Luckett v. Bethlehem Steel Corp., s. 77-1827

• Decision Date: 21 March 1980
• Docket Number: Nos. 77-1827,77-1828,s. 77-1827
• Parties: Bill LUCKETT and Betty Luckett, Plaintiffs-Appellants, v. BETHLEHEM STEEL CORPORATION, a Delaware Corporation, and Bethlehem SingaporePrivate Limited, a corporation organized under the Republic of Singapore,Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1373

618 F.2d 1373

Bill LUCKETT and Betty Luckett, Plaintiffs-Appellants, v. BETHLEHEM STEEL CORPORATION, a Delaware Corporation, and Bethlehem SingaporePrivate Limited, a corporation

organized under the Republic of

Singapore,Defendants-Appellees.

Nos. 77-1827, 77-1828.

United States Court of Appeals, Tenth Circuit.

Argued March 13, 1979.

Decided March 21, 1980.

Robert K. McCune, Oklahoma City, Okl. (Gene Stipe of Stipe, Gossett, Stipe & Harper, Oklahoma City, Okl., was with him on brief), for plaintiffs-appellants.

John R. Couch, Oklahoma City, Okl. (Gerald P. Green of Pierce, Couch, Hendrickson, Johnston & Boysinger, Oklahoma City, Okl., was with him on brief), for defendant-appellee, Bethlehem Steel Corporation.

Glen D. Huff, Oklahoma City, Okl. (Earl D. Mills and David W. Edmonds of Foliart, Mills & Niemeyer, Oklahoma City, Okl., was with him on brief), for defendant-appellee, Bethlehem Singapore Private Limited.

Before SETH, Chief Judge, MARKEY ^*, Chief Judge, and HOLLOWAY, Circuit Judge.

HOLLOWAY, Circuit Judge.

These appeals challenge orders granting a summary judgment in favor of defendant Bethlehem Steel Corporation (hereinafter referred to as Bethlehem Steel) and granting a motion to dismiss, plea to the court's jurisdiction and request to quash improper service of process in favor of defendant Bethlehem Singapore Private Limited (hereinafter referred to as Bethlehem Singapore). ¹

This action was brought by the plaintiffs-appellants Bill and Betty Luckett for injuries sustained by Mr. Luckett when a crane cable snapped on board a drilling rig in Singapore on March 15, 1975. Mr. Luckett was employed at the time by Transworld Drilling Company, a subsidiary of Kerr-McGee. His complaint alleged that he was engaged in directing the loading of equipment onto the drilling rig when a crane cable snapped and the crane's boom fell on top of him, fracturing his skull, ribs and spinal column, as well as causing other injuries. Mr. Luckett asserted that he was permanently paralyzed from the waist down as a result, and sought damages for past and future medical expenses, loss of earnings and earning capacity, and for pain and suffering. Mrs. Luckett sued for damages for loss of services, security and companionship of her husband.

The plaintiffs originally sued only Bethlehem Steel, but subsequently amended the complaint on March 2, 1976, to add its subsidiary, Bethlehem Singapore, as a defendant, essentially claiming that both defendants were liable for the negligence resulting in the injuries. Bethlehem Singapore's motion to dismiss, plea to the court's jurisdiction, and request to quash improper service of process asserted lack of in personam jurisdiction over that foreign corporation. Bethlehem Steel's motion for summary judgment denied liability for any negligence of the separate subsidiary corporation. The court sustained Bethlehem Singapore's motion and dismissed the claims against it, upholding its challenge to jurisdiction. The summary judgment for Bethlehem Steel upheld its denial of any liability for acts by the subsidiary, Bethlehem Singapore.

Plaintiffs appeal from both rulings, alleging several grounds of error. We will examine the arguments made against each defendant separately.

I Bethlehem Steel

Plaintiffs alleged in their complaint that Bethlehem Steel and Bethlehem Singapore had a contractual relationship whereby Bethlehem Steel agreed to furnish managerial services to Bethlehem Singapore, which services included the responsibility of insuring that Bethlehem Singapore would acquire and maintain proper facilities, adequate equipment and experienced and dependable personnel. (I.R. 141). The plaintiffs further alleged that Bethlehem Steel was negligent in failing to provide a dependable operator for the crane; that the crane operator was the employee of both Bethlehem Steel and Bethlehem Singapore; that he negligently operated the crane; and that both Bethlehem Steel and Bethlehem Singapore were negligent in knowingly using a stretched and weakened cable. (Id.).

Plaintiffs argued that Bethlehem Steel was liable for Bethlehem Singapore's actions because it exerted so much control over Bethlehem Singapore that Bethlehem Singapore was a mere instrumentality of Bethlehem Steel. Additionally, the management agreement between the two companies showed that Bethlehem Steel employees were responsible for many facets of Bethlehem Singapore's operations, including acts which led to Mr. Luckett's injuries.

In granting summary judgment, the court rejected both theories under which plaintiffs sought to hold Bethlehem Steel liable. It first held that Bethlehem Singapore was not a mere instrumentality of Bethlehem Steel and that sufficient cause did not exist to disregard the corporate entity of Bethlehem Singapore. It next held that there was no evidence that Bethlehem Steel supervised the allegedly negligent crane operator or that it participated in the hiring of the operator. The court added that even if any Bethlehem Steel employees (who were working for Bethlehem Singapore under a management agreement between the two companies) had any control over the crane operator, the employee would be a loaned servant of Bethlehem Singapore and thus Bethlehem Singapore would bear total responsibility for the employee's actions.

Plaintiffs claim there were several errors in these rulings. First, plaintiffs argue that the court erred in determining that Bethlehem Singapore was not the alter ego of Bethlehem Steel since the Management Agreement, Technical Services Agreement and License and Sales Agreement illustrate that Bethlehem Steel exerts a "maximum degree of control" over Bethlehem Singapore. Second, the court erred in holding that Bethlehem Steel was not liable for the failure of the management team to provide experienced and dependable personnel to Bethlehem Singapore. And third, the court erred in holding that even if a management team member negligently hired the crane operator, only Bethlehem Singapore would be possibly liable since management team members were loaned servants of Bethlehem Singapore.

As we examine these issues we must be mindful that "appellate courts, in assessing motions for summary judgment, must consider factual inferences tending to show triable issues in the light most favorable to the existence of these issues." Mustang Fuel Corp. v. Youngstown Sheet and Tube Co., 516 F.2d 33, 36 (10th Cir.). Where different ultimate inferences may properly be drawn, the case is not one for a summary judgment. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176; Webb v. Allstate Insurance Co., 536 F.2d 336, 339 (10th Cir.). Moreover, the appellate court considers a summary judgment in the same manner as the trial court since the trial court has no real discretion in determining to grant summary judgment. 6 Moore's Federal Practice P 56-23, p. 56-1394; see Radobenko v. Automated Equipment Corp., 520 F.2d 540, 543 (9th Cir.). We do not examine the trial court's rulings under the "clearly erroneous" standard of Rule 52, F.R.Civ.P., but instead apply the strict standard of Rule 56. Exnicious v. United States, 563 F.2d 418, 423 n.9 (10th Cir.); National Aviation Underwriters v. Altus Flying Service, Inc., 555 F.2d 778, 781 n.6 (10th Cir.).

A.

We turn first to the claim that Bethlehem Singapore was the alter ego of Bethlehem Steel, thus making Bethlehem Steel liable for the acts of Bethlehem Singapore. Plaintiffs say that circumstances giving rise to the execution of the contract entered into between Bethlehem Singapore and Transworld Drilling and the control which Bethlehem Steel exercised in this endeavor provide grounds for disregarding the corporate entities. Among these circumstances is the fact that Bethlehem Steel owns 100% of the stock of Bethlehem International which in turn owns 70% of the stock in Bethlehem Singapore. Bethlehem Steel has furnished 10 of the managing officers of Bethlehem Singapore, many of whom hold managerial posts in Bethlehem Steel as well.

Further plaintiffs point out that Bethlehem Steel has contracted to furnish Bethlehem Singapore with technical services and manufacturing equipment as well as locating new business for Bethlehem Singapore. A Bethlehem Steel employer, Mr. Lacey, negotiated the contract with Transworld, and after the contract was drawn up by Transworld it was sent to Bethlehem Steel's home office rather than to Bethlehem Singapore's office in Singapore. None of the negotiations were carried on through the Singapore office and Bethlehem Singapore maintains no place of business in the United States. According to the plaintiffs, these factors show that Bethlehem Steel dominates the decision making process of its subsidiary and maintains formal corporate requirements in an attempt to evade liability. Plaintiffs also argue that injustice results from the summary judgment for Bethlehem Steel in that any judgment against Bethlehem Singapore alone would be difficult to enforce. Further, dismissal of the action as to Bethlehem Singapore will compel the plaintiffs to sue Bethlehem Singapore in Singapore since it maintains no offices in the United States. ² (Brief of Appellants, 3-14).

Plaintiffs alternatively argue that the issue of whether the corporate entities should be disregarded is a question of fact to be determined by the jury, citing Pacific Can Co. v. Hewes, 95 F.2d 42 (9th Cir.), and Worldwide Carriers, Ltd. v. Aris Steamship Co., Ltd., 301 F.Supp. 64, 69 (S.D.N.Y.). (Brief of Appellants, 14-20).

In granting summary judgment for Bethlehem Steel on this issue the district court applied the test set out in Palmer v. Stokely, 255 F.Supp. 674 (W.D.Okl.), ³ and held that Bethlehem Singapore was not a mere instrumentality of Bethlehem Steel and that sufficient cause did not exist to disregard the corporate entity of the two corporations. Palmer v. Stokely, supra, outlined the factors discussed in Fish v....