Anderson v. Kennebec River Pulp & Paper Co.

• Decision Date: 12 August 1981
• Parties: 25 Wage & Hour Cas. (BNA) 878 C. William ANDERSON et al. v. KENNEBEC RIVER PULP & PAPER CO., et al.
• Court: Maine Supreme Court

Page 752

433 A.2d 752

25 Wage & Hour Cas. (BNA) 878

C. William ANDERSON et al. v. KENNEBEC RIVER PULP & PAPER CO., et al.

Supreme Judicial Court of Maine.

Argued Jan. 6, 1981.

Decided Aug. 12, 1981.

Jim Mitchell & Jed Davis, P.A., James E. Mitchell (orally), Augusta, Mark Kierstead, Waterville, for plaintiffs.

Thaxter, Lipez, Stevens, Broder & Micoleau, Sidney St. F. Thaxter, Ronald A. Epstein, Portland, Simpson, Thacher & Bartlett, John W. Ohlweiler, James S. Frank (orally), New York City, for defendants.

Before WERNICK, GODFREY, NICHOLS, GLASSMAN, ^* ROBERTS and CARTER, JJ.

NICHOLS, Justice.

The Defendants, Kennebec River Pulp & Paper Co., Penntech Papers, Inc. and T. P. property corporation, appeal from an order entered in Superior Court, Somerset County, on January 3, 1980, granting the Plaintiffs' motion to attach property owned by the Defendants. On appeal, the Defendants contend that the Plaintiffs' affidavits submitted in support of their motion for attachment failed to set forth sufficiently specific facts as required by M.R.Civ.P. 4A(h). The Defendants further argue that the Superior Court erred in finding a reasonable likelihood that the Plaintiffs would recover a judgment against them in an amount equal to or greater than the amount of the attachment.

We deny the appeal and affirm the order of attachment.

On December 20, 1975, the Kennebec Paper Mill in Madison was closed. Penntech Papers, Inc., through its subsidiary T.P. Property Corporation, thereafter acquired all the outstanding stock of Kennebec River Pulp & Paper Co. The mill at Madison was then reopened by Kennebec, but was shut down permanently on March 29, 1977.

The Plaintiffs, former salaried employees of Kennebec River Pulp & Paper Co., began suit on March 1, 1978, to recover diverse employment benefits guaranteed by Maine law. The Plaintiffs' complaint alleged, inter alia, that following the termination of their employment on or about March 29, 1977, the Defendants failed to provide them with vacation pay due them, severance pay, certain earned wages and a customary termination pay. The Defendants' answer denied the material allegations of the Plaintiffs' complaint and raised several affirmative defenses.

On December 6, 1978, the Plaintiffs filed a motion for attachment, including attachment on trustee process, against the property of the corporate Defendants in the amount of $100,000. Accompanying this motion were nine supporting affidavits.

A hearing on the motion for attachment was held in Superior Court, Somerset County, on October 23, 1979. The motion was granted on December 31, 1979, the court ordering attachment, including attachment on trustee process, in the amount of $100,000 against the Defendants' property. The Defendants seasonably appeal from this interlocutory order. Our jurisdiction to consider this appeal derives from the collateral order exception to the final judgment rule. Dartmouth Co. v. Day's, Inc., Me., 419 A.2d 366 (1980). ¹

We recently spelled out in Bowman v. Dussault, Me., 425 A.2d 1325 (1981), the pertinent requirements for the Superior Court's approval of the prejudgment attachment process. Essentially, the movants' supporting affidavits must set forth sufficiently specific facts to demonstrate a reasonable likelihood that judgment will be recovered, including interest and costs, in an amount equal to or greater then the amount of the attachment over and above the aggregate of any liability insurance available to the defendants. M.R.Civ.P. 4A(c). Our limited function as an appellate court is to review the Superior Court's determination by application of the usual "clearly erroneous" and "abuse of discretion" standards. Bowman v. Dussault, supra at 1328. ² M.R.Civ.P. 4A(h) requires that affidavits submitted in support of the prejudgment attachment process "set forth specific facts sufficient to warrant the required findings ...." ³ The Defendants' central argument on appeal is that the Plaintiffs' supporting affidavits were set forth in "conclusory fashion" without containing sufficiently specific facts to warrant the Superior Court making the "required findings."

We disagree.

The findings required by our Rules of Civil Procedure include:

(A) reasonable likelihood that the plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment over and above the aggregate of any liability insurance and any property or credits attached by other writ of attachment or by trustee process shown by the defendant to be available to satisfy the judgment. M.R.Civ.P. 4A(c).

These requirements must be strictly complied with since the prejudgment attachment process is in derogation of the common law. Englebrecht v. Development Corp., Me., 361 A.2d 908, 910-11 (1976).

Contrary to the Defendants' assertion that the Plaintiffs' supporting affidavits contain nothing more than "conclusory statements," we find that each affidavit contains specific factual allegations of promises and assurances made by officers of Penntech Papers, Inc. and T. P. Property Corporation to the employee Plaintiffs. These officers, allege the Plaintiffs in their affidavits, urged the Plaintiffs to dedicate themselves to the financial success of Kennebec River Pulp & Paper Co., personally promising that Penntech Papers, Inc. would stand behind their salaries, despite Kennebec's financial difficulties. The Plaintiffs' affidavits further allege that unused vacation time had accrued as the result of these urgings and assurances of the Defendants' officers. Each affidavit specifies the monetary amount allegedly owed each affiant. The sum total of these amounts, together with costs incurred to date, ⁴ is greater than the amount of the attachment ordered. The affidavit of the Plaintiffs' counsel indicates that of his own knowledge no prior writs of attachment have issued in the case and he is aware of no liability insurance owned by the Defendants. In sum, we find these facts to be sufficiently specific to comply with the rule which the Plaintiffs were invoking. The Superior Court did not abuse its discretion in so ruling.

The Defendants further argue that the Superior Court erred as a matter of law in finding a "reasonable likelihood" that the Plaintiffs will recover judgment in an amount equal to or greater than the amount of the attachment.

We disagree.

In Northeast Investment Co., Inc. v. Leisure Living Communities, Inc., Me., 351 A.2d 845 (1976), we discussed in detail the "likelihood of success" requirement of M.R.Civ.P. 4A(c) and construed this requirement as connoting a probability of success or a favorable chance of success. Having reviewed the complaint and affidavits submitted by the Plaintiffs in the instant case, we are unable to conclude that it "so clearly appears" that the Plaintiffs' claim is of such insubstantial character as to foreclose a reasonable possibility of recovery.

The Defendants argue on appeal, as they did before the Superior Court, that United Paperworkers International Union et al. v. Penntech Papers, Inc., et al., 439 F.Supp. 610 (D. Me.1977), aff'd sub nom. United Paperworkers International Union et al. v. T. P. Property Corp. et al., 583 F.2d 33 (1st Cir. 1978), precludes their liability for any obligations of Kennebec River Pulp & Paper Co. that may be due the Plaintiffs. The sole issue in United Paperworkers was whether Penntech Papers, Inc. could be forced to arbitrate pursuant to a collective bargaining agreement entered into between the Union and Kennebec Pulp & Paper Co., prior to Penntech's acquisition of all of Kennebec's outstanding capital stock. 439 F.Supp. at 612. In other words, the "principal question" concerned "the duty of the successor to arbitrate." Id. at 615. On appeal, the United States Court of Appeals for the First Circuit agreed that "real issue ... (was) not successorship as it is commonly understood, but whether parent corporations should be bound to the collective bargaining agreements of their subsidiaries." 583 F.2d at 35.

In its Order of Attachment the Superior Court distinguished United Paperworkers from the instant case thus:

(I)n (United Paperworkers), there was no "... allegation that Penntech presented (sic) to the unions that it would be responsible for meeting the terms of the arbitration agreement." (439 F.Supp.) at 621. Here there is such an allegation, which furnishes the basis for an argument that Defendants are estopped from pleading that Penntech is a distinct corporation not bound by Kennebec's obligation.

We find the distinction drawn by the Superior Court to be accurate. The focus of the United Paperworkers holding is that there was no allegation or evidence of misconduct by the defendants to justify piercing the corporate veil. 439 F.Supp. at 621. In the case sub judice, however, the Plaintiffs' affidavits allege that...