Chaknova v. Wilbur-Ellis Co.
| Decision Date | 03 February 1999 |
| Docket Number | No. A080747,WILBUR-ELLIS,A080747 |
| Citation | 69 Cal.App.4th 962,81 Cal.Rptr.2d 871 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , Prod.Liab.Rep. (CCH) P 15,465, 99 Cal. Daily Op. Serv. 962, 99 Daily Journal D.A.R. 1187 Albert A. CHAKNOVA et al., Plaintiffs and Appellants, v.COMPANY, Defendant and Respondent. |
Brayton, Purcell, Curtis & Geagan, Gilbert L. Purcell, James Geagan, Marc L. TerBeek, for Plaintiffs and Appellants.
Thacher, Albrecht & Ratcliff, James F. Thacher, Charles S. Holden, San Francisco, Becherer, Kannett & Schweitzer, Mark S. Kannett, Alameda, for Defendant and Respondent.
Dorothy Chaknova, on her own behalf and as successor-in-interest to her deceased husband Albert Chaknova, 1 appeals the trial court's entry of summary judgment in favor of respondent corporation, Wilbur-Ellis Company (Wilbur-Ellis) in this action for asbestos-related injuries. We hold, as did the trial court, that Wilbur-Ellis met its burden of establishing that it is not liable for appellants' injuries. The Chaknovas failed to create triable issues of material fact concerning Wilbur-Ellis's liability as successor-in-interest to the asbestos brokerage firm L.H. Butcher, and concerning Albert Chaknova's exposure to asbestos brokered by Wilbur-Ellis.
Albert and Dorothy Chaknova filed complaints for personal injury and loss of consortium, respectively, against several asbestos defendants including respondent Wilbur-Ellis. The actions were consolidated and Wilbur-Ellis moved for summary judgment on the grounds that it had no liability as a corporate successor nor as a "product line" successor to L.H. Butcher, 2 a corporation alleged to have brokered asbestos to which Albert was exposed during his career as a pipefitter. Wilbur-Ellis also sought summary judgment on the ground that the Chaknovas lacked admissible evidence that Albert was exposed to asbestos sold either by L.H Butcher or by a Wilbur-Ellis subsidiary. 3 The trial court granted summary judgment on each of these grounds.
Albert Chaknova alleged in his complaint that he developed asbestosis as a result of exposure to asbestos and asbestos containing products during his employment as a pipefitter from 1943 through 1979. In an amendment to his complaint he substituted "WILBUR-ELLIS COMPANY, individually and as parent, alter-ego, and successor-in-interest to L.H. Butcher CO." in place of DOE 11. On summary judgment the following undisputed facts were established: On November 30, 1960, Wilbur-Ellis purchased the asbestos distribution and industrial chemical business assets of L.H. Butcher Company, a wholly owned subsidiary of Udylite Corporation of Delaware. L.H. Butcher Company was a distributor of industrial chemical supplies including asbestos. As consideration for the sale, Wilbur-Ellis agreed to pay $3.7 million, by paying $2.5 million in cash at closing and $1.2 million in 10 equal annual installments. 4 It was agreed that this purchase price would be calculated as "(i) an amount equal to the total net book value of Butcher at the Closing Date, determined in accordance with generally accepted accounting principles consistent with those customarily employed by Butcher, as set forth in a balance sheet ... prepared by Butcher and audited by the Accountants in accordance with generally accepted auditing standards ... and (ii) the assumption of all the liabilities of Butcher given effect in the determination of said net book value ...." (Italics added.) The audited balance sheet included no amounts for tort liabilities, contingent or otherwise. 5
As part of the agreement, L.H. Butcher agreed to change its name so that Wilbur-Ellis could use the "L. H. Butcher" name in connection with the asbestos distribution business. Accordingly, in December 1960 the original L.H. Butcher became Udylite of California, Inc., which corporation became Udylite of Delaware's wholly owned subsidiary. In 1962, 15 months after the asset purchase, Udylite of California was dissolved pursuant to an "Agreement and Plan of Liquidation" entered into between Udylite of California and its sole shareholder, Udylite of Delaware. Wilbur-Ellis played no part in the decision to dissolve Udylite of California, nor could it have, as it had no board members in common with Udylite of Delaware or Udylite of California, owned no stock in either corporation and exercised no control over either entity. Furthermore, there was no provision in the original asset purchase agreement between Wilbur-Ellis and L.H. Butcher requiring the dissolution of the selling corporation.
On November 30, 1960, the same day Wilbur-Ellis purchased L.H. Butcher's asbestos and chemical distribution business, Wilbur-Ellis assigned and transferred its right title and interest under the purchase agreement to its wholly owned subsidiary, Wilbel, Inc. Three years later, on December 31, 1963, Wilbel, doing business as L.H. Butcher, was merged into Wilbur-Ellis. By virtue of the merger Wilbur-Ellis assumed all of Wilbel's existing obligations.
In February 1964, 39 months after acquiring L.H. Butcher, Wilbur-Ellis got out of the asbestos business when it sold the good will and assets of its asbestos distribution business to Central Solvents & Chemicals Company, and unrelated entity.
We review de novo the granting of a summary judgment motion to determine whether there exists a triable issue of material fact, or whether, there being none, the moving party is entitled to judgment as a matter of law. (Saldana v. Globe-Weis Systems Co. (1991) 233 Cal.App.3d 1505, 1514, 285 Cal.Rptr. 385.)
As a general rule, (Ortiz v. South Bend Lathe (1975) 46 Cal.App.3d 842, 846, 120 Cal.Rptr. 556, disapproved on other grounds in Ray v. Alad Corp. (1977) 19 Cal.3d 22, 34, 136 Cal.Rptr. 574, 560 P.2d 3 (Ray v. Alad ).)
Appellants assert the first of these conditions applies here to impose liability on Wilbur-Ellis; namely that it expressly or impliedly assumed contingent liability for asbestos-related injuries that might be incurred at some time in the future arising out of L.H. Butcher's brokering activities prior to 1960. We look first to the language of the agreement itself, which we conclude unambiguously shows no assumption by Wilbur-Ellis of existing or contingent tort liabilities.
Under the terms of the agreement, the $3.7 million amount set for the purchase price took into account Wilbur-Ellis's "assumption of all the liabilities of Butcher given effect in the determination of said net book value .... (Italics added.) Those liabilities, as detailed in footnote 5, ante, did not include the sort of contingent liability for injuries incurred in the future for which appellants seek to hold Wilbur-Ellis liable. As further indication of the limited nature of Wilbur-Ellis's liability assumption, the agreement provided that it would assume obligations to be performed under existing leases, purchase orders and executory contracts and assume liabilities related to those contracts. 6 These provisions are clear and unambiguous: they pertain to the assumption of ongoing business dealings and the performance of those contracts, and not to contingent tort liability.
Appellants claim, however, that the agreement can be interpreted so as to include Wilbur-Ellis's assumption of liability for L.H. Butcher's tortious acts. In support of this claim, appellants point to a letter written by Wilbur-Ellis's attorney on November 26, 1960, to the state deputy commissioner of corporations concerning Wilbur-Ellis's application for permission to issue stock. The letter discusses Wilbur-Ellis's purchase of L.H. Butcher including its "assumption of the balance of Butcher's liabilities." According to appellants, this phrase created a triable issue of material fact regarding Wilbur-Ellis's intention to assume all of L.H. Butcher's liabilities, notwithstanding what the sales contract documents provide. We reject this claim for two reasons.
First, in responding to Wilbur-Ellis's summary judgment motion, appellants admitted that Wilbur-Ellis purchased L.H. Butcher's assets "under an integrated set of contract documents dated November 30, 1960" which did not include the November 26 letter. Matters extrinsic to an integrated contract will not be considered to modify the unambiguous language of those contracts. (Code Civ. Proc., § 1856, 7 subd. (a); Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1382, fn. 4, 58 Cal.Rptr.2d 336; see also Masterson v. Sine (1968) 68 Cal.2d 222, 65 Cal.Rptr. 545, 436 P.2d 561.) As we have said, the documents comprising the agreement between Wilbur-Ellis and L.H. Butcher are clear with respect to the assumption of liabilities: Wilbur-Ellis assumed "all the liabilities of Butcher given effect in the determination of said net book value ...." (Italics added.) Thus, Wilbur-Ellis assumed very specific financial liabilities as given effect on L.H. Butcher's balance sheet. (See fn. 5, ante.) Therefore, even if the letter to the corporations department suggested that Wilbur-Ellis was intending to assume other of L.H. Butcher's liabilities, the subsequently executed unambiguous integrated contract documents speak clearly for themselves and are not subject to modification by the earlier letter.
In any case, we also hold that the letter to the commissioner of corporations,...
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