Mertens Constr. Co. v. Div. of Emp't Sec.
| Decision Date | 17 May 2016 |
| Docket Number | WD 78655 |
| Citation | 489 S.W.3d 918 |
| Parties | Mertens Construction Company, Inc., Appellant, v. Division of Employment Security, Respondent. |
| Court | Missouri Court of Appeals |
Thomas K. Riley and Jacquelyn Brazas, Fulton, Missouri, for appellant.
Sara H. Harrison and Mandolin Jackson, Jefferson City, MO, for respondent.
Mertens Construction Company (“Mertens”) appeals the decision of the Labor and Industrial Relations Commission (“Commission”), which affirmed a decision of the Appeals Tribunal finding that Mertens stands in the position of Prestage Quarries, Inc. (“Prestage”) as a successor pursuant to section 288.110.1 Mertens argues that the Commission erred because Mertens did not acquire substantially all of the business or continue the business of Prestage without interruption, as required by section 288.110. We affirm.
Mertens is a Missouri corporation that is in the business of mining, operating rock quarries, and selling crushed rock. Mertens's president is Kenneth Douglas Mertens (“Mr. Mertens”). Prestage, also a Missouri corporation, was also in the business of mining, crushing rock, and selling crushed rock to customers. Prestage conducted its business in a quarry on real estate that it owned. Gary Milligan (“Mr. Milligan”) was the president of Prestage.
In August of 2012, Mertens entered into an Asset Purchase Agreement (the “Agreement”) with Prestage, whereby Mertens purchased the real estate on which Prestage's quarry was located along with Prestage's inventory of crushed rock, equipment, supplies, goodwill, and customer list. Mertens also purchased and continued to use the telephone number previously used by Prestage. The sale did not include Prestage's accounts receivable, petty cash, cash in banks, CD's, prepaid insurance, and three vehicles. The Agreement did not require Mertens to hire any of Prestage's employees, and Mertens did not hire any of Prestage's employees. Prestage's employee workforce had dwindled prior to the sale and, by the time of the closing of the sale, Prestage had no employees.
As required by the Agreement, Prestage changed its name to Milligan Enterprises, Inc.,2 and its sole business after the closing of the Agreement was the winding up of accounts receivable and preparing and filing tax returns. The Agreement also contained a non-compete agreement, in which Mr. Milligan and Prestage agreed not to compete with Mertens by selling goods, such as crushed rock, that are sold by Mertens for a period of three years within 125 miles of the purchased quarry in the state of Missouri.
Mr. Mertens testified before the Commission that after the closing date of the Agreement, Mertens continued to operate the mining and quarry business on both the property already owned by Mertens along with the property purchased from Prestage. The inventory of crushed rock acquired from Prestage, 75,000 tons, was added to Mertens's existing inventory and was sold to its existing customers and Prestage's former customers under Mertens's name. Mertens attempted, unsuccessfully, to have Prestage's land reclamation permit from the Missouri Department of Natural Resources (“MDNR”) transferred to itself so that rock-crushing activities at the purchased quarry could continue. MDNR denied that request, and Mertens was required to apply for a new permit. Until the new permit was issued, Mertens sold the inventory of crushed rock from the purchased location but did not operate any mining or crushing operations. In August of 2013, Mertens was issued a permit to operate a relocated rock crushing plant on the property formerly owned by Prestage. Mertens now operates the quarry and a rock-crushing plant at that location. In response to DES's Successorship's Questionnaire, both Mr. Milligan and Mr. Mertens responded that Mertens was purchasing all of Prestage's business and was continuing that business.
The Missouri Division of Employment Security (“DES”) notified Mertens that it had determined that, effective January 1, 2013, it stood in the position of Prestage under section 288.110. Mertens was determined to have succeeded to Prestage's “separate account, actual contribution and benefit experience, annual payrolls, and liability for current or delinquent contributions, interest and penalties, and contribution rate as provided under Section 288.110 of the Missouri Employment Security Law.” Mertens timely filed a request for a hearing, the result of which, finding that Mertens must stand in the place of Prestage, was affirmed by the Appeals Tribunal. The Commission also affirmed the decision of DES and the Appeals Tribunal, finding that Mertens stands in the position of Prestage for all purposes under section 288.110. Mertens now appeals.
Appellate review of decisions of the Commission regarding the employment security law is governed by section 288.210 which provides, in pertinent part:
See e.g., Morrison v. Labor and Indus. Relations Comm'n , 23 S.W.3d 902, 906 (Mo.App.W.D. 2000)
.
While determinations of fact made by the Commission are conclusive and binding on the reviewing court if those facts are supported by substantial and competent evidence, SportsTicker Enterprises v. Division of Employment Security, 961 S.W.2d 909, 911 (Mo.App. W.D. 1998)
, we are not bound by the Commissions' conclusions of law or its application of law to the facts. Landmark Industries of Illinois, Inc. v. Division of Employment Security, 942 S.W.2d 446, 447 (Mo.App. W.D. 1997). Where the facts are undisputed and the issue involves the application and construction of a law to virtually uncontroverted facts, the issue is one of law. Division of Employment Security v. Taney County Dist. R–III, 922 S.W.2d 391, 393 (Mo. banc 1996).
In Point One on appeal, Mertens argues the Commission erred in finding that Mertens stands in the position of Prestage under section 288.110 because Mertens did not acquire substantially all of the business or continue the business of Prestage without interruption. Mertens argues that because Prestage terminated the employment of all its employees prior to the transfer of its assets to Mertens, the Commission erred in finding that Mertens shall stand as Prestage's successor pursuant to section 288.110.
Section 288.110 provides a mechanism through which the State of Missouri, for the purpose of its employment laws, may treat an individual, organization or other “employing unit,” which has acquired an “employer,” as one entity. That statute, in relevant part, states:
Any individual, type of organization or employing unit which has acquired substantially all of the business of an employer, excepting in any such case any assets retained by such employer incident to the liquidation of the employer's obligations, and in respect to which the division finds that immediately after such change such business of the predecessor employer is continued without interruption solely by the successor, shall stand in the position of such predecessor employer in all respects, including the predecessor's separate account, actual contribution and benefit experience, annual payrolls, and liability for current or delinquent contributions, interest and penalties.
Section 288.110. Stated more succinctly and in terms applicable to the facts at bar, where a business acquires (1) substantially all of the business of an employer and (2) solely continues the business without interruption, then the acquiring business is treated as the successor of the predecessor employer for employment purposes. See e.g., Atlas Mobilfone, Inc. v. Labor and Indus. Relations Comm'n , 939 S.W.2d 928 (Mo.App. W.D. 1997)
. As recognized by Mertens, the purpose of the statute is employment stabilization. This Court has characterized the purpose and policy behind the statute as follows:
On the one hand, the statute protects the basic integrity of the employment security system by providing a means of collection of delinquent accounts when the business enterprise is ongoing and the benefits and burdens have been assumed by another. So likewise, when the shoe is on the other foot and the transferee is asserting a right to the lower rate established by the transferor, if the transferee has assumed the benefits and burdens of the prior operation in whatever form and however conveyed, it is equitable and in furtherance of the statutory purpose to stabilize conditions of employment to permit the transferee to obtain the lower rate of contribution and any value in the predecessor's account. This is done for the reason that the whole purpose of the system is to provide continuity and stability of employment. The incentive to a transferee, to continue uninterrupted and without decrease in employment the enterprise transferred, is the expectation of the lowered rate of contribution. Put another way, interpretation of the statute which emphasizes the necessity for stability in employment and the protection of the State's interest in collection of delinquent accounts, and which is based upon a realistic appraisal of the business situation, accomplishes the basic legislative goals.
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