Celotex Corp. v. Pickett

• Decision Date: 08 May 1986
• Docket Number: No. 66383,66383
• Citation: 11 Fla. L. Weekly 208,490 So.2d 35
• Parties: , 54 USLW 2606, 11 Fla. L. Weekly 208, Prod.Liab.Rep. (CCH) P 11,034 The CELOTEX CORPORATION, Petitioner, v. Leonard H. PICKETT, Sr., and Linda N. Pickett, his wife, Respondents.
• Court: Florida Supreme Court

Page 35

490 So.2d 35

55 A.L.R.4th 157, 54 USLW 2606, 11 Fla. L. Weekly 208,

Prod.Liab.Rep. (CCH) P 11,034

The CELOTEX CORPORATION, Petitioner, v. Leonard H. PICKETT, Sr., and Linda N. Pickett, his wife, Respondents.

No. 66383.

Supreme Court of Florida.

May 8, 1986.

Rehearing Denied July 15, 1986.

Julian Clarkson of Holland and Knight, Tallahassee, James W. Kynes, The Celotex Corp., and Thomas C. MacDonald, Jr., Charles P. Schropp and Raymond T. Elligett, Jr. of Shackleford, Farrior, Stallings and Evans, Tampa, for petitioner.

Wayne Hogan of Brown, Terrell, Hogan and Ellis, Jacksonville, for respondents.

C. Harris Dittmar, Mary K. Phillips and Timothy J. Corrigan of Bedell, Dittmar, DeVault, Pillans and Gentry, Jacksonville, amicus curiae for The Academy of Florida Trial Lawyers.

EHRLICH, Justice.

We have for our review a decision of the First District Court of Appeal reported as Celotex Corp. v. Pickett, 459 So.2d 375 (Fla. 1st DCA 1984). We have jurisdiction pursuant to article V, section 3(b)(3), Florida Constitution, based upon apparent direct and express conflict with prior decisions of this Court: White Construction Co. v. DuPont, 455 So.2d 1026 (Fla.1984); Bernard v. Kee Manufacturing Co., 409 So.2d 1047 (Fla.1982); Mercury Motors Express, Inc. v. Smith, 393 So.2d 545 (Fla.1982).

The facts relevant for our review here are that the respondent husband (Pickett) was employed in a Jacksonville shipyard from 1965 through June 1968, where as part of his employment as an insulator of ships, he extensively used Philip Carey asbestos cement. Pickett developed severe lung problems, due to the devastating effects on the human body which results from exposure to asbestos. The Picketts sued, on the grounds of negligence and strict liability, several defendants including the petitioner (Celotex) in its capacity as the corporate successor to Philip Carey. Finding that Philip Carey was negligent in placing "defective" asbestos-containing insulating products on the market which caused Pickett's injuries, the jury awarded compensatory damages of $500,000 to Pickett and $15,000 to his wife. The jury also determined that Philip Carey had acted so as to warrant punitive damages in the amount of $100,000 against Celotex. Celotex's appeal of the imposition of punitive damages formed the basis for the First District's opinion below which affirmed the award.

The threshold question involved here is the legal status of Celotex as the successor to Philip Carey. The district court opinion set forth the following background:

The Philip Carey Corporation was begun in 1888 and subsequently merged with Glen Alden Corporation in 1967. Thereafter, Philip Carey merged with another Glen Alden subsidiary, Briggs Manufacturing Company, and became known as Panacon Corporation. Celotex purchased Glen Alden's controlling interest in 1972 and later purchased the remaining shares of Panacon and merged it into Celotex.

459 So.2d at 376.

The effect of this merger, as correctly recognized by the First District, is controlled by section 607.231(3), Florida Statutes (1983), which reads:

(c) Such surviving or new corporation shall have all the rights, privileges, immunities and powers, and shall be subject to all of the duties and liabilities, of a corporation organized under this chapter. (Emphasis added.)

Celotex has admitted that it is liable, because of the merger, for the compensatory damages awarded to the Picketts. The sole and narrow issue before us here is whether punitive damages were properly assessed against petitioner, the surviving corporation in a statutory merger.

Celotex, however, maintains that the trial court and the district court below misapplied our prior decisions by holding Celotex liable for punitive damages, when Philip Carey, not Celotex, was the "real wrongdoer." Celotex also claims that imposition of punitive damages against Celotex, simply because it is the statutory successor of Philip Carey, contravenes the purpose of such damages in Florida. We disagree with both contentions.

Celotex's argument is essentially that: first, the district court misapplied Bernard v. Kee Manufacturing Co., 409 So.2d 1047 (Fla.1982), by approving the trial court's assessment of punitive damages against Celotex merely because it is the statutory successor to Philip Carey; second, the First District Court opinion failed to consider the requirements set forth in Mercury Motors Express, Inc. v. Smith, 393 So.2d 545 (Fla.1981), that some degree of fault must exist before punitive damages may be vicariously imposed; and, finally, the degree of tortious conduct at issue here does not rise to the requisite level of culpability justifying punitive damages as enunciated in White Construction Co. v. DuPont, 455 So.2d 1026 (Fla.1984).

Celotex misperceives the scope of our prior decisions. In Bernard, the plaintiff brought a product liability claim against the defendant corporation even though the defendant's predecessor had manufactured the defective product. In refusing to accept the "product line" theory of corporate successor liability, we noted that the defendant corporation had purchased from its predecessor its assets which included the manufacturing plant, inventory, good will and the corporate name. We found that the defendant corporation, by the terms of the acquisition agreement, had not assumed the liabilities or obligations of its predecessor. 409 So.2d at 1048. We also recognized that a successor corporation could succeed to its predecessor's liabilities if the successor explicitly or impliedly assumed the obligations of the predecessor. Id. at 1049.

In Mercury Motors, we had occasion to address the propriety of a punitive damages award against an employer based solely on the vicarious liability theory of respondeat superior. Our holding in Mercury Motors was that the doctrine of respondeat superior, without proof of some fault on the part of the corporate employer, could not serve to justify an award of punitive damages. We affirmed the established rule in Florida that the correct standard in determining whether liability for punitive damages may properly be imposed, is the same for an individual "master" as for a corporate entity. 393 So.2d at 547.

An issue in White Construction involved the question of what degree of negligence was required in order to submit the issue of punitive damages to a jury. In reaffirming the rule set forth in Carraway v. Revell, 116 So.2d 16 (Fla.1959), we opined in White Construction that the degree of negligence necessary to sustain the imposition of punitive damages is the same as that required to sustain a conviction of manslaughter. 455 So.2d at 1028.

Bernard simply does not address the issue of a successor corporation's assumption of its predecessor's liabilities, including punitive damages, when two corporations truly merge. Celotex's reliance on White Construction is similarly misplaced. Celotex has not raised as an issue either before the district court or here, the sufficiency of the evidence justifying an award of punitive damages against Panacon. It is Celotex's liability for the tortious conduct of Panacon which represents the gravamen of Celotex's argument before this Court. Celotex, having merged with Panacon, cannot now disclaim its lineage.

Celotex seeks here to characterize its liability as "vicarious," in contravention of our holding in Mercury Motors, since, according to it, Philip Carey/Panacon is the "real wrongdoer" and there is no evidence of fault by Celotex. We disagree with this characterization. Because of its merger agreement with Panacon, whereby "all debts, liabilities and duties" of Panacon are enforceable against Celotex, and because of the effect of section 607.231(3), the liability imposed upon Celotex is direct, not vicarious. Liability for the reckless misconduct of Philip Carey/Panacon legally continues to exist within, and under the name of, Celotex. See, e.g., Barnes v. Liebig, 146 Fla. 219, 1 So.2d 247 (1941). Where two corporations have truly merged, a corporate tortfeasor by any other name is still a tortfeasor, to paraphrase Shakespeare. See, e.g., Moe v. Transamerica Title Insurance Co., 21 Cal.App.3d 289, 98 Cal.Rpt. 547, 556-57 (1971) (merger "merely directs the blood of the old corporation into the veins of the new, the old living in the new"); Atlanta Newspapers, Inc. v. Doyal, 84 Ga.App. 122, 128, 65 S.E.2d 432, 437 (1951) (merger "is like the uniting of two or more rivers, neither stream is annihilated, but all continue in existence").

Celotex's claim that the imposition of punitive damages here contravenes the purpose of such damages is unpersuasive. Punitive damages are imposed as a punishment of the defendant and as a deterrent to others. Fisher v. City of Miami, 172 So.2d 455 (Fla.1965). Both aspects of this purpose are present here. Celotex,...