BRADSON MERCANT. v. VANDERBILT INDUS. CONTRACTING

• Decision Date: 14 April 1995
• Docket Number: No. 3:93-CV-113-P.,3:93-CV-113-P.
• Citation: 883 F. Supp. 37
• Court: U.S. District Court — Western District of North Carolina
• Parties: BRADSON MERCANTILE, INC., Plaintiff, v. VANDERBILT INDUSTRIAL CONTRACTING CORPORATION, Total Plant Maintenance, Inc., Centrig Industries, Inc., Monroe R. Meyerson, Leila M. Meyerson, David Meyerson, Stuart Meyerson, Kenneth Lindlau, and Carolina Food Processors, Inc., Defendants.

883 F. Supp. 37

BRADSON MERCANTILE, INC., Plaintiff, v. VANDERBILT INDUSTRIAL CONTRACTING CORPORATION, Total Plant Maintenance, Inc., Centrig Industries, Inc., Monroe R. Meyerson, Leila M. Meyerson, David Meyerson, Stuart Meyerson, Kenneth Lindlau, and Carolina Food Processors, Inc., Defendants.

No. 3:93-CV-113-P.

United States District Court, W.D. North Carolina, Charlotte Division.

April 14, 1995.

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James L. Bruner, Charlotte, NC, Alice Carmichael Richey, Columbia, NC, for plaintiff.

James C. Smith, Anthony L. Giordano, Charlotte, NC, for defendants.

ORDER

ROBERT D. POTTER, Senior District Judge.

THIS MATTER is before the Court on Defendant Leila M. Meyerson's Motion, filed July 15, 1994, for entry of summary judgment. Defendants David Meyerson, Stuart Meyerson and Kenneth Lindlau jointly filed their motions for summary judgment on July 21, 1994. Plaintiff filed a response to the summary judgment motions on August 12, 1994. A separate reply memorandum from each of the Defendants was filed on September 2, 1994. The Court also held a hearing in this matter on November 4, 1994, regarding Defendants' motion to dissolve a portion of a Consent Order of Injunction. The Court has reviewed the motions for summary judgment and the briefs in support of them, each party's responses and additional memoranda, and the relevant legal authorities. Based upon its review of this case, the Court makes the following findings of facts and conclusions of law.

THE ALLEGATIONS

Plaintiff, Bradson Mercantile, Inc., ("Bradson"), brought this action against the Defendants, alleging claims for breach of contract, breach of fiduciary duty, trust fund, conspiracy, tortious interference with contract, indemnity, fraud, successor-in-interest, and equitable subordination.¹ Defendants have filed counterclaims against the Plaintiff for its alleged failure to properly perform its contractual obligations owed to Vanderbilt.

These allegations arise from an Agreement entered into between Bradson and Defendant Vanderbilt Industrial Contracting Corporation ("Vanderbilt or VICC") on February 27, 1992. Bradson is a Tennessee corporation engaged in the business of furnishing personnel services to various industries, including contractors on industrial construction projects, in the United States and Canada. Vanderbilt, a Delaware corporation with its principal place of business in Charlotte, North Carolina, was engaged in the industrial contracting business.

As a threshold matter, Plaintiff alleges that:

1. By virtue of their actions and representations with respect to each other, with respect to CENTRIG, VICC and RERI, and with respect to third parties, Monroe and Leila were de facto partners ... in the business of CENTRIG, VICC, RERI, TPM and SWEET LADY. Additionally, ... Monroe, as agent, acted for Leila, as principal. Leila, as principal, received and retained benefits from the agreement between VICC and Monroe, on one hand, and the Plaintiff, on the other.... As copartners, Monroe and Leila were agents for one another.

2. CENTRIG so dominated and controlled its subsidiaries VICC and RERI that they were in reality the "alter-egos" or mere instrumentalities of CENTRIG. CENTRIG used this control to cause specific harm and damage to the Plaintiff through the perpetration of wrongdoing, fraud and a violation of VICC's positive legal duties to Plaintiff under their agreement....

3. CENTRIG and its subsidiaries was so dominated and controlled by Monroe and Leila as co-partners and agents for each other ... so as to make CENTRIG a mere instrumentality or "alter-ego" of these individuals and a shield for their activities....

4. TPM is the successor in interest to or "mere continuation" of VICC and the "alter-ego" or instrumentality of Leila and her co-partner Monroe by virtue of their domination and control of the company and their use of the company to perpetrate unjust and dishonest acts.

(Plaintiff's Amended Complaint, ¶¶ 6, 10, 11, 12, 44-45.) According to the Plaintiffs brief, they have sued the corporate Defendant Vanderbilt primarily for breach of contract and the other Defendants on that claim and several other claims,

because their manner of operation of the family business and conduct in transferring assets and opportunities of the corporate defendant Centrig and VICC to themselves, should subject them to liability as the partners or principals of one another and the alter-egos of, or successors to, VICC.

Plaintiffs Reply Brief, p. 3.

Based, in part, on these general allegations Plaintiff essentially argues that Monroe, Leila, and David are each liable for breach of contract under partnership and principal-agency rationale. Plaintiff asserts that Monroe, Leila, David and Stuart breached their fiduciary duties to the Plaintiff because of their joint and several actions, and with respect to David and Leila, because of the acts of their co-partner and agent Monroe. Plaintiff also asserts that David, Stuart, Lindlau, and Leila, through her co-partner/principal relationship with Monroe and because she benefitted from the acts of these individuals, conspired with Monroe to misrepresent the financial condition of VICC to the Plaintiff, while at the same time they were engaged in a conspiracy to transfer the assets of VICC to themselves and others, all to the detriment of the Plaintiff. Furthermore, Plaintiff claims David, Stuart, Monroe and Lindlau tortiously interfered with the contract and transferred corporate assets for the benefit of Leila and Total Plant Maintenance ("TPM").

Specifically, Plaintiff further alleges the following claims:

1. That Monroe and Leila, with the knowledge, consent, cooperation or assistance of Stuart, David and Lindlau caused substantial company assets to be transferred to themselves ..., thus aggravating the financial difficulties of CENTRIG and VICC and instead of depositing contract proceeds into the trust account in accordance with the services agreement they paid those monies to themselves or to third parties for their benefit.

2. That Monroe, Leila, David and Stuart caused certain assets which remained in VICC and RERI to be transferred to TPM for inadequate or no consideration, outside the ordinary course of business and without provision for creditors.

3. During the course of negotiations between Bradson, Monroe and Stuart, Monroe represented that VICC was financially sound and it is undisputed that he personally guaranteed VICC's payment obligations. Subsequently, when periods of non-payment occurred Monroe and Stuart assured Bradson that non-payment was a temporary problem; VICC was financially sound; and, Bradson would be paid.

4. It is undisputed that a trust account was established, in part, to make payments to Bradson. Plaintiff alleges that Monroe caused VICC to divert funds from the trust account.

SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56(c) provides, ... judgment ... shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c) (West 1994).

Summary judgment must be granted when there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Id., Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir.1984). To attain summary judgment, the movant bears an initial burden of demonstrating no genuine issues of material fact are present. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The burden then shifts to the non-moving party who must point out specific facts which create disputed factual issues. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986), Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The ultimate inquiry of the court is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so onesided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-252, 106 S.Ct. at 2512.

In evaluating a summary judgment motion, district courts must consider the evidence in the light most favorable to the non-moving party and draw all reasonable inferences from those facts in favor of the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). Those facts which the moving party bears the burden of proving are facts which are material. "The substantive law will identify which facts are material. Only disputes over facts which might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.

An issue of material fact is genuine when, "the evidence ... creates a fair doubt; wholly speculative assertions will not suffice. A trial, after all, is not an entitlement. It exists to resolve what reasonable minds could recognize as real factual disputes." Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). However, when there are disputes over the sufficiency of evidence establishing the facts that control the application of a rule of law, summary judgment is an inappropriate means of deciding the issue. Thus, summary judgment is appropriate only where no material facts are genuinely disputed and the evidence from the entire record could not lead a rational fact finder to rule for the non-moving party. Matsushita Electric Industrial Co., 475 U.S. at 587, 106 S.Ct. at 1356, Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. at 2552-53 (1986).

FACTUAL BACKGROUND AND DISCUSSION

1. In February, 1992, Bradson entered into an Agreement with VICC under which...