Printed Media Services v. Solna Web, Inc.

• Decision Date: 12 November 1993
• Docket Number: No. 93-2454-JWL.,93-2454-JWL.
• Citation: 838 F. Supp. 1453
• Parties: PRINTED MEDIA SERVICES, Plaintiff, v. SOLNA WEB, INC., Defendant, Solna Web, U.S.A., Garnishee, Evello Investments, N.V., Intervenor.
• Court: U.S. District Court — District of Kansas

838 F. Supp. 1453

PRINTED MEDIA SERVICES, Plaintiff, v. SOLNA WEB, INC., Defendant, Solna Web, U.S.A., Garnishee, Evello Investments, N.V., Intervenor.

No. 93-2454-JWL.

United States District Court, D. Kansas.

November 12, 1993.

Truman K. Eldridge, Jr., Renana B. Abrams, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, Thomas L. Hamlin, John C. Knoepfler, Robins, Kaplan, Miller & Ciresi, Minneapolis, MN, for plaintiff.

Mark S. Gunnison, McDowell, Rice & Smith, P.C., Overland Park, KS, Harry E. Wigner, Jr., W. Joseph Hatley, Lathrop & Norquist, Overland Park, KS, for defendant.

Edward M. Boyle, Payne & Jones, Chtd., Overland Park, KS, for intervenor.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

I. Introduction

In this action, plaintiff Printed Media Services ("Printed Media") seeks to enforce a valid default judgment against Solna Web, Inc. pursuant to K.S.A. §§ 60-714 et seq. On May 27, 1992, Printed Media obtained a $6,688,339 judgment against Solna Web, Inc. in the United States District Court for the District of Minnesota. In an effort to satisfy this judgment, Printed Media requests that the court set aside a transfer, which took place in December of 1991, whereby Solna Web, Inc. transferred all of its assets to its parent corporation, Evello Investments N.V. Printed Media alleges that this transfer was fraudulent, in violation of K.S.A. § 33-102, and, thus, is void and has no effect.

A trial to the court was held in this matter on the 26th and 27th of October, 1993. After considering at great length the evidence in this case, the court finds that the plaintiff has not met its burden to show that the transfer was fraudulent. Accordingly, Printed Media's request for relief is denied and the court will not set aside the transfer. Furthermore, the court finds that even if the purpose of the transfer had been to avoid payment to Printed Media, Printed Media could not have reached the assets of Solna Web, Inc., which are in question here because the assets were already subject to a valid perfected security interest, and relief is denied on this ground as well.

Pursuant to F.R.C.P. 52(a), the court makes the following findings of fact and conclusions of law.

II. Findings of Fact

1. In 1986, Printed Media bought a web offset press from Solna, Inc., a Missouri corporation that distributed, in the United States, sheetfed and webfed presses manufactured by the Swedish corporations owned by AB Bonnierforetagen, a Swedish conglomerate ("the Bonnier Group"). At that time, the stock of Solna, Inc., was wholly owned by the Bonnier Group.

2. In early 1989, Solna, Inc., stopped distributing sheetfed presses and their component parts, but continued to distribute web fed presses and parts. In 1990, the Bonnier Group stopped manufacturing sheetfed presses.

3. In response to the change in the type of presses distributed, Solna, Inc., changed its name to Solna Web, Inc. ("Solna Web (MO)"), but continued to distribute presses manufactured by the Bonnier Group.

4. In December of 1989, PEC Acquisition Corporation ("PEC Acq."), a Delaware corporation, acquired certain assets and assumed certain liabilities of Solna Web, Inc., the Missouri corporation ("Solna Web (MO)").

5. PEC Acq. was a wholly owned subsidiary of Publishers Equipment Corporation ("PEC"), formed by PEC specifically for the purpose of acquiring the assets and liabilities of Solna Web (MO). PEC is a publicly held Texas corporation, of which the Bonnier Group owned, at the time relevant to this lawsuit, a significant minority portion of the stock.

6. The sale was finalized on January 12, 1990 by the execution of an Asset Purchase Agreement. No party in this lawsuit contests the validity of the sale of the assets of Solna Web (MO) to PEC Acquisition Corp. All parties agree this was a valid transfer and no fraud is alleged as to it.

7. As part of the asset purchase agreement between PEC Acq. and Solna Web (MO) ("PEC Acq. asset purchase agreement"), Solna Web (MO) sold the right to use the trade name "Solna Web" and agreed that it would change its name to something not similar to Solna Web, Inc. Subsequent to the execution of the agreement, on May 3, 1990, PEC Acq. changed its name to Solna Web, Inc. ("Solna Web (DE)").

8. PEC Acq. acquired the assets of Solna Web (MO) for a purchase price of $2,462,756. The purchase price was paid by PEC Acq. in the form of a ten year non-interest bearing note ("Note") executed by PEC Acq. in favor of Solna Web (MO).

9. PEC Acq. granted Solna Web (MO) a security interest in the assets transferred in order to secure or collateralize the Note.

10. After this asset transfer, Solna Web (MO) changed its name to Bocca, Inc. ("Bocca"), as was required by the agreement. Bocca's assets consisted of about $930,572 cash and the Note for $2,462,000, which were available for any debts owed to creditors.

11. PEC Acq. became Solna Web (DE) and continued to do the same business that was done by Solna Web (MO). Operations were conducted from the same facility in Kansas City, Missouri, and many of the same employees worked for both corporations.

12. The parties vehemently disagree as to what extent, if any, PEC Acq. (later Solna Web (DE)) assumed liability on the press sold to Printed Media by virtue of the asset purchase agreement with Solna Web (MO) (later Bocca).¹

13. On May 15, 1990, Printed Media filed suit in federal court in Minnesota naming Solna Web, Inc. as defendant, alleging claims based on the failure of the press, purchased in 1986, to function properly. Initially, the complaint described Solna Web, Inc. as a Missouri corporation, even though at the time, all the assets of Solna Web (MO) had been sold to PEC Acq. The complaint was not amended until January of 1992 to reflect that Solna Web (DE) was being sued.

14. In June of 1991, PEC placed into bankruptcy, in Sweden, its Swedish webfed press manufacturing company. Roland Anger and a partner, through entities controlled by them, purchased the assets of this bankrupt company from the bankruptcy trustee in Sweden.

15. As part of this transaction, the Bonnier Group agreed to assign the Note and security agreement to a corporation named Evello AB. Evello AB had been a dormant corporation for four or five years, but owned shares of stock in other corporations. Evello AB was wholly owned by Roland Anger.

16. Anger and a partner reorganized the webfed press printing manufacturing operation it had just acquired through the bankruptcy proceedings and named it Solna Web International AB ("Solna Web Int'l").

17. The court finds that Bocca, after the assignment of the Note, had over $900,000 with which to pay its remaining debts and any judgment that Printed Media might eventually have had against it.

18. In June of 1991, Solna Web (DE) was the distributor of presses of a Swedish manufacturer that was out of production. Although it continued to cost money to run the corporation, the corporation was not generating revenue. Solna Web (DE) did not generate a profit in 1990, nor in the first half of 1991.

19. In July of 1991, Herb Minnis, the manager of special projects at Solna Web (DE) (he also held the same position with Solna Web (MO)), met with Anger in Sweden to discuss the possibility that Minnis and Ulf Aggeryd would buy the Solna Web (DE) distributorship. The lawsuit taking place in Minnesota was not discussed.

20. On August 30, 1991, Evello Investments, N.V. ("Evello NV"), bought 100% of the stock of Solna Web (DE) from PEC. Roland Anger owned sixty of one-hundred thirty shares of stock in Evello NV and had the power to sign on behalf of the corporation. This stock purchase ("Evello NV stock purchase") was evidenced by an agreement between PEC, Solna Web (DE) and Evello NV.

21. At the time of the Evello NV stock purchase, Solna Web (DE) still owed on the Note. This debt was reflected in the balance sheet of Solna Web (DE) dated August, 1991, in the amount of $1,055.338, and was later reflected in the October, 1991, balance sheet in the amount of $1,114,791.

22. Immediately upon Evello NV's acquisition of the stock of Solna Web (DE), Anger directed the officers of Solna Web (DE) to locate an entity to take over the business of distributing webfed press products manufactured in Sweden.

23. A distributor agreement was executed between Inland Industries, Inc. ("Inland"), and Solna Web Int'l which provided that as of January 1, 1992, Inland, or a designated wholly owned subsidiary, would be the exclusive distributor of Solna products and services in the United States. Inland formed Solna Web USA, Inc. ("Solna Web USA"), to serve as distributor under the agreement.

24. As part of the distributorship agreement, Evello NV and Solna Web (DE) entered into a letter of intent with Inland which provided that Evello NV and Solna Web (DE) would deliver on consignment to Solna Web USA all inventory of Solna Web (DE) located in Joplin, Missouri.

25. After a distributor was found, and while Printed Media's lawsuit was pending in Minnesota, Evello NV, which owned all the stock in Solna Web (DE), by and through Anger, began a series of actions which would ultimately result in Evello NV's acquisition of the assets of Solna Web (DE). Anger directed the employees of Solna Web (DE) to engage in an evaluation of the corporation's assets so that Evello NV could purchase these assets by the end of the year, December 31, 1991.

26. Herb Minnis prepared the evaluation and retained legal counsel to prepare appropriate legal documents so that Evello NV could purchase the assets of its subsidiary, Solna Web (DE).

27. On December 31, 1991, Solna Web (DE) transferred its assets to Evello NV, its parent company and sole shareholder ("Evello NV asset purchase agreement"). The agreement was signed on behalf of Solna Web (DE) by Ulf Aggeryd, the corporation's vice president. Pursuant to a written power of attorney, Herb Minnis signed on behalf of Anger and Evello NV. Thus, the...