Judge: Laura A. Seigle, Case: 21STCV30709, Date: 2023-04-28 Tentative Ruling

Case Number: 21STCV30709    Hearing Date: April 28, 2023    Dept: 15

[TENTATIVE] ORDER RE MOTION FOR SUMMARY JUDGMENT

            Plaintiffs Kirt Bjoin and Allison Bjoin sued Defendant Rexel USA, Inc. as “successor in interest, successor by merger, parent, alter ego, and equitable trustee of Industries Supply Co. of San Diego.”  (Undisputed Material Fact (“UMF”) 2.)  Defendant filed a motion for summary judgment arguing it is not responsible for Industries Supply Co. of San Diego’s liabilities.  Instead, Defendant contends, ESD Company is the successor-in-interest to Industries Supply Co. of San Diego. 

            The objections to the relevant evidence are discussed below.

            A defendant seeking summary judgment must “conclusively negate[] a necessary element of the plaintiff’s case, or . . . demonstrate[] that under no hypothesis is there a material issue of fact that requires the process of trial.”  (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 334.)  To show that a plaintiff cannot establish an element of a cause of action, a defendant must make the initial showing “that the plaintiff does not possess, and cannot reasonably obtain, needed evidence.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.)  “The defendant may, but need not, present evidence that conclusively negates an element of the plaintiff’s cause of action.  The defendant may also present evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence – as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing.”  (Id. at p. 855.)

            Here, Defendant takes the first option of trying to conclusively negate a necessary element of Plaintiffs’ case.  On January 31, 1978, Industries Supply Co. was merged into Electric Supplies Distributing Company of San Diego which assumed all of its liabilities.  (UMF 32.)  Defendant contends that on March 31, 1983, Electric Supplies Distributing Company of San Diego merged with ESD Company, citing a Certificate of Ownership Merging Electric Supplies Distributing Co. of San Diego into ESD Company.  (UMF 33; Moore Decl., Ex. C.)  Plaintiffs contend this fact lacks evidentiary support because the exhibit is not authenticated.  That is not correct.  Dankole Moore provides a foundation for authenticated the documents.  (Moore Decl., ¶¶ 2-3.)  Further, the Certificate of Ownership has a stamp showing it was filed with the Secretary of State office. 

            Next Defendant contends that on April 4, 1983, ESD Company was merged into Newy & Eyre, Inc., citing a Certificate of Ownership Merging ESD Company into Newey & Eyre Inc.  (UMF 34; Moore Decl., Ex. D.)  Plaintiffs contend this fact lacks evidentiary support because the exhibit is not authenticated.  That is not correct.  Dankole Moore provides a foundation for authenticated the documents.  (Moore Decl., ¶¶ 2-3.)  Further, the Certificate of Ownership has a stamp showing it was filed with the Secretary of State office. 

            Then Newey & Eyre Inc. changed its name to ESD Company.  Defendant cites a Certificate of Amendment of Certificate of Incorporation of Newey & Eyre Inc. stating “The name of the corporation . . . is ESD Company.”  (UMF 35; Moore Decl., Ex. E at p. 1.)  This document was authenticated.  (Moore Decl., ¶¶ 2-3.)  On December 31, 1989, ESD Company sold its assets and certain liabilities to Summers Group, Inc.  (UMF 36.)  On December 31, 1990, ESD Company dissolved.  (UMF 38.)  Eventually, Summers Group, Inc. changed its name to Rexel, Inc. (UMF 41.)

            Defendant contends that when ESD Company sold its assets and certain liabilities to Summers Group, Inc. on December 31, 1989, “Summers Group, Inc. did not assume liability for products previously supplied by Industries Supply Co. of San Diego.  (Motion at p . 10.)  To support this contention, Defendant cites UMF 36.  UMF 36 states “On December 31, 1989, ESD Company sold its assets, and certain defined and limited liabilities to Summers Group, Inc.  Summers Group, Inc. paid consideration in the form of:  4,250 shares of its stock; assumed liability for two lawsuits with a monetary exposure of a total of approximately $402,000; and assumed liability and responsibility for Accounts Payable in the amount of approximately $8.9 million.”  UMF 36 cites to the Moore Declaration, which makes that same statement and cites the December 31, 1989 Purchase Agreement but not any specific page or paragraph of the Purchase Agreement. 

Paragraphs 4.a. and 4.b. of the December 31, 1989 Purchase Agreement support UMF 36.  Also, the agreement states that Summers Group, Inc. “shall not assume or become liable for any accounts payable or other obligations of liabilities of Seller of any kind, whether direct or indirect, now existing or hereinafter incurred . . . except for (1) obligations under the Orders, (ii) obligations for the Accounts Payable and liabilities described on Exhibit 8(h) attached hereto, and (iii) obligations arising after Closing under the Leases and other leases expressly assumed by Buyer in writing.”  (Moore Decl., Ex. F, ¶ 5.)  The agreement defined “Orders” as “outstanding stock purchase orders,” outstanding manufacturer direct shipment orders, and “outstanding purchase orders.”  (Id., ¶ 1.)  The liability here is not an obligation under the Orders, not an obligation for Accounts Payable, not a liability listed on Exhibit 8(h), and not an obligation arising under a lease.  Therefore, Defendant has shown that Summers Group, Inc. did not assume responsibility for Plaintiffs’ claims by way of an assumption of liability under the December 31, 1989 Purchase Agreement.

However, there is a gap in Defendant’s analysis.  After the December 31, 1989 Purchase Agreement, ESD Company held 4,250 shares of stock in Summers Group, Inc. and certain liabilities.  What happened to that stock and liabilities?  According to Defendant, on December 31, 1989, when ESD Company sold its assets but retained some of its liabilities and on December 31, 1990 when it dissolved, ESD Company was a subsidiary of BTR Dunlop Holdings Inc. or its affiliates.  (Moore Decl., ¶¶ 10, 11.)  Plaintiffs submit evidence that on December 31, 1989, SGDHC, Inc. was the sole shareholder of ESD Company.  (Stock Decl., Ex. 17.)  Defendant agrees that “at the time ESD Company dissolved, SGDHC, Inc. was the sole shareholder of ESD Company.”  (Reply at p. 4.)

What did SGDHC, Inc. do with the Summers Group, Inc. stock and the liabilities held by ESD Company when SGDHC, Inc voted to dissolve ESD Company?  Plaintiffs surmise that SGDHC, Inc. acquired the assets and liabilities when ESD Company dissolved and then sold all of the stock to a company that ultimately became Rexel.  (Opposition at p. 14.)  Later, on November 20, 1993 when SGDHC, Inc. sold the stock of Summers Group, Inc., it represented that the shares it was selling “constitute all of the issued and outstanding capital stock of Summers,” which suggests that Plaintiffs are correct that SGDHC, Inc. acquired ESD Company’s assets (the Summers Group stock) when ESC Company dissolved.  (Moore Decl., Ex. H, ¶ 4.14(a).)  In any event, Defendant does not answer this question about what happened to ESC Company’s assets and liabilities when it dissolved.  Because of this gap, Defendant did not conclusively prove that it does not have responsibility for the liability and did not shift the burden to Plaintiffs.

The motion for summary judgment is DENIED.

In addition, Defendant brought a motion for summary adjudication of Plaintiffs’ request for punitive damages, which Plaintiffs state they do not oppose.  (Opposition at p. 5.)  Therefore the motion for summary adjudication is GRANTED.

The moving party is to give notice.