Court Opinion

ID: 3172412
Source: CourtListenerOpinion
Date Created: 2016-01-27 14:05:46.119036+00
Date Added: 2024-06-11T12:01:37.273992
License: Public Domain

[Cite as Carpenter v. New Age Logistics, L.L.C., 2016-Ohio-281.]

STATE OF OHIO                     )                        IN THE COURT OF APPEALS
                                  )ss:                     NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                  )

JACK D. CARPENTER                                          C.A. No.   27689

        Appellant

        v.                                                 APPEAL FROM JUDGMENT
                                                           ENTERED IN THE
NEW AGE LOGISTICS, LLC                                     COURT OF COMMON PLEAS
                                                           COUNTY OF SUMMIT, OHIO
        Appellee                                           CASE No.   CV 2013 11 5307

                                 DECISION AND JOURNAL ENTRY

Dated: January 27, 2016

        MOORE, Judge.

        {¶1}     Plaintiff-Appellant, Jack Carpenter, now appeals from the judgment of the

Summit County Court of Common Pleas, granting summary judgment in favor of Defendant-

Appellee, New Age Logistics, LLC (“New Age”). This Court reverses.

                                                      I.

        {¶2}     Handl-It, Inc. (“Handl-It”) was founded in 1992 and operated until March 13,

2013.     Before ceasing its operations, Handl-It functioned as a public warehousing and

manufacturing company. Mr. Carpenter acted as a consultant for Handl-It and routinely serviced

its manufacturing equipment. At the time it ceased its operations, Handl-It allegedly owed Mr.

Carpenter more than $20,000 for his services, which spanned from June 18, 2012, through March

10, 2013.

        {¶3}     New Age was founded in October 2012 by Garrett Peters, the son of one of

Handl-It’s four owners. Mr. Peters founded New Age for the purpose of supplying Handl-It with
                                                2

a specific product that it required. When it became clear that Handl-It would be ceasing its

operations, however, New Age agreed to buy certain assets and accounts from it pursuant to an

asset purchase agreement.      One of the assets that New Age purchased was Handl-It’s

manufacturing equipment. It is undisputed that New Age asked Mr. Carpenter to act as its

consultant and to service the manufacturing equipment it purchased from Handl-It.

       {¶4}    While Mr. Carpenter serviced New Age’s manufacturing equipment, New Age

began making payments on past-due invoices that Mr. Carpenter had issued to Handl-It.

According to Mr. Carpenter, he only agreed to service New Age’s equipment because, after he

threatened to withhold his services, New Age had agreed to pay the balance of the invoices.

According to Mr. Peters, New Age agreed to make payments towards Handl-It’s outstanding

balance so that Mr. Carpenter would not withhold his services, but it never agreed to pay the

entire outstanding balance. While New Age began making payments on the Handl-It invoices,

Mr. Carpenter issued 6 new invoices directly to New Age for services he performed there from

March 28, 2013, through August 8, 2013.

       {¶5}    Subsequently, Mr. Carpenter brought suit against New Age and Handl-It, seeking

a money judgment on 31 separate invoices. With respect to New Age, Mr. Carpenter sought

payment on the 6 invoices he had issued it (“the New Age invoices”) for a total of $2,600.50,

plus interest. With respect to Handl-It, Mr. Carpenter sought payment on 25 invoices that he had

issued it (“the Handl-It invoices”) for a total of $16,900, plus interest. Mr. Carpenter also

alleged that New Age was jointly and severally liable for the money due on the Handl-It invoices

under the theory of successor liability. Mr. Carpenter later voluntarily dismissed his case against

Handl-It.
                                               3

       {¶6}   Following discovery, New Age filed a motion for summary judgment with respect

to the Handl-It invoices. New Age argued that it was entitled to summary judgment because it

had neither expressly, nor impliedly agreed to assume Handl-It’s obligation to Mr. Carpenter for

the services that he had provided Handl-It. Mr. Carpenter filed a brief in opposition to the

motion and argued that genuine issues of material fact remained with respect to the issue of

successor liability. The trial court ultimately rejected Mr. Carpenter’s arguments and granted

New Age’s motion for summary judgment.

       {¶7}   After the court granted New Age’s motion, Mr. Carpenter moved for summary

judgment against New Age for payment on the New Age invoices. New Age did not oppose the

motion, and the trial court granted it. The court ordered New Age to pay Mr. Carpenter

$2,600.50 so as to satisfy the New Age invoices.

       {¶8}   Mr. Carpenter now appeals from the court’s judgment in favor of New Age on the

Handl-It invoices and raises two assignments of error for our review. For ease of analysis, we

combine his assignments of error.

                                              II.

                                ASSIGNMENT OF ERROR I

       THE TRIAL COURT ERRED BY GRANTING THE MOTION FOR
       SUMMARY JUDGMENT OF NEW AGE BASED ON ITS FINDING THAT
       NEW AGE DID NOT IMPLIEDLY ASSUME THE HANDL-IT INVOICES.

                               ASSIGNMENT OF ERROR II

       THE TRIAL COURT ERRED BY GRANTING THE MOTION FOR
       SUMMARY JUDGMENT OF NEW AGE BASED ON ITS FINDING THAT
       NEW AGE DID NOT EXPRESSLY ASSUME THE HANDL-IT INVOICES.

       {¶9}   In his assignments of error, Mr. Carpenter argues that the trial court erred by

granting New Age’s motion for summary judgment. Specifically, he argues that genuine issues
                                                 4

of material fact remain as to whether New Age either expressly or impliedly assumed liability for

the Handl-It invoices after it purchased Handl-It’s manufacturing equipment. We agree.

        {¶10} We review an award of summary judgment de novo. Grafton v. Ohio Edison Co.,

77 Ohio St. 3d 102, 105 (1996). We apply the same standard as the trial court, viewing the facts

of the case in the light most favorable to the non-moving party and resolving any doubt in favor

of the non-moving party. Viock v. Stowe-Woodward Co., 13 Ohio App. 3d 7, 12 (6th Dist.1983).

        {¶11} Pursuant to Civ.R. 56(C), summary judgment is proper only if:

        (1) No genuine issue as to any material fact remains to be litigated; (2) the
        moving party is entitled to judgment as a matter of law; and (3) it appears from
        the evidence that reasonable minds can come to but one conclusion, and viewing
        such evidence most strongly in favor of the party against whom the motion for
        summary judgment is made, that conclusion is adverse to that party.

Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327 (1977). The party moving for summary

judgment bears the initial burden of informing the trial court of the basis for the motion and

pointing to parts of the record that show the absence of a genuine issue of material fact. Dresher

v. Burt, 75 Ohio St. 3d 280, 292-93 (1996). “If the moving party fails to satisfy its initial burden,

the motion for summary judgment must be denied.” Id. at 293. If the moving party fulfills this

burden, then the burden shifts to the nonmoving party to prove that a genuine issue of material

fact exists. Id.

        {¶12} “The well-recognized general rule of successor liability provides that the

purchaser of a corporation’s assets is not liable for the debts and obligations of the seller

corporation.” Welco Industries, Inc. v. Applied Cos., 67 Ohio St. 3d 344, 346 (1993). “The

Supreme Court of Ohio has identified four well recognized exceptions to the general rule barring

successor liability.” Rondy & Co., Inc. v. Plastic Lumber Co., 9th Dist. Summit No. 25548,

2011-Ohio-5775, ¶ 9. It has held that
                                                 5

       [a] corporation that purchases the assets of another is not liable for the contractual
       liabilities of its predecessor corporation unless (1) the buyer expressly or
       impliedly agrees to assume such liability; (2) the transaction amounts to a de facto
       consolidation or merger; (3) the buyer corporation is merely a continuation of the
       seller corporation; or (4) the transaction is entered into fraudulently for the
       purpose of escaping liability.

Welco at syllabus, citing Flaugher v. Cone Automatic Machine Co., 30 Ohio St. 3d 60 (1987).

This appeal only concerns the first exception to the general rule. As such, the issue is whether

New Age either expressly or impliedly agreed to assume Handl-It’s liability on the Handl-It

invoices.

       {¶13} New Age submitted two affidavits in support of its motion for summary

judgment. The first was from Jerry Peters, the father of Garrett Peters and one of Handl-It’s four

owners. The second was from Garrett Peters, his son and the owner of New Age. In both of

their affidavits, Jerry and Garrett Peters averred that Handl-It sold its manufacturing equipment

to New Age at fair market value, as determined by an independent appraisal company. Garrett

Peters averred that New Age asked Mr. Carpenter to service the purchased equipment, but that

Mr. Carpenter “agreed to provide [his] services only if New Age paid for Handl-[I]t’s past due

invoices.” He further averred that “[a]t that critical time for [New Age] * * * to keep its business

open, [it] had no choice but to agree to pay approximately $6,500.00 of Handl-[I]t’s past due

invoices.” In his deposition, Garrett Peters elaborated on the foregoing payment arrangement.

       {¶14} Mr. Peters testified that, after New Age purchased Handl-It’s manufacturing

equipment, it began manufacturing the same products that Handl-It had manufactured. Although

Mr. Peters had never personally met Mr. Carpenter, he knew that Mr. Carpenter acted as a

consultant and serviceman for Handl-It. He testified that such consultants were “very hard to

come by, so it was in [New Age’s] interest to continue to do business with [Mr. Carpenter] * *

*.” He admitted, however, that money was an issue because Handl-It was indebted to Mr.
                                               6

Carpenter and Mr. Carpenter said that he “would not do anymore work without getting some

past-due invoices paid.” According to Mr. Peters, New Age needed Mr. Carpenter, so it agreed

to pay him “some money” in exchange for his continuing to service the equipment. He denied

that New Age ever agreed to pay Mr. Carpenter the full amount that Handl-It owed. Instead, he

testified that New Age agreed to pay “some portion” of the money and that he “approved * * *

between four and seven hundred dollars a week to be paid to [Mr. Carpenter] in a sum of sixty-

five hundred dollars or so.” According to Mr. Peters, the parties never set a specific payment

schedule or negotiated a specific sum of payment. He testified that New Age would simply send

Mr. Carpenter a check each time he came to the facility because “he kind of demanded some

money.”

       {¶15} Mr. Peters testified that, when New Age receives an invoice, the invoice is

entered into its accounts payable system for payment. He agreed that, once an invoice has been

entered into the system, it is New Age’s intention to pay it. He further agreed that, without

exception, the Handl-It invoices had all been stamped as having been entered into New Age’s

system. Nevertheless, he denied that New Age’s decision to enter the Handl-It invoices into its

system meant that it had assumed the responsibility to pay them. He suggested that the invoices

might have been entered simply to have “some kind of record to pay.”

       {¶16} The remaining pieces of summary judgment evidence upon which New Age

relied related to its actual purchase of Handl-It’s manufacturing equipment. One piece of that

evidence was the asset purchase agreement that the two entities signed on March 25, 2013.

While the agreement provided that New Age would acquire Handl-It’s assets subject to an

Internal Revenue Service lien, it did not include any mention of a lien related to Mr. Carpenter.

Indeed, in the Representations and Warranties clause of the agreement, Handl-It represented that
                                                7

“[e]xcept for the Tax Lien, there are no other liens, encumbrances or other impediments which

prevent [Handl-It] from conveying the assets free and clear.”

       {¶17} In opposition to summary judgment, Mr. Carpenter submitted his own affidavit.

In it, he averred that New Age had asked him to provide it the same consulting services that he

had previously provided to Handl-It, but, at that point, Handl-It owed him more than $20,000.

Mr. Carpenter stated that he “threatened” to refuse his services if New Age did not agree to pay

him the balance of Handl-It’s debt. He further averred that, in response, “New Age promised to

pay [him] the whole amount of the Handl-[I]t Obligation if [he] would agree to provide [his] * *

* services to New Age.”       Mr. Carpenter stated that his consulting services were “very

specialized” and that New Age “was in dire need of [his] services.”

       {¶18} Mr. Carpenter also attached to his brief in opposition copies of checks he received

from New Age for payment on past-due invoices he had billed to Handl-It. The checks included

payments on several invoices that predated the Handl-It invoices. All of the invoices were

identified by number and letter, and each check from New Age included a notation, identifying

the specific invoice to which it pertained. For instance, New Age issued Mr. Carpenter four

checks on invoice 45bb, an invoice for work Mr. Carpenter performed for Handl-It during the

week of April 21, 2012. The checks ranged from $500 to $620 in value and satisfied the entire

amount due and owing on invoice 45bb.

       {¶19} In total, New Age either completely or almost completely satisfied a sizeable

portion of five invoices that predated the Handl-It invoices, but were nevertheless owed to Mr.

Carpenter by Handl-It. New Age did so by issuing Mr. Carpenter 14 separate checks from

March 6, 2013, to September 4, 2013. The checks totaled $7,340. Much like the Handl-It
                                               8

invoices, all of the invoices to which the checks corresponded bore a stamp, signifying that New

Age had entered the invoices into its accounts payable system.

       {¶20} First, Mr. Carpenter argues that the trial court erred by granting New Age’s

motion for summary judgment because genuine issues of material fact remained as to whether

New Age expressly agreed to assume Handl-It’s liability on the Handl-It invoices. The trial

court determined that New Age was entitled to summary judgment because Mr. Carpenter failed

to detail the conditions under which New Age allegedly promised to assume liability on the

Handl-It invoices. That is, the court found that Mr. Carpenter “never identifie[d] exactly what

was said, who made the promise to pay him, when the promise was made, in what context the

promise was made, [or whether] * * * there were any witnesses present, etc.” In ruling on a

motion for summary judgment, however, a court must view the facts of the case in the light most

favorable to the non-moving party and resolve any doubt in favor of the non-moving party.

Viock, 13 Ohio App. 3d at 12. It is error for the court to weigh the quality of the evidence. See

Taylor v. Uhl, 9th Dist. Lorain No. 13CA010441, 2014-Ohio-3090, ¶ 5, quoting Harry London

Candies, Inc. v. Bernie J. Kosar Greeting Card Co., 9th Dist. Summit No. 20655, 2002 WL
185305, *3 (Feb. 6, 2002).

       {¶21} New Age satisfied its initial Dresher burden on the issue of its express

assumption of liability. See Dresher, 75 Ohio St. 3d at 292-93. Mr. Peters testified that New Age

only agreed to pay Mr. Carpenter “some money” on the Handl-It invoices and never promised to

pay the invoices in their entirety. Moreover, the asset purchase agreement between New Age

and Handl-It evidenced that New Age purchased Handl-It’s assets free from any “liens,

encumbrances or * * * impediments” other than an Internal Revenue Tax lien. Thus, the burden

shifted to Mr. Carpenter to demonstrate the existence of a genuine issue of material fact on the
                                                9

issue of New Age’s express assumption of liability. See id. at 293. Because the record reflects

that Mr. Carpenter satisfied his reciprocal burden, we must conclude that the trial court erred

when it awarded New Age summary judgment on that issue.

       {¶22} In his affidavit, Mr. Carpenter averred that New Age was in “dire need” of his

services and that he had threatened to withhold them if New Age did not agree to pay him “the

balance of over $20,000” that Handl-It owed him. He further averred that, to secure his services,

New Age had “promised to pay [him] the whole amount of the Handl-[I]t [invoices] * * *.”

Although Mr. Carpenter did not set forth the details surrounding that promise, the trial court was

obligated to view his statement in a light most favorable to him and to resolve any doubt in his

favor. See Viock, 13 Ohio App. 3d at 12. This Court has held that a non-moving party may rely

upon a self-serving affidavit to satisfy his reciprocal Dresher burden so long as the affidavit

points to a genuine issue of material fact. See Copley v. Westfield Group, 9th Dist. Medina No.

10CA0054-M, 2011-Ohio-4708, ¶ 8. Mr. Carpenter’s averment that New Age promised to pay

him the full amount due and owing on the Handl-It invoices created a genuine issue of material

fact on the issue of New Age’s express assumption of liability. Thus, the trial court erred by

awarding New Age summary judgment on that issue.

       {¶23} Next, we consider Mr. Carpenter’s argument that genuine issues of material fact

remain as to whether New Age impliedly agreed to assume Handl-It’s liability on the Handl-It

invoices. “Implied assumption is also referred to as equitable assignment.” Albright v. Varicon,

L.L.C., 8th Dist. Cuyahoga No. 99967, 2014-Ohio-209, ¶ 32. “An equitable assignment * * *

requires no particular form[.] * * * ‘It is accomplished where there is an intention on one side to

assign and an intention on the other to accept, supported by a sufficient consideration and

disclosing a present purpose to make an appropriation of a debt or fund.’” Elbert v. West, 9th
                                               10

Dist. Lorain No. 3985, 1986 WL 9131, *1 (Aug. 20, 1986), quoting Gen. Excavator Co. v.

Judkins, 128 Ohio St. 160 (1934), paragraph three of the syllabus.         “The intent is to be

ascertained from the language used, construed in light of the surrounding circumstances.” Elbert

at *1.

         {¶24} As previously noted, the parties submitted competing affidavits.      While Mr.

Carpenter averred that New Age promised to pay him the full amount due and owing on the

Handl-It invoices, Mr. Peters averred that New Age only agreed to pay “approximately

$6,500.00 of Handl-[I]t’s past due invoices.” Mr. Peters also testified that New Age agreed to

pay Mr. Carpenter “some money,” but never promised the entire amount. He acknowledged that

New Age had entered all of the Handl-It invoices into its accounts payable system, but denied

that, by doing so, New Age had assumed responsibility for them. The trial court credited Mr.

Peters’ testimony and wrote that it was “not persuaded that the act of entering invoices into a

company’s account system is tantamount to agreeing to pay for the debt of another.” It then

entered summary judgment on behalf of New Age.

         {¶25} Once again, “[i]n ruling on a motion for summary judgment the trial court is not

permitted to weigh the evidence or choose among reasonable inferences.” Taylor, 2014-Ohio-

3090, at ¶ 5, quoting Harry London Candies, Inc., 2002 WL 185305, at *3. It was not for the

trial court here to decide whether one parties’ evidence was more persuasive. The only issue

before the court was whether, viewing the evidence in a light most favorable to Mr. Carpenter,

there were genuine issues of material fact for trial. Because the record reflects that a genuine

issue of material fact exists on the issue of implied assumption, we must conclude that the trial

court erred by awarding summary judgment to New Age.
                                               11

       {¶26} Assuming without deciding that New Age satisfied its initial Dresher burden on

the issue of implied assumption, the evidence that Mr. Carpenter presented in support of his

reciprocal burden demonstrated a triable issue. Mr. Carpenter averred that, because of New

Age’s “dire need” for his specialized services, it promised to pay him the full amount due and

owing on the Handl-It invoices. In support of his averment, he introduced copies of fourteen

checks that New Age issued to him. The checks were sent to him on an almost weekly basis

between March 6, 2013, and September 4, 2013, and totaled $7,430.             The checks were

designated as payment for particular invoices that Mr. Carpenter had sent to Handl-It, and all of

those invoices were stamped as having been entered into New Age’s accounts payable system.

The Handl-It invoices were all likewise stamped, and Mr. Peters acknowledged that, once an

invoice has been entered into New Age’s system, it is New Age’s intention to pay the invoice.

There was no evidence of any written agreement wherein New Age only agreed to pay Mr.

Carpenter a limited amount of money in exchange for his services. Moreover, in spite of Mr.

Peters’ averment that New Age only promised to pay Mr. Carpenter approximately $6,500

towards Handl-It’s past-due invoices, the checks that Mr. Carpenter introduced into evidence

showed that New Age had already paid him an amount in excess of $7,300.

       {¶27} New Age argues that Mr. Carpenter’s implied assumption claim should fail

because there was no evidence of any bargained-for consideration on its part. See Elbert, 1986
WL 9131, at *1, quoting Gen. Excavator Co., 128 Ohio St. 160 at paragraph three of the syllabus

(equitable assignment must be supported by sufficient consideration). It argues that it did not

stand to gain a benefit from satisfying Handl-It’s debt to Mr. Carpenter because Handl-It had

already received the benefit of that bargain. There was evidence, however, that New Age was in

“dire need” of Mr. Carpenter’s services. Mr. Peters himself testified that the services Mr.
                                               12

Carpenter provided were “very hard to come by” and that “[a]t that critical time” New Age

needed him. Because Mr. Carpenter made his services contingent upon New Age’s payment of

Handl-It’s past due invoices, there was evidence that New Age received a benefit from its

payment of the invoices. Specifically, it received Mr. Carpenter’s unique services at a time when

it was in “dire need” of them.

       {¶28} Mr. Carpenter set forth evidence which, when viewed in a light most favorable to

him, demonstrated a genuine issue of material fact for trial on the issue of implied assumption.

See Albright, 2014-Ohio-209, at ¶ 39-40 (genuine issue as to implied assumption of lease where

entity that acquired another’s assets made monthly payments on the selling entity’s 5-year lease

for a period in excess of 20 months). Further, as discussed above, he demonstrated a genuine

issue of material fact for trial on the issue of express assumption. As such, we must conclude

that the trial court erred by granting New Age’s motion for summary judgment. For the reasons

outlined above, Mr. Carpenter’s assignments of error are sustained.

                                               III.

       {¶29} Mr. Carpenter’s assignments of error are sustained. The judgment of the Summit

County Court of Common Pleas is reversed, and the cause is remanded for further proceedings

consistent with the foregoing opinion.

                                                                             Judgment reversed,
                                                                            and cause remanded.

       There were reasonable grounds for this appeal.
                                                 13

       We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

       Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

       Costs taxed to Appellee.

                                                      CARLA MOORE
                                                      FOR THE COURT

SCHAFER, J.
CONCURS.

HENSAL, P. J.
CONCURRING IN PART, AND DISSENTING IN PART.

       {¶30} Mr. Carpenter brought suit against New Age under the theory that it either

expressly or impliedly assumed Handl-It’s debts for his maintenance and repair services. While I

agree that this matter should be remanded on the issue of implied assumption, I cannot agree that

genuine issues of material fact remain on the issue of express assumption. Consequently, I

dissent with respect to that portion of the majority’s opinion.

       {¶31} In moving for summary judgment on Mr. Carpenter’s successor liability claim,

New Age set forth evidence that it purchased Handl-It’s manufacturing equipment by way of an
                                                14

asset purchase agreement. The agreement did not provide that the purchase was subject to a lien

related to Mr. Carpenter. To the contrary, it provided that, “[e]xcept for [a] Tax Lien, there

[were] no other liens, encumbrances or other impediments which prevent[ed] [Handl-It] from

conveying the assets free and clear.” Thus, there was no evidence that, as a condition of

purchasing Handl-It’s assets, New Age ever expressly promised Handl-It that it would satisfy

Handl-It’s debt to Mr. Carpenter. Further, no other evidence of communications or agreements

between New Age and Handl-It in which they referenced obligations owed to Mr. Carpenter

were proffered or alleged.

       {¶32} The only express statement that Mr. Carpenter set forth in support of his express

assumption theory was an oral promise that New Age allegedly made to him when it asked him

to service its newly purchased manufacturing equipment.            According to Mr. Carpenter’s

affidavit, “New Age promised to pay [him] the whole amount of the Handl-[I]t Obligation if [he]

would agree to provide [his] * * * services to New Age.” Handl-It was not a party to that

promise, however, because it (1) only involved New Age and Mr. Carpenter, and (2) occurred

after New Age had already purchased Handl-It’s equipment. Mr. Carpenter did not set forth

evidence that New Age made the foregoing promise surrounding its acquisition Handl-It’s assets.

Accordingly, while the promise to Mr. Carpenter might have given rise to a contractual or quasi-

contractual arrangement between New Age and Mr. Carpenter, it was not evidence in support of

his express assumption claim. Because Mr. Carpenter did not present any other evidence in

support of that claim, I would conclude that he failed to satisfy his reciprocal Dresher burden

and that New Age was entitled to summary judgment on his express assumption claim. To the

extent the majority concludes otherwise, I respectfully dissent.
                                         15

APPEARANCES:

JARED M. HOOVER, Attorney at Law, for Appellant.

J. KURT DENKEWALTER, Attorney at Law, for Appellee.