Gayoso v American Honda Motor Co., Inc.

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Gayoso v American Honda Motor Co., Inc. 2015 NY Slip Op 31144(U) July 6, 2015 Supreme Court, New York County Docket Number: 190209/14 Judge: Peter H. Moulton Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE CITY OF NEW YORK COUNTY OF NEW YORK: PART 50 --------------------------------------x IN RE: NEW YORK CITY ASBESTOS LITIGATION --------------------------------------x JAY A. GAYOSO and SHARON R. GAYOSO, Plaintiffs, Index No.: 190209/14 -against- AMERICAN HONDA MOTOR CO., INC. (AHM) et al Defendants. ---------------------------------------x PETER H. MOULTON, J.S.C.: In this action, plaintiff alleges that he was exposed to asbestos 1>"Jhile working at a gas station and as a mechanic at an automobile service station in the late 1970s, performing brake and clutch repairs, including on Fiat automobiles. He was diagnosed with mesothelioma in May, 2014. Defendant Fiat USA, Inc. ("defendant" or "Fiat USA") moves to dismiss the action and all claims and cross-claims against it on the basis that it is not a proper party. Defendant asserts that it did not design, manufacture, sell or distribute automobiles in the United States during the relevant time period. Defendant further asserts that it did not assume or acquire the liabilities of any Fiat entity that sold or distributed cars during the relevant period. Plaintiffs in the United States oppose the motion and [* 2] cross-move for discovery. Background Defendant attaches myriad corporate documents in support of its motion. The documents reflect the following information. party Fiat Auto USA, Inc. ("FAUSA") v1as Non- incorporated in Delaware on March 14, 1984, in connection with the reorganization of a New York corporation Fiat Motors of North America, Inc. FNMA was ("FNMA"). the company that, through its predecessors Fiat-Roosevelt Motors, Inc. Inc. ) 1 (which later changed its name to Fiat Distributors, sold cars in the United States beginning in the late 1950s. FMNA came into existence through a merger of Fiat Distributors, Inc. \lfith Fiat Motor Company, Inc. in June 1976. 2 As part of the reorganization, effective March 30, 1984, FMNA transferred all of its assets and liabilities of Fiat/Lancia and Ferrari automobiles, including outstanding Canada excluding Limited (but Canadian Di vision of FNMA) stock of FAUSA. assets to FAUSA, On April 2, 1984, and shares of Fiat Auto liabilities of the in exchange for shares of in a General Assignment and 1 FNMA was originally incorporated in New York on December 29, 1965 under the name Fiat-Roosevelt Motors, Inc. FiatRoosevelt Motors, Inc. changed its name to Fiat Distributors, Inc. on January 2, 1975. 2 0n June 1, 1976, Fiat Distributors, Inc. merged v1ith Fiat Motor Company, Inc. (which originally was incorporated in 1955 under the name Servofide, Inc. to sell ship motors). The surviving corporation of the June 1 1 1976 merger bore the name Fiat Distributors, Inc. 2 [* 3] Assumption Agreement, FAUSA agreed to assume all obligations and liabilities of FNMA defined as the Automobile Business Liabilities (including but not limited to those liabilities listed in Exhibit B to the agreement). A memor.andum regarding the reorganization indicates that the reorganization resulted "in the change of FNMA's function to that of an administrative and holding company under the new name 'Fiat U.S.A., Inc.'" Approximately two defendant Fiat USA, December 6, Representative, weeks thereafter, on April 13, 1984, Inc., a New York corporation incorporated on 1971 originally Inc. under the name Fiat u. s. (a company that did not sell or distribute automobiles in the United States} the surviving corporation, 3 \oJas merged into FMNA. FMNA as changed its name to "Fiat USA, Inc." {the defendant herein). FAUSA {the entity that assumed the automobile liabilities in 1984) authorized its dissolution on November 18, 1999 as reflected by a Certificate of Novemb'er 19, 1999. '1 Dissolution of Fiat Auto USA, Inc., dated The reasons for dissolution are not explained. As a matter of interest, Fiat automobiles have recently made a come back in the United States through FCA US LLC, whose parent 3 Fiat U.S., Representative, Inc. changed its name to Fiat U.S.A., Inc. pursuant to a certificate filed with the New York Secretary of State on April 2, 1979. 4 0n December 1, 1998, FAUSA merged with Ferrari Group North America, Inc., and the surviving company bore the name Fiat Auto U.S.A., Inc. 3 [* 4] company is Fiat Chrysler Automobiles NV. In June 2009, the company known as Chrysler emerged from bankruptcy with Fiat SpA as an owner. On December 15, 2015, Chrysler Group LLC was renamed FCA US LLC, to reflect a Fiat-Chrysler merger. 5 Arguments Based on the above, defendant asserts that "when Fiat U.S.A., Inc. subsequently merged with FMNA in 1984, all assets and liabilities of FMNA related to the sale and distribution of Fiat cars in the United States had already been transferred to another party, Fiat Auto U.S.A., Additionally, "Fiat Inc." U.S.A., (Weinholtz Aff in Support 'TI 11). Inc. did not agree to assume any liabilities for the pre-1984 sale or distribution of Fiat cars in the United States." (id.). Further, defendant is merely an administrative company whose corporate purpose is to liaise with regulatory agencies and assist with sales distribution (id. at 'TI'TI 14, 29). FAUSA, defendant contends, is the company who expressly assumed the liabilities of FMNA, but it was dissolved in 1999. 6 Defendant concludes that it is not a proper party because FAUSA (which no longer exists) is the entity to v1hich all automobile assets and liabilities in the United States were transferred (id. 5 In 1998, Chrysler merged with Daimler-Benz AG to form DaimlerChrysler but the merger proved contentious with investors and Chrysler was sold to Cerberus Capital Management and renamed Chrysler LLC in 2007. 6 The Board of Directors of FAUSA included the famous Massimo Ferrari. 4 [* 5] at ~ 43). Plaintiffs cross-move for discovery, maintaining that nit is clear that each of the entities, Fiat USA, Inc., Fiat Auto USA, and Fiat Motors of North America are related, but what is not clear is to what extent" (Ratcliffe Aff in Opp. and in Plaintiffs state that without further discovery, Support <_ff 6). which is in the sole possession of defendant, they cannot rule out the application of any of the exceptions in Schumacher v Richards Shear Co. NY2d 239 [1983]). Accordingly, (59 summary judgment is premature and should be denied under CPLR § 3212 (f). Defendant counters that plaintiffs' cross-motion is untimely because plaintiffs' papers were due on March 23, 2015, but were not served until April 15, rejected as untimely, Even 2015. if the cross-motion is not defendant asserts that plaintiffs explain why additional discovery is needed fail to (i.e., what essential facts may exist to provide a basis to oppose the motion) or why defendant's presentation of corporate history in its moving papers presents an "incomplete picture.u DISCUSSION On a motion to dismiss pursuant to CPLR 3211, the pleading should be liberally construed, the facts alleged by the plaintiff should be accepted as true, and all inferences should be drawn in the plaintiff's However, favor (Leon v Martinez, 84 NY2d 83 [1994]). "[a]llegations consisting of bare legal conclusions ... 5 [* 6] are not presumed to be true [or] accorded every favorable inference" \Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000]) In Schumacher v Richards Shear Co, 59 NY2d 239, supra the court noted four exceptions to the general rule that a corporation, which acquires the assets of another, is not responsible for the liabilities of the predecessor: (1) it [the acquiring corporation] expressly or impliedly assumed the predecessor's ... liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations. (id. at 245).' Successor liability may also be predicated under the doctrine of a de facto merger. A transaction structured as a purchase-of-assets may be deemed to fall within [the above-noted] exception as a 'de facto' merger, even if the parties chose not to effect a formal merger, if the following factors are present: (1) continuity of ownership; (2) cessation of ordinary business operations and the dissolution of the selling corporation as soon as possible after the transaction; (3) the buyer's assumption of the liabilities ordinarily necessary 7 Although Schumacher concerned the obligations of a purchasing corporation with respect to the tort liabilities of the acquired company, courts have applied the same principles to contractual obligations when a company's assets are acquired by another entity (see Burgos v Pulse Combustion, 227 AD2d 295 [1st Dept 1996] I. 6 [* 7] for the uninterrupted continuation of the seller's business; and (4) continuity of management, personnel, physical location, assets and general business operation. (Matter of New York City Asbestos Litigation, 15 AD3d 254, 256 [1st Dept 2005] I. Further, a corporate veil may be pierced, even in the absence of fraud, where individual or ignored that instead of one corporation another it its corporation primarily own "has and and transacts can (Ca1npone v Pisciotta Services, be been its the called Inc., so dominated an entity separate by so dominator's the other's 87 AD3d 1104, business alter ego" 1105 [2d Dept 2011] [internal quotation marks and citations omitted]). Factors that indicate alter ego status include the use of essentially the same name by both companies, overlap of employees, ownership, facilities and equipment, the degree of discretion demonstrated by the allegedly dominated corporation and whether dealings betv1een the entities are at arm's-length (see Commissioners of State Ins. Fund v Ramos, 80 AD3d 447 [1st Dept 2011]; Crespo v Pucciarelli, 21 AD3d 1048 [2d Dept 2005] I. Fiat USA's motion for summary judgment is denied with leave to renew after the completion of discovery limited to the relationship between defendant and FAUSA, for the period of time from March 14, 1984 through 90 days after the dissolution of FAUSA. cross-motion prejudice is granted resulted from despite plaintiffs' 7 untimeliness brief delay Plaintiffs' given in that no submission. [* 8] Defendant had the opportunity, and did, submit opposition to the cross-motion. Although defendant asserts that supported by sufficient consideration the form of 1000 shares of the reorganization was (paid by FAUSA to FNMA) FAUSA common stock, and that in FAUSA received assets in addition to liabilities in connection therewith, the amount of assets versus liabilities has not been quantified. Further, noted in one of the few cases involving defendant, "[iJntercompany loans and transfers of idle the court cash for investments were made on the average of five or six times per month in amounts ranging from $ 1 million to $ 10 million between FAUSA and Fiat U.S.A., (Vendetti v the New York corporation and parent of (802 F Supp 886 Fiat Auto S.p.A. FAUSA" [WDNY 1992]) The court further noted overlap bet>-Jeen a director and chief executive officer of defendant and FAUSA, and directors that these (id. at 891-92). factors were as well as other common officers While the court ultimately found unpersuasive in establishing New York personal jurisdiction over FAUSA (a Delaware corporation) and while the court found that the transactions were "routine inter-corporate transactions" plaintiffs should have an opportunity for discovery in this Prods. Co., 2013] [discovery action (see also 2013 NY Slip OP 30393 necessary where Cullens (U) v A. 0. [Sup Ct., plaintiff 8 Smith Water New York County alleged liability); Wexler v A. 0. Smith Water Prod. Co., limited successor 2012 NY Slip Op [* 9] 31796 (U) New [Sup Ct., New York County 2012] [same]; compare Matter of York City Asbestos Litigation, 15 AD3d 254, supra [summary judgment on successor liability granted in favor of company that paid $1 million dollars for the assets of another company which manufactured asbestos products]). It is hereby ORDERED that the motion for summary judgment is denied with leave to renew after the completion of discovery limited to the relationship between defendant and FAUSA, for the period of time from March 14, 1984 through 90 days after the dissolution of FAUSA; and it is further ORDERED that the cross-motion is granted to the extent that the parties shall engage in the discovery described above. Dated: July 6, 2015 ENTER: / '?Z fc ?"-------...__ Peter H. Moulton, J.S.C. 9

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