knievel v. 13 ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)) (stating that a document was properly 14 subject to judicial notice when no one questioned the authenticity of the document). 15 Thus, the court takes judicial notice of the documents and considers the motion under 16 Rule 12(c). See Fed. R. Evid. 201(b)(2); Heliotrope Gen., Inc. v. Ford Motor Co., 189 17 F.3d 971, 981 n.18 (9th Cir. 1999). 18 A Rule 12(c) motion challenges the sufficiency of the opposing party’s pleadings, 19 and the court applies the standard for a motion under Rule 12(b)(6). Chavez v. United 20 States, 683 F.3d 1102, 1108-09 (9th Cir. 2012); see also Dworkin v. Hustler Magazine, 21 Inc., 867 F.2d 1188, 1192 (9th Cir. 1989) (stating that “[t]he principal difference” 22 between Rule 12(c) and Rule 12(b)(6) motions “is the time of filing”). Judgment on the ORDER - 4 1 pleadings is appropriate when, even if all material facts in the pleading are true, the 2 moving party is entitled to judgment as a matter of law. Hal Roach Studios, Inc. v. 3 Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1989). 4 2. Judgment on the Pleadings 5 Saberhagen argues that Plaintiffs’ claims against it are barred as a matter of law 6 because Plaintiffs sued Saberhagen more than three years after its dissolution. (MJOP at 7 1.) Plaintiffs argue that the court should continue the motion because they seek to prove 8 through discovery that Saberhagen’s dissolution is invalid. (MJOP Resp. at 1-2 9 (invoking Rule 56(d))); see also Fed. R. Civ. P. 56(d)(1) (“If a nonmovant shows by 10 affidavit or declaration that, for specified reasons, it cannot present facts essential to 11 justify its opposition, the court may . . . defer considering the motion . . . .”). 12 A claim survives against a dissolved corporation for three years. See RCW 13 23B.14.340 (stating that for corporate dissolutions “effective on or after June 7, 2006,” an 14 existing claim is not impaired by the dissolution if a plaintiff institutes a proceeding 15 within three years); see also Ballard Square Condo. Owners Ass’n v. Dynasty Constr. 16 Co., 146 P.3d 914, 921 (Wash. 2006); Fed. R. Civ. P. 17(b)(2) (stating that the capacity 17 to sue a corporation is provided “by the law under which it was organized”). Thus, “a 18 dissolved corporation retains its capacity to be sued” only for those three years. See 19 La.-Pac. Corp. v. ASARCO, Inc., 5 F.3d 431, 433 (9th Cir. 1993) (discussing the similar 20 Washington statute that preceded RCW 23B.14.340). If a plaintiff brings a claim against 21 a dissolved corporation after three years, the claim is barred. See Ballard Square, 146 22 P.3d at 923. ORDER - 5 Taking all of Plaintiffs’ allegations as true, the court concludes that Saberhagen is 1 2 entitled to judgment as a matter of law. See Hal Roach Studios, 896 F.2d at 1550. 3 Saberhagen dissolved on August 22, 2013, and Plaintiffs brought suit on April 10, 4 2018—well after the three-year period provided in RCW 23B.14.340.4 (See Articles; 5 Thorson Decl. ¶ 4, Ex. C.) That a number of other courts have also entered judgment in 6 Saberhagen’s favor for the same reason bolsters the court’s conclusion. (See Thorson 7 Decl. ¶¶ 5-12, Exs. D-K.) 8 Despite the foregoing statutory scheme, Plaintiffs contend that Saberhagen’s 9 dissolution is invalid because Saberhagen “failed to furnish proper notice to known 10 creditors” and “intended [to] defraud known or reasonably ascertainable creditors.” (See 11 id. at 2 (quoting SAC § IV); see also id. at 6-7.) Based on those allegations, Plaintiffs set 12 forth three theories that they argue preclude judgment on the pleadings: (1) that equitable 13 remedies—such as corporate disregard and de facto corporation—may allow them to 14 obtain relief from Saberhagen’s corporate officers, (2) that Saberhagen’s failure to notify 15 known claimants may toll the statutory period for bringing suit, and (3) that they may 16 seek the appointment of a receiver “to enable their claims . . . to move forward without 17 burdening shareholders and other corporate officers.” (See MJOP Resp. at 7.) The court 18 finds those arguments lacking, and thus grants judgment on the pleadings. 19 // 20 4 21 22 Plaintiffs argue that applying RCW 23B.14.340 in this manner subverts the Washington legislature’s intent to allow suits against a dissolved corporation. (MJOP Resp. at 8-9.) That argument does not pass muster, however, because the legislature expressly limited the time period during which a plaintiff can sue. See RCW 23B.14.340. ORDER - 6 1 2 a. Equitable Remedies Plaintiffs argue that judgment on the pleadings is inappropriate because they may 3 pursue “equitable remedies” to “obtain relief from Saberhagen through its officers.” 4 (MJOP Resp. at 7.) The argument fails because Plaintiffs provide no authority that the 5 cited equitable remedies apply to a dissolved corporation or even if they apply, liability 6 would be against some entity or individual other than Saberhagen. 7 First, Plaintiffs assert that Saberhagen might be liable under a theory of corporate 8 disregard due to Saberhagen-Matson’s activities. (See MJOP Resp. at 7.) “The corporate 9 entity is disregarded and liability assessed against shareholders in the corporation when 10 the corporation has been intentionally used to violate or evade a duty owed to another.” 11 Morgan v. Burks, 611 P.2d 751, 755 (Wash. 1980). “Abuse of the corporate form may 12 include: (1) the diversion of assets from one corporation to another entity; and (2) the 13 manipulation of assets and liabilities between entities so as to concentrate the assets in 14 one and the liabilities in another.” Plascencia v. McDaniel, No. C08-5453RJB, 2010 WL 15 2465492, at *6 (W.D. Wash. June 14, 2010) (citing Meisel v. M & N Modern Hydraulic 16 Press Co., 645 P.2d 689, 692 (Wash. 1982)). A plaintiff cannot proceed with this theory 17 when the individuals responsible for corporate misconduct are not parties to the suit. 18 Meisel, 645 P.2d at 693 (stating that even if the court assumed corporate misconduct, the 19 two individuals “have been dismissed from the suit without appeal”). 20 Plaintiffs do not explain how corporate disregard provides them a remedy against 21 a dissolved corporation. (See MJOP Resp. at 7.) And the entities against whom such a 22 theory could be asserted—Saberhagen-Matson or its constituents—are not parties to this ORDER - 7 1 case.5 See Meisel, 645 P.2d at 693. So even if Saberhagen’s dissolution has harmed 2 Plaintiffs, that “harm alone does not create corporate misconduct.” Id. 3 Plaintiffs next invoke a theory of de facto corporation. (MJOP Resp. at 7.) Under 4 that theory, “one who knows a corporation is dissolved and continues to act as the 5 corporation could be personally liable under RCW 23B.02.040.” Equipto Div. Aurora 6 Equip. Co. v. Yarmouth, 950 P.2d 451, 456 (Wash. 1998); see also id. (stating that the 7 statute supplanted the common law). But even though someone acting as Saberhagen 8 post-dissolution could be personally liable, Plaintiffs’ remedy is not against Saberhagen. 9 Cf. id. (addressing personal liability). 10 Lastly, Plaintiffs’ briefing implies a theory of successor liability. (See MJOP 11 Resp. at 7-10.) Generally, a corporation purchasing the assets of another corporation 12 does not become liable for the selling corporation’s debts and liabilities. See Columbia 13 State Bank v. Invicta Law Grp., PLLC, 402 P.3d 330, 338 (Wash. Ct. App. 2017). But 14 successor liability may be imposed if: (1) the purchaser expressly or impliedly agrees to 15 assume liability; (2) the purchase is a de facto merger or consolidation; (3) the purchaser 16 is a mere continuation of the seller; or (4) the transfer of assets is for the fraudulent 17 purpose of escaping liability.6 Id.; see also Lefevre v. CBS Corp., No. C13-5058RBL, 18 2013 WL 4804471, at *2-5 (W.D. Wash. Sept. 9, 2013) (discussing successor liability in 19 20 21 5 The court makes no ruling on whether Saberhagen-Matson or its constituents are in fact proper parties to this suit or would be liable. Indeed, the court discusses those entities only because Plaintiffs focus on their conduct. (See MJOP Resp. at 3-5.) 6 22 The fact that the successor entity differs in form from the predecessor entity is irrelevant. See id. (“The particular form of the business entity is not determinative.”). ORDER - 8 1 the context of asbestos litigation). But even if Saberhagen-Matson is liable under this 2 doctrine, successor liability does not support a claim against Saberhagen, the 3 predecessor—and dissolved—corporation. For those reasons, the “equitable remedies” Plaintiffs cite do not prevent judgment 4 5 on the pleadings. 6 b. Known Claimants 7 Plaintiffs also argue that if Saberhagen failed to provide them adequate notice of 8 its dissolution, the limitations period may be tolled. (MJOP Resp. at 7, 9-10.) In so 9 arguing, they rely on University of Alaska v. Thomas Architectural Products, Inc., 907 10 P.2d 448 (Alaska 1995). (See id.) In that case, the Alaska Supreme Court applied 11 Washington law to determine whether a dissolved corporation’s failure to notify known 12 creditors tolled the statutory period for asserting claims. Thomas Architectural, 907 P.2d 13 at 449, 452. The court acknowledged that there was no Washington case on point and 14 relied on law from other jurisdictions in which courts held that “the abatement of claims 15 provision[s are] ineffective with regard to claims by creditors who did not receive 16 required notice.” Id. at 453. Because there was “an unresolved question” about whether 17 the plaintiff was a “known creditor” at the time of dissolution, the court concluded that 18 the Washington provision did not bar the claim against the dissolved corporation. Id. 19 The court noted, however, that “a potential tort claimant is arguably not a known 20 creditor” because “[o]therwise, a corporation would have to contact every person or 21 entity to whom it had sold a product.” Id. 22 // ORDER - 9 1 Not only has no Washington court adopted Thomas Architectural’s reasoning,7 2 Plaintiffs were also not known claimants. Under the Washington Business Corporation 3 Act, a “known claim” is “any claim or liability” that “[h]as matured sufficiently, before 4 or after the effective date of the dissolution, to be legally capable of assertion against the 5 dissolved corporation, whether or not the amount of the claim or liability is known or 6 determinable” and “the dissolved corporation has knowledge of the identity and the 7 mailing address of the holder of the claim or liability and . . . actual knowledge of 8 existing facts.”8 RCW 23B.14.060(3)(a)(i); id. 23B.14.060(3)(b). Even if Saberhagen 9 gave insufficient notice (see MJOP Resp. at 9), Plaintiffs’ claim had not “sufficiently 10 matured” (see SAC § III (alleging Mr. Clayton was diagnosed with mesothelioma in June 11 2016)), and there is no indication that Saberhagen knew Plaintiffs’ “identity,” see RCW 12 23B.14.060(3)(a)(i); id. 23B.14.060(3)(b). To hold otherwise would create the problem 13 Thomas Architectural identified: If potential tort claimants are known claimants, “a 14 corporation would have to contact every person or entity to whom it had sold a product.” 15 Thomas Architectural, 907 P.2d at 453. And here, the problem would balloon even more 16 if Saberhagen had to notify not just purchasers 17 18 19 20 21 7 The only Washington case to cite Thomas Architectural—Smith v. Sea Ventures, Inc., 969 P.2d 1090 (Wash. Ct. App. 1999)—held that “RCW 23B.14.340 does not, and never has, covered post-dissolution claims to corporate assets, based on pre-dissolution contractual rights, where shareholders have taken affirmative steps to appropriate those assets after corporate dissolution.” Id. at 1093. The Washington Court of Appeals cited Thomas Architectural in “consider[ing] several theories upon which such recovery can be based,” but did not adopt not the reasoning in that opinion. Id. at 1093 n.9. 8 22 The statute also addresses a claim arising from a contract, which is not at issue here. See RCW 23B.14.060(3)(a)(ii). ORDER - 10 1 but also users like Mr. Clayton. (See SAC § III (alleging that Mr. Clayton was exposed 2 to asbestos during his military service).) 3 Plaintiffs also argue that Saberhagen’s publication of notice was inadequate. (See 4 MJOP Resp. at 9-10.) But the publication statute states that “[a] dissolved corporation’s 5 failure to publish notice in accordance with this subsection does not affect the 6 validity . . . of its dissolution.” RCW 23B.14.030(3). That is because the statute merely 7 gives a dissolved corporation a way to quickly resolve claims. See Dale L. Carlisle & 8 Brooke A. Johnson, 31 Wash. Prac., Business Law 23B.14.030 (2018 ed.) (noting that the 9 statute’s “relatively simple procedure . . . is important, as a correctly drafted notice will 10 serve to effectively bar creditors’ claims against the dissolved corporation that are not 11 filed within the time period specified by the notice”); see also RCW 23B.14.030. Thus, 12 even if tolling were allowed for known claimants, Plaintiffs are not known claimants and 13 were not entitled to any particular notice of Saberhagen’s dissolution. 14 c. Receivership 15 Finally, Plaintiffs maintain that judgment on the pleadings is inappropriate 16 because they may petition the court to appoint a receiver. (See MJOP Resp. at 7 (citing 17 RCW 7.60.020(6) and RCW 7.60.030, both of which were repealed in 2004).)9 As with 18 their invocation of equitable remedies, Plaintiffs offer no argument about why appointing 19 // 20 21 22 9 Even if those statutes had not been repealed, they would not apply here because federal law governs the appointment of a receiver in federal court. See Can. Life Assur. Co. v. LaPeter, 563 F.3d 837, 843-44 (9th Cir. 2009). ORDER - 11 1 a receiver would allow them to proceed against a dissolved corporation. (See id. at 7-10.) 2 Thus, this argument provides no basis for denying judgment in Saberhagen’s favor. 3 Viewing all of the material facts in the light most favorable to Plaintiffs, the court 4 grants Saberhagen’s motion for judgment on the pleadings. Plaintiffs filed suit more than 5 three years after Saberhagen’s dissolution, and Plaintiffs’ various attempts to nevertheless 6 maintain the suit fail. See RCW 23B.14.340; Ballard Square, 146 P.3d at 923; supra 7 §§ III.A.2.a-c. 8 d. Discovery 9 Because Plaintiffs’ theories fail as a matter of law, any discovery to support those 10 theories is unnecessary. See Tatum v. City & Cty. of S.F., 441 F.3d 1090, 1100 (9th Cir. 11 2006) (“A party requesting a continuance pursuant to Rule [56(d)] must identify by 12 affidavit the specific facts that further discovery would reveal, and explain why those 13 facts would preclude summary judgment.”). Moreover, a request for discovery under 14 Rule 56(d) is inappropriate in response to a motion for judgment on the pleadings. See 15 Wilson v. Amneal Pharms., L.L.C., No. 1:13-cv-00333-CWD, 2013 WL 6909930, at *7 16 (D. Idaho Dec. 31, 2013) (rejecting the plaintiff’s request for discovery under Rule 12(d) 17 and Rule 56(d) in response to a motion for judgment on the pleadings); Anderson v. 18 Chandler, No. CV-12-813-PHX-SMM, 2013 WL 3864255, at *2 (D. Ariz. July 25, 2013) 19 (denying a motion for “Rule 56(d) relief” because the court did not convert the motion 20 for judgment on the pleadings into one for summary judgment). For these reasons, the 21 court denies Plaintiffs leave to conduct discovery related to Saberhagen. 22 // ORDER - 12 1 B. Plaintiffs’ Motion Plaintiffs also move to extend the time to respond to Saberhagen’s motion. (See 2 3 MFR at 1.) But Plaintiffs have nevertheless responded, see supra §§ III.A.2.a-d, and they 4 make the same arguments in their motion as in their response (compare MJOP Resp., 5 with MFR). Having rejected those arguments for the reasons stated above, the court 6 denies Plaintiffs’ motion as moot. See supra §§ III.A.2.a-d. 7 IV. CONCLUSION 8 For the reasons set forth above, the court GRANTS Saberhagen’s motion for 9 judgment on the pleadings (Dkt. # 39), DENIES Plaintiffs’ request for a Rule 56(d) 10 continuance, and DENIES as moot Plaintiffs’ motion for relief from a deadline (Dkt. 11 # 47). 12 Dated this 20th day of July, 2018. 13 14 A 15 JAMES L. ROBART United States District Judge 16 17 18 19 20 21 22 ORDER - 13

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