J.D. Fields & Co. v. Nottingham Construction Co.
184 So. 3d 99
La. Ct. App.2015Background
- In 2005 Nottingham Construction rented sheet piles from J.D. Fields and hired PCS to drive/remove them for a cofferdam; Fields alleges the piles were returned damaged in 2006 and billed Nottingham for reconditioning/liquidation charges that went unpaid.
- In August 2010 Wharton‑Smith purchased certain Nottingham assets via an Asset Purchase Agreement and expressly assumed only specified liabilities; the agreement excluded liabilities accrued prior to closing.
- Fields sued (2012) Nottingham, Wharton‑Smith, and PCS for breach of contract (successor liability against Wharton‑Smith) and negligence; procedural exceptions dismissed Fields’ open‑account claim on prescription, leaving the breach claim against Wharton‑Smith.
- Wharton‑Smith moved for summary judgment arguing it did not assume Fields’ pre‑closing liabilities and was not a mere continuation of Nottingham; it submitted the purchase agreement and depositions supporting exclusion language and lack of continuity/ownership overlap.
- The trial court granted summary judgment for Wharton‑Smith (Jan. 5, 2015); the court of appeal affirmed, holding (1) the contract excluded pre‑closing liabilities and (2) Wharton‑Smith was not a mere continuation of Nottingham.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether purchaser expressly or impliedly assumed seller's liability to Fields | Fields: agreement should be read to impose liability on Wharton‑Smith for Nottingham's debt | Wharton‑Smith: agreement expressly excluded liabilities arising before closing, so it assumed no obligation for Fields' claim | Held: No assumption — contract excludes pre‑closing liabilities; Wharton‑Smith not liable under this exception |
| Whether purchaser is a "mere continuation" of the seller (successor liability) | Fields: continuity of business — Wharton‑Smith used Nottingham’s office, assumed lease, and hired employees — shows continuation | Wharton‑Smith: did not buy all/substantially all assets, no common owners/officers, different customer base and scope; only selective asset purchase | Held: Not a continuation — insufficient evidence of continuity of ownership/identity; summary judgment proper |
| Whether summary judgment was appropriate on successor‑liability theory | Fields: disputed facts exist about assumption/continuation preventing summary judgment | Wharton‑Smith: no factual support for elements of successor liability; burden shifts to plaintiff, who failed to produce evidence | Held: Summary judgment affirmed — no genuine issue of material fact supporting successor liability |
| Whether transaction was entered to escape liability (de facto fraud/escape exception) | Fields: (implicitly) sale served to avoid liability | Wharton‑Smith: no evidence of fraudulent intent or sham transaction | Held: Not raised/supported — no basis to apply escape‑liability exception |
Key Cases Cited
- Golden State Bottling Co. v. National Labor Relations Board, 414 U.S. 168 (U.S. 1973) (articulates three exceptions to the general rule that asset purchasers do not assume seller's liabilities)
- Bourque v. Lehmann Lathe, 476 So.2d 1125 (La. App. 3d Cir. 1985) (Louisiana follows Golden State exceptions for successor liability)
- Pichon v. Asbestos Defendants, 52 So.3d 240 (La. App. 4th Cir. 2010) (discusses requirement that purchaser acquire all or substantially all assets for continuation analysis)
- Wolff v. Shreveport Gas, Electric Light & Power Co., 70 So. 789 (La. 1916) (continuation doctrine centers on continuity of ownership — same shareholders indicate continuation)
- National Surety Corp. v. Pope Park, Inc., 121 So.2d 240 (La. 1960) (explains limitation that continuation/de facto merger theories require continuity in ownership)
- Calmes v. American Bankers Ins. Co., 580 So.2d 450 (La. App. 5th Cir. 1991) (affirming summary judgment where only an asset sale occurred and there was no common ownership)