Amantes v. B&R Machine Company, Inc.

Filing 71

ORDER granting 25 MOTION for Summary Judgment by Defendant B&R Machine, Inc., denying 32 MOTION for Summary Judgment by Plaintiff Vielka Amantes, denying 37 MOTION for Leave to File Amended Complaint by Plaintiff Vielka Amantes, granting 59 MOTION to Strike by Defendant B&R Machine, Inc. Signed by Chief Judge Barbara B. Crabb on 4/23/2009. (arw)

IN THE UNITED STATES DISTRICT COURT FO R THE WESTERN DISTRICT OF WISCONSIN --------------------------------------------V IEL KA AMANTES, P la i n t i f f , v. 0 8 - cv -2 1 8 - b b c B & R MACHINE INC.,
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O P IN IO N AND ORDER

D efendan t. --------------------------------------------Plaintiff Vielka Amantes was seriously injured when her hair became caught in a bag m a c hine that she was using during the course of her employment. In this civil action for m on etary relief, she alleges that her injuries were caused by defendant B&R Machine Inc.'s negligent design, manufacture, assembly, distribution and sale of the machine and that defendan t is strictly liable for its acts and omissions. Jurisdiction is present. 28 U.S.C. § 13 32 . Several motions are before the court. On January 28, 2009, defendant moved for su m m ary judgment on the ground that its predecessors, Davis Machine Corporation and D avis Manufacturing Corporation, designed, manufactured, distributed and sold the

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I have revised the caption to reflect defendant's correct name: B&R Machine Inc.

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m ach in e that injured plaintiff.

Dkt. #25.

On February 6, 2009, plaintiff moved for

sum m ary judgment on her strict liability and negligence claims. Dkt. #32. Twelve days later, she moved for leave to amend her complaint to add a claim of successor liability, arguin g that it became apparent during discovery that defendant agreed to assume Davis's liabilities in an asset purchase agreement. Dkt. #37. Defendant opposes the motion to am end and asserts that it did not expressly or impliedly assume Davis Machine's and Davis M anufacturing's future liabilities. Also before the court is defendant's motion to strike plain tiff's proposed findings of fact, dkt. #57, filed for the first time with plaintiff's reply brief. Dkt. #59. Plaintiff has not opposed the motion to strike. Because plaintiff unduly delayed amending her complaint and because adding a claim of successor liability would be futile, I am denying her motion to amend. I agree that plaintiff's proposed findings of fact should not be considered because they are not in com pliance with this court's procedures regarding summary judgment motions. I also note that the proposed findings are not material to the dispositive issues in this case. Therefore, defendant's unopposed motion to strike, dkt. #59, will be granted. Because plaintiff has failed to adduce any evidence that defendant was responsible for the design, manufacture, assem bly, distribution or sale of the bag machine at issue in this case, I am denying plaintiff's m o tio n for summary judgment on her negligence and strict liability claims. I find no genuine issue of material fact from which a reasonable jury could find defendant liable as a corporate

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successor for the acts or omissions of Davis Machine or Davis Manufacturing. Therefore, defendan t's motion for summary judgment will be granted. For the purpose of deciding this motion, I find from the facts proposed by the parties an d the contents of the asset purchase agreement signed by defendant that the following facts are both material and undisputed.

U N D IS PU T ED FACTS Plaintiff Vielka Amantes is an adult citizen of the state of Wisconsin. At all relevant tim es, she lived in Hudson, Wisconsin and was employed there by Duro Bag Manufacturing C om pan y. Defendant B&R Machine, Inc. is an Arkansas corporation with its principal place o f business in Camden, Arkansas. It previously operated under the name of Barnwell A c q u i s i t io n . On August 5, 1987, Duro Bag Manufacturing Company bought a bag machine from D a vis Machine Corporation. Its sister company, Davis Manufacturing Corporation,

m an ufactu red the machine, which was shipped to Duro Paper Bag Manufacturing on June 22, 1988. On December 27, 1988, defendant's predecessor, Barnwell Acquisition, was inco rpo rated. Two days later, Barnwell Acquisitions entered into an asset purchase

agreem en t with Davis Machine, Davis Manufacturing, A. R. Davis, Martha Jane Hooper and R oy Ed Davis. Under the agreement, Barnwell purchased the following assets that Davis

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used in its machine manufacturing business in Camden, Arkansas: raw material inventory, parts inventory, machinery, equipment, certain prepaid items and work-in-process. P aragrap h nine of the agreement provided "No Liabilities Assumed. Purchaser assumes no pre-existing liabilities of any nature of Sellers." The parties agreed that the purchase

agreem ent would be governed by Arkansas law. On or about December 30, 1988, Barnwell chan ged its name to B&R Machine, Inc. Plaintiff alleges that on November 14, 2005, she was injured when her hair became caught in a "B&R Machine bag machine" that she was operating in the course of her em p lo ym en t. On April 17, 2008, plaintiff commenced suit against defendant, alleging claim s of negligence and strict liability. In the complaint, plaintiff alleges that defendant designed, manufactured, distributed, supplied, assembled, sold, and was otherwise involved in the design and manufacture of the machine on which she was allegedly injured. The co m p lain t contains no mention of Davis Machine Corporation or Davis Manufacturing C orp ora tion and does not allege that defendant succeeded to the liabilities of those com pan ies.

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O PIN IO N A . Choice of Law In this case, a choice of law issue arises because defendant is an Arkansas corporation an d the asset purchase agreement is governed by Arkansas law and plaintiff is a resident of W iscon sin and the accident at issue occurred in Wisconsin. "A federal court sitting in diversity looks to the conflict-of-laws rules in the state jurisdiction in which it sits in order to choose the substantive law applicable to the case." Massachusetts Bay Insurance

C o m p an y v. Vic Koeing Leasing, Inc., 136 F.3d 1116, 1122 (7th Cir. 1998) (citation om itted). Wisconsin law does not recognize a conflict unless the choice of one law over an o th er will determine the outcome of the case, Lichter v. Fritsch, 77 Wis. 2d 178, 182, 252 N .W .2 d 360, 362 (1977), or the laws at issue reflect public policies that are fundamentally at odds with one another, Zelinger v. State Sand & Gravel Co., 38 Wis. 2d 98, 107, 156 N .W .2 d 466, 470 (1968). Defendant asserts that because Wisconsin and Arkansas follow the same law with respect to the substantive issues in this case, Wisconsin law applies. Plaintiff does not object to defendant's position. Accordingly, Wisconsin law will be applied.

B . Negligence and Strict Liability Plaintiff argues that she is entitled to summary judgment because she has "conducted discovery and obtained the facts necessary to prove the elements of her strict products

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liability and negligence claims against defendant." Dkt. #34, at 5. She asserts that because defendan t did not conduct discovery or retain an expert, it "has failed to discover evidence capab le of disputing the facts upon which plaintiff's strict products liability and negligence claim s rely." Id. However, plaintiff did not submit any proposed findings of fact in support o f her arguments until she filed her reply brief, and the facts that she proposed do not support the dispositive issues in her motion for summary judgment or suffice to defeat d efen dan t's motion. Kampmier v. Emeritus Corporation, 472 F.3d 930, 936 (7th Cir. 2007) (to avoid summary judgment, non-moving party must supply sufficient evidence for each essen tial element); Borcky v. Maytag Corporation, 248 F.3d 691, 695 (7th Cir. 2001) ("Factual disputes are `material' only when they `might affect the outcome of the suit under th e governing law.'") (quoting Oest v. Illinois Department of Corrections, 240 F.3d 605, 610 (7th Cir. 2001)); Liu v. T & H Machine, Inc., 191 F.3d 790, 796 (7th Cir. 1999) (mere existen ce of some alleged factual dispute insufficient to defeat properly supported motion for summary judgment). The preliminary pretrial conference order entered in this case makes clear the pro cedures to be followed on summary judgment. It directs counsel to propose all facts necessary to sustain a party's position on summary judgment as findings of fact in a separate do cu m ent and support them with admissible evidence. July 15, 2008 Order, dkt. #15. All litigants in this court are expected to read, understand and comply with these rules, whether

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they are represented by counsel or proceeding pro se. Cowart v. City of Eau Claire, 571 F. Supp. 2d 1005, 1009 (W.D. Wis. 2008). Because plaintiff's proposed findings of fact do no t comply with this court's procedures and are not material to the dispositive issues in this case, I will grant defendant's unopposed motion to strike them. In any event, even if plaintiff had complied with the court's summary judgment pro cedures, she cannot prevail. Defendant did not design, manufacture, assemble, distribute or sell the machine in question. As a result, it cannot be found liable under either a theory o r negligence or strict liability. Green v. Smith, 245 Wis. 2d 772, 792, 629 N.W.2d 727, 7 3 7 (2001) (to prove strict liability, plaintiff must prove product was in defective condition w h en it left possession or control of seller); Miller v. Wal-Mart Stores, Inc., 219 Wis. 2d 2 5 0 , 260, 580 N.W.2d 233, 238 (1998) (to establish negligence, plaintiff must first show th at defendant had duty of care). Kampmier v. Emeritus Corporation, 472 F.3d 930, 936 (7 th Cir. 2007) (in order to avoid summary judgment, non-moving party must supply sufficient evidence for each essential element to allow reasonable jury to render verdict in his favor).

C . Addition of Successor Liability Claim Ap paren tly realizing that she cannot succeed on her negligence and strict liability claim s against defendant, plaintiff now seeks to add a claim of corporate successor liability.

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R ule 15(a) of the Federal Rules of Civil Procedure provides that "a party may amend [its] pleading once as a matter of course at any time before a responsive pleading is served;" otherw ise, amendment is permissible "only by leave of court." Whether to grant leave to am end a pleading pursuant to Rule 15(a) is within the discretion of the trial court, Sanders v. Venture Stores, Inc., 56 F.3d 771, 773 (7th Cir. 1995). The rule provides that leave "sh all be freely given when justice so requires," Fed. R. Civ. P. 15(a), but a request to amend m a y be denied on several grounds, including undue delay, undue prejudice to the party o p po sin g the motion or futility of the amendment. Sound of Music v. Minnesota Mining an d Manufacturing Co., 477 F.3d 910, 922-23 (7th Cir. 2007); Butts v. Aurora Health Care, Inc., 387 F.3d 921, 925 (7th Cir. 2004). Although plaintiff had 11 weeks to amend her complaint as a matter of course, she did not seek to do so until after the deadline for filing dispositive motions had passed. Sept. 2 9 , 2008 order, dkt. #17 (rejecting parties' stipulation to extend deadline for amending pleadings by 30 days). In explaining the late filing, plaintiff's attorney avers that plaintiff lea rned only through discovery that the Davis corporations had dissolved and that Barnwell had entered into an asset purchase agreement with those companies. He also avers that at "the Rule 26 conference on July 15, 2008, it was discussed by counsel that defendant would b e bringing a motion for summary judgment as to successor liability" and that if such motion w a s denied, "plaintiff would amend her pleadings to allege successor liability." Dkt. #37,

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Exh. #1 at ¶¶ 4-6 and 13-14. Plaintiff says that she anticipated that defendant would file a prompt motion for summary judgment on the issue of successor liability and that if the m o tio n was denied, the case deadlines would be adjusted accordingly and plaintiff would am end her complaint to assert successor liability. It seems odd that plaintiff would wait to am en d her complaint until the court ruled against defendant. More to the point, I do not u n d er sta nd why plaintiff would wait to undertake discovery on successor liability if she expected defendant to move for summary judgment on that issue. In any event, it is clear fro m the affidavit that plaintiff knew of the potential successor liability claim as early as July 2008 ; she knew from the preliminary pretrial conference order that amendments to the pleadings were due September 30, 2008, dkt. #15; and she had sufficient time before then to conduct discovery with respect to the successor liability claim. To the extent that plaintiff is arguing that defendant will not suffer prejudice because the parties agreed to a last minute amendment, her argument is not persuasive. On

S eptem ber 29, 2008, the court rejected the parties' stipulation for an enlargement of time in which to amend the pleadings. Dkt. #17. Although defendant had notice of a potential su ccesso r liability claim and discussed it at length in its summary judgment motion, allowing plaintiff to add a new claim at this late date would prevent defendant from raising other o bjectio n s it may have related to the claim. Given plaintiff's untimely filing of the motion

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an d the potential prejudice to defendant, I am denying plaintiff's motion for leave to amend her complaint. Even if the proposed amendment were timely, it would be futile. In most

ju risd ictio n s, including Wisconsin, "the general rule of successor liability in the context of asset purchase agreements is that a `corporation which purchases the assets of another corp ora tion does not succeed to the liabilities of the selling corporation,' subject to certain excep tio n s." Columbia Propane, L.P. v. Wisconsin Gas Company, 261 Wis. 2d 70, 86, 661 N .W .2d 776, 784 (2003) (citing Leannais v. Cincinnati, Inc., 565 F.2d 437, 439 (7th Cir. 1 9 7 7)); see also Fish v. Amsted Industries, Inc., 126 Wis. 2d 293, 298, 376 N.W.2d 820, 823 (1985) (explicitly recognizing rule for first time in Wisconsin). The idea behind the rule is that one should be responsible for its "own act and not for the totally independent act of others." Leannais, 565 F.2d at 439. Further, An important reason for structuring an acquisition as an asset transaction is the desire on the part of a buyer to limit its responsibility for liabilities, p articu larly unknown or contingent liabilities. Unlike a stock purchase or statutory combination, where the acquired corporation retains all of its liabilities and obligations, known and unknown, the buyer in an asset purch ase has an opportunity to determine which liabilities of the seller it will con tractually assume. C olum bia Propane, 261 Wis. 2d at 90, 661 N.W.2d at 785-86 (quoting Byron F. Egan et al., Asset Acquisitions: A Colloquy, 10 U. Miami Bus. L. Rev. 145, 152 (2002)).

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T h e rule has four recognized exceptions, only one of which is relevant in this case. L ean n ais, 565 F.2d at 439; Gallenberg Equipment, Inc. v. Agromac International, Inc., 10 F. Supp. 2d 1050, 1053 (E.D. Wis. 1998). In arguing that defendant succeeds the Davis c o r p o ratio n s in interest and liabilities, plaintiff relies solely on the exception that liability m ay be imposed "where the purchasing corporation expressly or impliedly agreed to assume the selling corporation's liability." Leannais, 565 F.2d at 439. The asset purchase agreement in this case provided that defendant would not assume any "pre-existing" liabilities. Plaintiff asserts that because her accident occurred after the execu tio n of the agreement, it was not a pre-existing liability and defendant should be held liable. I do not find this argument persuasive. As defendant points out, the Wisconsin S uprem e Court has held that this exception requires "an express or implied assumption of liabilities, not an express exclusion of liabilities." Columbia, 261 Wis. 2d at 88 (emphasis in original). To protect defendant, the asset purchase agreement did not have to state exp ressly that no future or unknown liabilities would be assumed. Because defendant cannot be held liable as a corporate successor as a matter of law, plaintiff is not entitled to summary judgm ent on such a claim. Accordingly, defendant's motion for summary judgment will be granted and plaintiff's motion for summary judgment will be denied.

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OR DER IT IS ORDERED that: 1. Plaintiff Vielka Amantes's motion for leave to amend her complaint, dkt. #37, is D EN IED as untimely and futile. 2 . Defendant B&R Machine Inc.'s motion to strike plaintiff's proposed findings of fact in support of its summary judgment motion, dkt. #59, is GRANTED. 3. Defendant's motion for summary judgment, dkt. #25, is GRANTED. Plaintiff's m otio n for summary judgment, dkt. #32, is DENIED. 4. The clerk of court is directed to enter judgment in favor of defendant and close this case. Entered this 23 r d day of April, 2009. B Y THE COURT: /s/ _ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ B AR B AR A B. CRABB D istrict Judge

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