Court Opinion

ID: 6112833
Source: CourtListenerOpinion
Date Created: 2022-01-26 18:12:42.674261+00
Date Added: 2024-06-11T08:59:51.195511
License: Public Domain

J-A25036-21

                                   2022 PA Super 13

    KELLY SMITH, EXECUTRIX OF THE              :   IN THE SUPERIOR COURT OF
    ESTATE OF DANIEL R. HARRITY,               :        PENNSYLVANIA
    DECEASED                                   :
                                               :
                       Appellant               :
                                               :
                                               :
                v.                             :
                                               :   No. 3 WDA 2021
                                               :
    A.O. SMITH CORPORATION, ET. AL.            :

               Appeal from the Order Entered December 1, 2020
       In the Court of Common Pleas of Allegheny County Civil Division at
                          No(s): G.D. No. 19-006036

BEFORE:      KUNSELMAN, J., KING, J., and COLINS, J.*

OPINION BY COLINS, J.:                               FILED: JANUARY 26, 2022

        Kelly Smith (“Plaintiff”), the executrix of the estate of Daniel R. Harrity

(“Decedent”), appeals from the December 1, 2020 order dismissing all claims

and parties in this action in which Plaintiff seeks damages related to

Decedent’s alleged exposure to asbestos. In this appeal, Plaintiff challenges

the August 11, 2020 order of the trial court granting the summary judgment

motion of Appellee Vanadium Enterprises Corporation (“Vanadium”); the trial

court concluded that the record lacked sufficient evidence to support a finding

that Vanadium was liable as a successor to Decedent’s former employers,

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-A25036-21

Schneider, Inc. and one of its subsidiaries, Pittsburgh Mechanical Systems,

Inc. (“Pittsburgh Mechanical”). We affirm.1

       Decedent worked for Schneider, Inc. and Pittsburgh Mechanical as a

union plumber from 1966 to 1975. Vanadium Motion for Summary Judgment

Based on Lack of Successor Liability (“Motion”), Exhibit 5 (Decedent’s

employment records). Specifically, Decedent worked for Schneider, Inc. from

1968 through 1971 and for Pittsburgh Mechanical from 1966 through 1975,

eventually rising to the level of Vice President of Pittsburgh Mechanical. Id.

According to his complaint, Decedent was diagnosed with mesothelioma in

March 2019. On April 23, 2019, he initiated this action against various entities

who allegedly exposed him to asbestos. Vanadium was named as one of the

defendants in this lawsuit, while Schneider, Inc. and Pittsburgh Mechanical

were not. Decedent died on May 23, 2019, and Plaintiff, Decedent’s daughter

and the executrix of his estate, was substituted as plaintiff in the trial court.

       Decedent’s employers, Schneider, Inc. and Pittsburgh Mechanical, were

two of approximately 40 corporate entities founded by Frank Schneider that

____________________________________________

1 This matter and Maxine Rosenkeimer as Executrix of the Estate of
Arthur W. Rosenkeimer, III v. A.O. Smith Corporation, et al., No. 4 WDA
2021, are two related appeals from orders of the Court of Common Pleas of
Allegheny County granting summary judgment in favor of Vanadium based
upon a lack of successor liability with respect to asbestos-exposure claims
brought by former employees of Schneider, Inc. and Pittsburgh Mechanical.
While the plaintiffs, decedents, and their exact dates of employment with
Schneider, Inc. and Pittsburgh Mechanical differ in the two cases, the
summary judgment motion, the trial court’s orders and reasoning, and the
appellate issues are identical in these two matters.

                                           -2-
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we refer to collectively in this opinion as the “Schneider Companies.” Over

time, various Schneider Companies ceased operations or experienced financial

difficulties, and the assets of the remaining four operational Schneider

Companies were sold in 1990 to Vanadium.          The question of Vanadium’s

potential successor liability for the obligations of the four Schneider

Companies whose assets it purchased was the subject of a prior lawsuit

brought by Continental Insurance Company (“Continental Insurance”) in the

trial court.   This earlier litigation ultimately produced opinions both of this

Court, Continental Insurance Co. v. Schneider, Inc., 810 A.2d 127, 130

(Pa. Super. 2002), and our Supreme Court, Continental Insurance Co. v.

Schneider, Inc., 873 A.2d 1286 (Pa. 2005).2 Plaintiff’s principal argument

on appeal is that our reversal of the summary judgment grant in favor of

Vanadium in Continental I is binding precedent that requires us to also

reverse the grant of summary judgment here.

       In Continental II, our Supreme Court explained the events that led to

Vanadium’s purchase of the assets of the four Schneider Companies as

follows:

       During the mid-to-late 1980s, the Schneider Companies fell upon
       severe financial difficulties, such that by 1989, they had
       accumulated $35 million in debt to their three secured creditors,
       Pittsburgh National Bank (now PNC Bank), Mellon Bank and
       Equitable Bank (now National City Bank) (collectively, the
____________________________________________

2  In this opinion, we refer to our 2002 opinion as “Continental I,” our
Supreme Court’s 2005 opinion as “Continental II,” and we refer to the earlier
litigation generally as “Continental.”

                                           -3-
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        “Banks”), who held blanket security interests in virtually all of the
        assets of the companies. As a result, Schneider, in coordination
        with the Banks, began shutting down or selling off most of the
        Schneider Companies. By April of 1990, only four of the Schneider
        Companies were still conducting any business and after May of
        1990, even those four were nothing more than empty shells.

873 A.2d at 1288 (footnote omitted).

        The four Schneider Companies that were still operating in 1990 and

whose assets were sold to Vanadium were Schneider Engineers, Schneider

Services International, Inc. (“SSI”), Jones-Krall, Inc. (“Jones-Krall”), and

Construction Rental and Supply (“CRS”). Continental I, 810 A.2d at 130. In

early 1990, Schneider delivered all of the non-real estate assets of Schneider

Engineers, SSI, Jones-Krall, and CRS to its secured creditors, the Banks.

Continental II, 873 A.2d at 1288. The Banks sold the assets of these four

companies to Vanadium for $15 million at a consensual private foreclosure

sale, pursuant to Section 9–504 of the Uniform Commercial Code (“UCC”).3

Id. In the transaction, Vanadium served as a holding company for four of its

subsidiaries which individually purchased the assets of Schneider Engineers,

SSI, Jones-Krall, and CRS.4 Id. at 1288 & n.3. Neither Vanadium nor its

subsidiaries assumed any of the obligations of the four Schneider Companies.

Continental I, 810 A.2d at 130.

____________________________________________

3   13 Pa.C.S. § 9504.
4 These four Vanadium subsidiaries—S.E. Technologies, Inc., Construction
Rental and Supply, Inc., Jones Krall, Inc. and S.S.I. Services, Inc.—were given
nearly identical names to the Schneider Companies whose assets were
purchased. Continental II, 873 A.2d at 1288 & n.3.

                                           -4-
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       The four Schneider Companies whose assets were purchased by

Vanadium were involved in distinct lines of business: Schneider Engineers

was an engineering design firm, SSI performed facility and property

management services, Jones-Krall was an electrical contractor, and CRS was

an equipment rental company.          Motion, Exhibit 16 (Matthew Schneider

Deposition), at 40-41, 117-18. These lines of business continued at the four

Vanadium subsidiaries after the asset sale. Id. at 98. By contrast, Vanadium

did not purchase any assets related to the plumbing and mechanical

contracting work Decedent was engaged in at Schneider, Inc. and Pittsburgh

Mechanical. Id. at 38, 115-18.

       In addition to its operational role as a plumbing and mechanical

contractor, Schneider, Inc. also was a holding company and parent of Jones-

Krall and, through another subsidiary, SSI. Plaintiff’s Response in Opposition

to Vanadium’s Motion for Summary Judgment Based on Lack of Successor

Liability   (“Response”),   Exhibit   D   (Organization   Chart   of   Schneider

Companies); Motion, Exhibits 12-13 (Jones-Krall and SSI Asset Sale

Agreements).     However, Schneider, Inc.’s own assets were not sold to

Vanadium, and the company had not dissolved as of the date of the summary

judgment motion. Motion, Exhibit 16, at 135; id., Exhibit 15 (Pennsylvania

Department of State Business Document Search Report).

       Vanadium was formed by managers at the four Schneider Companies

whose assets it purchased.      Motion, Exhibit 16, at 31, 37, 55-62, 65-66.

Neither of the shareholders of Schneider, Inc.—Frank Schneider and his

                                      -5-
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brother, Edward Schneider—ever had an ownership interest in Vanadium or

its subsidiaries. Id. at 69, 131, 133-34, 172. Frank Schneider did, however,

later come to work for one of the Vanadium subsidiaries until his death in

2002.     Id. at 25, 108-10.   In addition, Frank’s son, Matthew Schneider,

borrowed $2.05 million from his parents at the time of the 1990 asset sale,

and he invested the money in Vanadium through a company he formed,

Capital Diverse Venture Corporation. Id. at 30-32, 68-69, 81, 106-107. At

first, Matthew was a passive investor in Vanadium holding non-voting stock,

but he ultimately became the president and chief executive officer and sole

voting shareholder of Vanadium in 1995. Id. at 71, 84-85, 87. Matthew,

however, had very limited work experience at only one of the Schneider

Companies (CRS) prior to his investment in Vanadium and none at Schneider,

Inc. or Pittsburgh Mechanical; furthermore, Matthew never worked in the

plumbing and mechanical contracting business. Id. at 103-104, 123-24.

        In the present matter, Vanadium filed a motion for summary judgment

on February 28, 2020, in which it asserted that it lacked successor liability for

Schneider, Inc. and Pittsburgh Mechanical. On August 11, 2020, after oral

argument, the trial court entered an order granting summary judgment in

favor of Vanadium and dismissing all claims against Vanadium.            Plaintiff

ultimately settled with or discontinued litigation against all remaining parties,

and on December 1, 2020, the trial court entered an order disposing of all

outstanding claims and parties to the lawsuit. Plaintiff filed a timely notice of

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appeal, citing her objection to the earlier grant of summary judgment in favor

of Vanadium.

       On May 28, 2021, the trial court filed an opinion explaining its reasons

for granting summary judgment.5 In its opinion, the trial court concluded that

the evidence of record showed that none of the elements of the de facto

merger standard were met because (i) Frank Schneider and his brother

Edward never held an ownership interest in Vanadium; (ii) the only continuity

of management was that Frank Schneider was an employee for one of

Vanadium’s subsidiaries; (iii) Schneider, Inc. has not dissolved; and (iv) the

liabilities of Schneider, Inc. and Pittsburgh Mechanical were not assumed by

Vanadium or its subsidiaries. Trial Court Opinion, 5/28/21, at 8; see also

Fizzano Brothers Concrete Products, Inc. v. XLN, Inc., 42 A.3d 951, 962

(Pa. 2012) (listing four prongs of de facto merger test). While recognizing

that Matthew Schneider had borrowed funds from his father to invest in

Vanadium, the court noted that the source of funds for an investment is not a

factor in the de facto merger standard and further that Matthew had no

interest in or relationship with Schneider, Inc. or Pittsburgh Mechanical. Trial

Court Opinion, 5/28/21, at 8-9. The trial court further concluded that, while

the Schneider Companies were related and had business dealings with each

other, they were not a single entity, and in any event, inter-billing between

____________________________________________

5 The trial court did not order Plaintiff to file a concise statement of errors
complained of on appeal pursuant to Pa.R.A.P. 1925(b).

                                           -7-
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the Schneider Companies shows that corporate formalities between the

various entities were observed. Id. at 9.

      The trial court additionally found that there was insufficient evidence

that Vanadium was a “mere continuation” of Schneider, Inc. and Pittsburgh

Mechanical because Vanadium was engaged in distinct lines of business as

those two companies. Id. at 11-12. The court concluded that, although two

of the four Schneider Companies that Vanadium purchased were Schneider,

Inc. subsidiaries, none of Schneider, Inc.’s assets itself were sold to

Vanadium, and Schneider, Inc. continues to exist. Id. The trial court found

that the “mere continuation” argument “might be viable if [Decedent] had

worked specifically for one of the four companies whose assets were

purchased” by Vanadium, but there was no genuine issue of material fact as

to whether Vanadium was a continuation of the plumbing and mechanical

contracting business of Schneider, Inc. or Pittsburgh Mechanical. Id. at 11.

      Plaintiff presents the following issue for our review:

      Whether the trial court erred when it determined that there was
      no genuine issue as to any material fact in relation to whether
      Vanadium [] was the corporate successor to Schneider, Inc. and
      that Vanadium [] was entitled to a judgment as a matter of law in
      relation to Plaintiff[’s] claims against it.

Plaintiff’s Brief at 4. Plaintiff focuses on two primary arguments in this appeal.

First, Plaintiff argues that the trial court and this Court are bound by our

holding in Continental I that there was a genuine issue of material fact as to

whether Vanadium had successor liability based upon its purchase of assets

                                      -8-
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of four of the Schneider Companies. In addition, Plaintiff argues that the trial

court erred when it refused to consider the deposition taken of Frank

Schneider during the Continental litigation prior to his death in 2002.

      Our review of the trial court’s grant of summary judgment is guided by

the following considerations.   “[S]ummary judgment is appropriate only in

those cases where the record clearly demonstrates that there is no genuine

issue of material fact and that the moving party is entitled to judgment as a

matter of law.” In re Risperdal Litigation, 223 A.3d 633, 639 (Pa. 2019)

(citation omitted). Under our Rules of Civil Procedure, “a record that supports

summary judgment will either (1) show the material facts are undisputed or

(2) contain insufficient evidence of facts to make out a prima facie cause of

action or defense and, therefore, there is no issue to be submitted to the jury.”

Cigna Corp. v. Executive Risk Indemnity, Inc., 111 A.3d 204, 210-11 (Pa.

Super. 2015) (citation omitted); see also Pa.R.Civ.P. 1035.2.

      “When considering a motion for summary judgment, the trial court must

take all facts of record and reasonable inferences therefrom in a light most

favorable to the non-moving party and must resolve all doubts as to the

existence of a genuine issue of material fact against the moving party.” Maas

v. UPMC Presbyterian Shadyside, 234 A.3d 427, 436 (Pa. 2020). Thus,

the trial court may only grant summary judgment “where the right to such

judgment is clear and free from all doubt.” Risperdal Litigation, 223 A.3d

at 639 (citation omitted).

                                      -9-
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       On appellate review, . . . an appellate court may reverse a grant
       of summary judgment if there has been an error of law or an
       abuse of discretion. But the issue as to whether there are no
       genuine issues as to any material fact presents a question of law,
       and therefore, on that question our standard of review is de novo.
       This means we need not defer to the determinations made by the
       [trial court].

Summers v. Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010) (citation

omitted).

       In Pennsylvania, it is a “general principle of corporation law that a

purchaser of a corporation’s assets does not, for such reason alone, assume

the debts of the selling corporation, unlike a purchaser of the corporation’s

stock.”   Fizzano Brothers, 42 A.3d at 954.         However, exceptions to this

general rule against successor liability have been recognized where:

       (1) the purchaser expressly or implicitly agreed to assume
       liability, (2) the transaction amounted to a consolidation or [a de
       facto] merger, (3) the purchasing corporation was merely a
       continuation of the selling corporation, (4) the transaction was
       fraudulently entered into to escape liability, or (5) the transfer was
       without adequate consideration and no provisions were made for
       creditors of the selling corporation.

Id. at 954 n.2 (quoting Continental II, 873 A.2d at 129).

       Of the five exceptions to the general rule against successor liability, only

the “de facto merger” and “mere continuation” exceptions are at issue here.6

With respect to the “de facto merger” exception,

____________________________________________

6 As Vanadium points out in its brief, in 1988, the General Assembly enacted
Section 1904 of the Business Corporation Law, which “abolished” the “doctrine
of de facto mergers, consolidations and other fundamental transactions.” See
(Footnote Continued Next Page)

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       For a de facto merger to occur, there must be continuity of the
       successor and predecessor corporation as evidenced by (1)
       continuity of ownership; (2) a cessation of ordinary business and
       dissolution of the predecessor as soon as practically and legally
       possible; (3) assumption by the successor of the liabilities
       ordinarily necessary for the uninterrupted continuation of the
       business of the predecessor, and (4) a continuity of management,
       personnel, physical location, aspects, and general business
       operation.

Fizzano Brothers, 42 A.3d at 962 (citation omitted). “[T]he elements of the

de facto merger are not a mechanically-applied checklist, but a map to guide

a reviewing court to a determination that, under the facts established, for all

intents and purposes, a merger has or has not occurred between two or more

corporations, although not accomplished under the statutory procedure.” Id.

at 969.

       The ”mere continuation” exception to the general rule against successor

liability is often treated “identically” to and is “difficult to distinguish” from the

de facto merger exception.         Id. at 963 n.13 (quoting Commonwealth v.

Lavelle, 555 A.2d 218, 227 (Pa. Super. 1989) (en banc)). We have stated

that “[i]n a [mere] continuation, a new corporation is formed to acquire the

assets of an extant corporation, which then ceases to exist.” Lavelle, 555

____________________________________________

15 Pa.C.S. § 1904. However, no Pennsylvania state court has ever interpreted
this statute, let alone found that the statute abolishes the de facto merger or
mere continuation exceptions to the general rule against successor liability.
Indeed, as recently as 2012, our Supreme Court in Fizzano Brothers
recognized the continued existence of the de facto merger and mere
continuation exceptions. In light of our affirmance of the trial court’s grant of
summary judgment here, we need not address what effect, if any, Section
1904 has on the successor liability exceptions.

                                          - 11 -
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A.2d at 227 (citation omitted). “There is in effect but one corporation which

merely changes its form and ordinarily ceases to exist upon the creation of

the new corporation which is its successor.”      Id. (citation omitted).    “The

primary elements of the continuation exception are identity of the officers,

directors, or shareholders, and the existence of a single corporation following

the transfer.” Continental I, 810 A.2d at 134-35.

       Plaintiff first argues that the trial court erred in ignoring this Court’s

determination in Continental I that there was a genuine issue of material

fact whether Vanadium was liable for the obligations of the Schneider

Companies under a successor liability theory. Plaintiff contends that the only

operative difference between this case and Continental is that Continental

Insurance was seeking relief from Vanadium and its four subsidiaries, whereas

here Plaintiff is seeking to impose liability solely on Vanadium. Plaintiff argues

that this Court’s prior conclusion that there remained unresolved issues of fact

as to whether Vanadium was liable under the de facto merger or mere

continuation exceptions remains good law and is controlling in the present

litigation.   Furthermore, Plaintiff asserts that the trial court’s attempt to

distinguish Continental I on the basis that Schneider, Inc. was dismissed

from the case was unavailing as Schneider, Inc. is not a party to the present

matter either and the pertinent issue in both matters is the same: whether

Vanadium is the corporate successor to the Schneider Companies.

       The Continental case arose when Continental Insurance, the general

liability, automobile, and workers’ compensation insurance carrier for the

                                     - 12 -
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Schneider Companies prior to the asset sale, brought suit to recover $12

million in premiums that it claimed had never been paid. Continental I, 810

A.2d at 129-30.         Continental Insurance named Vanadium and its four

subsidiaries as parties to the suit, alleging that they were liable as successors

to Schneider Engineers, SSI, Jones-Krall, and CRS. Id. at 129-30. The trial

court entered summary judgment in favor of Vanadium concluding that the

doctrine of successor liability should not operate to defeat the public policy

favoring the interests of secured creditors—the Banks that arranged the

foreclosure sale to Vanadium—over that of a general creditor—Continental

Insurance. Id. Subsequent to the trial court’s ruling, judgment was entered

by consent against all the remaining Schneider defendants, including

Schneider, Inc., and the only remaining defendants in the case were Vanadium

and its four subsidiaries. Id. at 129 & n.1.

       This Court held on appeal that a secured creditor’s disposition of a

debtor company’s assets under Section 9-504 of the UCC7 does not preclude

a general creditor from later seeking recovery from the purchaser of the assets

under the successor liability doctrine. Id. at 132-33. We then proceeded to

hold that the trial court erred in granting summary judgment on the successor

liability issue, concluding that there remained genuine issues of material fact

as to whether Vanadium was the successor of the four Schneider Companies

____________________________________________

7Section 9-504 of the UCC was amended in 2001 and the relevant provisions
were re-enacted in substantial part at Sections 9-610 and 9-611 of the UCC.
See 13 Pa.C.S. §§ 9610, 9611; Continental I, 810 A.2d at 131 n.2.

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it purchased. Id. at 135-36. In particular, this Court noted that there was a

genuine dispute regarding the continuity of ownership and control of

Schneider Engineers, SSI, Jones-Krall, and CRS and whether the Vanadium

companies served the same clients, had the same employees, and occupied

the same offices as the former Schneider Companies. Id. at 135.

      Our Supreme Court granted allocatur on the issue of whether a

successor liability claim is viable following a sale of the debtor’s assets

pursuant to Section 9-504. Continental II, 873 A.2d at 1287. The Supreme

Court affirmed this Court’s conclusion that “a UCC foreclosure sale does not

extinguish potential successor liability claims.” Id. at 1292-94. The Supreme

Court noted that Vanadium requested that it consider whether Continental

Insurance had raised a genuine issue of material fact as to successor liability,

but the Court did not reach the summary judgment ruling as allocatur was not

granted on the issue. Id. at 1294 n.11.

      Here, the trial court concluded that the summary judgment ruling of

Continental I is inapplicable to the present case because Decedent’s

employers, Schneider, Inc. and Pittsburgh Mechanical, were not parties to the

Continental matter at the time of the appeal to this Court and therefore the

issues and arguments pertaining to those two entities were not raised. Trial

Court Opinion, 5/28/21, at 5.      The trial court further observed that the

ultimate question of whether Vanadium and its subsidiaries had successor

liability in the Continental litigation was not resolved as the case was settled

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prior to the trial court’s resolution of the issue.8 Id. “Most importantly,” the

trial court stated, Continental I is not binding in this matter because ”for

purposes of summary judgment each case must be decided based on the

record in that particular case.” Id.

       Upon review, we agree with the trial court that the determination in

Continental I that there was a triable issue of fact as to successor liability

does not dictate the resolution of the summary judgment motion in the

present matter. Both this Court and the trial court are bound by “existing

[Superior Court] precedent under the doctrine of stare decisis.” Fiedler v.

Spencer, 231 A.3d 831, 838 (Pa. Super. 2020) (citation omitted); see also

Sunbeam Corp. v. Liberty Mutual Insurance Co., 781 A.2d 1189, 1194

(Pa. 2001).

       The doctrine of stare decisis maintains that for purposes of
       certainty and stability in the law, a conclusion reached in one case
       should be applied to those which follow, if the facts are
       substantially the same, even though the parties may be different.
       In this formulation the terms “conclusion” and “in the law” are
       particularly meaningful because stare decisis relates primarily to
       rules or pronouncements of law.

In re Angeles Roca First Judicial District Philadelphia County, 173 A.3d

1176, 1187 (Pa. 2017) (internal citations and some quotation marks omitted);

____________________________________________

8 A review of the docket in the Continental matter reveals that the case was
settled in 2006 shortly after the matter was remanded to the trial court. See
https://dcr.alleghenycounty.us/Civil/View/PublicSearchByCaseNumber.aspx?
CasID=GD-92-009392 (last visited December 17, 2021); see also Deyarmin
v. Consolidated Rail Corp., 931 A.2d 1, 5 n.6 (Pa. Super. 2007) (we may
take judicial notice of the docket of the courts of this Commonwealth).

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see also 20 Am. Jur. 2d Courts § 129 (“For a court to apply a precedent as

stare decisis, there must have been a judicial opinion on a point of law.”)

(cited in In re Roca, 173 A.3d at 1187).        Thus, our Supreme Court has

emphasized that the doctrine of stare decisis is concerned with the stability of

court pronouncements of law rather than the resolution of individual cases

with different facts.     In re Roca, 173 A.3d at 1187, 1191-92 & n.10

(concluding that judicial disciplinary sanctions imposed in prior cases do not

have precedential value in subsequent cases).

      In Continental I, this Court reversed the trial court’s grant of summary

judgment and found that there remained an issue of fact as to whether

Vanadium had successor liability for the four Schneider Companies whose

assets it had purchased. 810 A.2d at 135-36. However, our conclusion in

Continental I was based upon the record developed by the litigants in that

earlier litigation.   Id. at 135 (noting that this Court had “reviewed the[]

disputed issues of fact in the context of the elements required [] to support a

claim of successor liability”).   Summary judgment is an inherently factual

determination made on the record created by the parties in each individual

case. Pa.R.Civ.P. 1035.2, 1035.3; Risperdal Litigation, 223 A.3d at 639.

Thus, a trial court must weigh each summary judgment motion on “all facts

of record” in that particular case, Maas, 234 A.3d at 436, and may not simply

rely on the precedential value of an earlier summary judgment ruling based

upon the unique record developed in that earlier case.

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       In addition to the fact that Continental I was decided on a different

factual record, there is another factor that distinguishes the earlier case from

the present litigation:       the business activities of Decedent’s employers,

Schneider, Inc. and Pittsburgh Mechanical, were not at issue in the

Continental litigation. Rather, Continental related to Vanadium’s alleged

successor liability arising out of its subsidiaries’ purchases of the assets of

Schneider Engineers, SSI, Jones-Krall, and CRS, companies that never

employed Decedent and never engaged in the line of business in which

Decedent was engaged. Except to the extent Vanadium purchased the assets

of Schneider, Inc.’s two subsidiaries, Jones-Krall and SSI, Vanadium did not

contract with or have any involvement with Schneider, Inc. or Pittsburgh

Mechanical.     Nor did Vanadium attempt to continue Schneider, Inc. and

Pittsburgh    Mechanical’s      plumbing       and   mechanical   contracting   work.

Accordingly, in light of the distinct record and factual predicate in the earlier

Continental case, we conclude that the trial court did not err in refusing to

give precedential effect to Continental I.9

____________________________________________

9 Plaintiff has not raised the issue of whether Vanadium is collaterally estopped
from challenging successor liability as a result of this Court’s ruling in
Continental I. However, even if properly raised, we would find the doctrine
of collateral estoppel inapplicable. Collateral estoppel precludes a party from
relitigating an issue addressed in a previous matter but only if “the issue
decided in the prior case is identical to [the] one presented in the later case.”
Weissberger v. Myers, 90 A.3d 730, 733 (Pa. Super. 2014) (citation
omitted). As we have explained in this decision, the issue of successor liability
in Continental I involves distinct facts as compared to the successor liability
analysis in the present matter.

                                          - 17 -
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      Plaintiff next argues that the trial court abused its discretion in not

considering Frank Schneider’s deposition taken during the Continental

litigation, which Plaintiff included in her response to Vanadium’s summary

judgment motion. See Response, Exhibit A. In declining to consider Frank’s

deposition, the trial court concluded that even though he was deceased and

unavailable to be deposed in the present matter, it would be inappropriate to

consider the earlier deposition because it was hearsay and “Vanadium did not

have the same motive to develop [Frank’s] testimony” in the earlier case.

Trial Court Opinion, 5/28/21, at 9.           The trial court explained that in

Continental, “the parties did not distinguish between claims that lie against

Vanadium’s successor entities as a result of business continuation, as opposed

to [the] broader claims [at issue here] that stem[] from the prior activity of

an entity that did not continue to operate as a Vanadium company.” Id. at

9-10. The court stated that, if successor liability as to Schneider, Inc. and

Pittsburgh Mechanical had been at issue, it would have been “expected to see

more detailed questioning about the maintenance of corporate formalities,”

testimony which was noticeably absent from the transcript excerpts attached

to Plaintiff’s opposition to the summary judgment motion. Id. at 10.

      Plaintiff argues that the trial court’s attempt to distinguish this action

from Continental is unavailing as there is no legal authority “supporting the

proposition that a finding of successor liability based on the mere continuation

or de facto merger doctrines would somehow be different based on the type

of claim asserted.”   Plaintiff’s Brief at 23-24.   “Whether an action brought

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against a purported corporate successor is in tort, as here, or in contract, as

in [Continental], successor liability analysis is the same.” Id. at 24. Plaintiff

asserts that the successor liability issues are identical in Continental and

here, and therefore Vanadium had the same motivation in examining Frank

Schneider in both cases.

      “The admissibility of evidence is a matter addressed to the sound

discretion of the trial court and should not be overturned absent an abuse of

discretion.” Kardos v. Armstrong Pumps, Inc., 222 A.3d 393, 401 (Pa.

Super. 2019) (citation omitted). The Pennsylvania Rules of Civil Procedure

permit a non-movant to use hearsay in opposition to a summary judgment

motion so long as the non-movant can demonstrate to the trial court “a

plausible avenue for the admission at trial of the hearsay.” Id. at 402.

      Frank Schneider’s Continental deposition, which Plaintiff offered to

substantively rebut Vanadium’s summary judgment motion, is undoubtedly

hearsay.   See Pa.R.E. 801(c) (defining hearsay as a statement offered to

prove the truth of the matter asserted that a declarant “does not make while

testifying at the current trial or hearing”); Bugosh v. Allen Refractories

Co., 932 A.2d 901, 911-12 (Pa. Super. 2007) (deposition of deceased

deponent in earlier lawsuit is hearsay).       Pennsylvania Rule of Evidence

804(b)(1) provides an exception to the rule against hearsay for former

testimony, including deposition testimony, by an unavailable declarant that

“is now offered against a party who had--or, in a civil case, whose predecessor

in interest had--an opportunity and similar motive to develop it by direct,

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cross-, or redirect examination.”         Pa.R.E. 804(b)(1); see also Pa.R.Civ.P.

4020(a) (providing for admission of deposition testimony at trial against party

who was present or represented at the taking of deposition “so far as

admissible under the rules of evidence”). As Frank Schneider was deceased

at the time the instant litigation commenced, he is clearly unavailable to testify

in this case. Pa.R.E. 804(a)(4); Bugosh, 932 A.2d at 911. However, the

question remains whether Vanadium had a “similar motive” to examine Frank

in his Continental deposition. Pa.R.E. 804(b)(1).10

       Plaintiff cited to three separate portions of Frank Schneider’s deposition

in her response to Vanadium’s summary judgment motion. Two of the three

relevant portions of Frank’s testimony concern his loan to Matthew to fund his

investment in Vanadium and Frank’s employment with Vanadium after the

1990 asset purchase, matters as to which there is no substantial factual

disagreement between the parties. Compare Response at 7-10; id., Exhibit

A (Frank Schneider Deposition) at 123-27, 130-31 with Motion, Exhibit 16, at

30-32, 68-69, 81, 106-10.          As to the remaining issue, Plaintiff highlights

Frank’s testimony that Schneider Inc. did not publish annual reports and that

none of the Schneider Companies held regular board meetings, which Plaintiff
____________________________________________

10  Vanadium argues that, because the transcript of Frank Schneider’s
Continental deposition reproduced in Plaintiff’s summary judgment
opposition was partial and did not show the attorneys present at the
deposition, there is no evidence that it had the “opportunity” to examine Frank
in the earlier matter. We assume for the purpose of this decision that
Vanadium, which was a party to the Continental case and Frank’s employer
at the time he was deposed, received adequate notice of the deposition.

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points to as evidence showing that all of the Schneider Companies “operated

as a single entity.” Response at 2; id., Exhibit A, at 177; see also Plaintiff’s

Brief at 7.

       We conclude that the trial court did not abuse its discretion in not

considering Frank Schneider’s testimony regarding the Schneider Companies’

lack of adherence to corporate formalities.        The issue in the Continental

litigation was whether Vanadium had any successor liability for the Schneider

Companies arising from its purchase of the assets of Schneider Engineers,

SSI, Jones-Krall, and CRS and Vanadium’s continuation of those businesses

following the purchase.        The issue of Schneider, Inc.’s internal corporate

operations was at best tangential to the core issues in Continental and not

necessary for proof of Vanadium’s successor liability in that case. Therefore,

Vanadium lacked a “similar motive” to develop Frank’s testimony on this issue,

and the court properly concluded that his statements may not be admitted

through the former testimony hearsay exception.          Pa.R.E. 804(b)(1); see

Bugosh, 932 A.2d at 912 (affirming decision to prohibit the introduction of

hearsay deposition testimony from prior case where party had no incentive to

cross-examine witness concerning liability issues in present case).11
____________________________________________

11 Vanadium also argues that the Frank Schneider deposition should not be
considered because Plaintiff only attached selected portions of the transcript;
Plaintiff did not provide a copy of the full transcript in discovery; Vanadium
does not have access to the transcript otherwise; and Vanadium is entitled to
receipt of the entire transcript prior to its use at trial. See Pa.R.Civ.P.
4020(a)(4) (“If only part of a deposition is offered in evidence [at trial] by a
(Footnote Continued Next Page)

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       More to the point, however, we agree with the trial court that even if

Frank Schneider’s deposition testimony were considered, the record still lacks

sufficient evidence to show a triable issue of fact as to Vanadium’s successor

liability.   See Trial Court Opinion, 5/28/21, at 10.   It is undisputed that

Decedent worked at Schneider, Inc. and Pittsburgh Mechanical as a union

plumber and ultimately became a vice president of Pittsburgh Mechanical

performing functions in its plumbing/mechanical contracting business line. It

is further undisputed that Decedent never worked for Vanadium and that

Vanadium never purchased the plumbing and mechanical contracting business

of Schneider, Inc. or Pittsburgh Mechanical.

       In 1990, Vanadium did purchase the assets of Schneider Engineers, SSI,

Jones-Krall, and CRS, four of the approximately forty businesses founded by

Frank Schneider.         However, these four companies were engaged in

engineering design, facility and property management services, electrical

contracting, and equipment rental—distinct lines of business from the
____________________________________________

party, any other party may require the offering party to introduce all of it
which is relevant to the part introduced, and any party may introduce any
other parts.”); see also Pa.R.E. 106. We agree with Vanadium that Plaintiff’s
apparent use of selected portions of the deposition transcript without
providing the remainder of Frank Schneider’s testimony is concerning as Frank
may have discussed the relevant matters in more depth or even contradicted
the statements quoted by Plaintiff at other points during his deposition. See
Pa.R.E. 106, Comment (“The purpose of Pa.R.E. 106 is to give the adverse
party an opportunity to correct a misleading impression that may be created
by the use of a part of a writing or recorded statement that may be taken out
of context.”). However, the trial court did not rule on this issue below, and
the appellate record does not allow us to resolve the factual question of
whether Vanadium was or was not provided a copy of the full transcript.

                                          - 22 -
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plumbing and mechanical contracting work of Schneider, Inc. and Pittsburgh

Mechanical in which Decedent was engaged. Furthermore, Vanadium did not

acquire the debts or liabilities of Schneider Engineers, SSI, Jones-Krall, CRS,

or of any other of the Schneider Companies.

        With respect to the question of whether Schneider, Inc. and Pittsburgh

Mechanical effectively merged into Vanadium, the trial court accurately

determined that none of the four elements of the de facto merger analysis

were met here. As to the first element, there was no “continuity of ownership”

between Vanadium and Schneider, Inc. or its subsidiary Pittsburgh Mechanical

as Schneider, Inc. was owned by Frank and Edward Schneider.              Fizzano

Brothers, 42 A.3d at 962 (citation omitted).         Neither of these individuals

became owners of Vanadium.                Matthew Schneider, who did invest in

Vanadium, had no ownership interest or role at Schneider, Inc. or Pittsburgh

Mechanical.

        Second, Schneider, Inc. and Pittsburgh Mechanical did not “ce[ase their]

ordinary business and dissol[ve] as soon as practically and legally possible”

following Vanadium’s purchase of the assets of the unrelated Schneider

Companies. Id. (citation omitted). Rather, the record reveals that Schneider,

Inc. has not dissolved and remains an active corporation as of the date of the

present litigation.12

____________________________________________

12   The record is silent regarding the fate of Pittsburgh Mechanical.

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      Third, Vanadium did not assume the “liabilities [of Schneider, Inc. and

Pittsburgh Mechanical] ordinarily necessary for the uninterrupted continuation

of the business” of those two companies.      Id. (citation omitted).   Indeed,

Vanadium did not assume the liabilities of the four Schneider Companies

whose assets it purchased, let alone the liabilities of Schneider, Inc. and

Pittsburgh Mechanical.

      Finally, there is virtually no evidence to show “a continuity of

management, personnel, physical location, aspects, and general business

operation” between Schneider, Inc./Pittsburgh Mechanical and Vanadium. Id.

(citation omitted).   Vanadium was formed by management at Schneider

Engineers, SSI, Jones-Krall, and CRS, none of whom were shown to have any

role at Schneider, Inc. or Pittsburgh Mechanical.    While Vanadium brought

over as many as 1,000 employees from Schneider Engineers, SSI, Jones-Krall,

and CRS, there is no evidence that any of them had worked at Schneider, Inc.

or Pittsburgh Mechanical, aside from Frank Schneider. Motion, Exhibit 16, at

89, 108. Vanadium and its subsidiary businesses also never occupied any of

the office locations of Schneider, Inc. and Pittsburgh Mechanical in Pittsburgh

and Carnegie, Pennsylvania.        Id., Exhibit 15, Exhibit 16 at 119-23.

Furthermore, Vanadium and its subsidiaries pursued distinct lines of business

as compared to Schneider, Inc. and Pittsburgh Mechanical.

      Just as the “de facto merger” test was not met, the summary judgment

record also fails to reveal sufficient evidence to support a claim of Vanadium’s

successor liability under the “mere continuation” exception.      As explained

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above, the “mere continuation” analysis is very similar to that of the “de facto

merger” exception and focusses on whether “a new corporation is formed to

acquire the assets of an extant corporation” with the predecessor then ceasing

to exist, leaving “in effect but one corporation.” Fizzano Brothers, 42 A.3d

at 963 n.13; Lavelle, 555 A.2d at 227 (citation omitted).         “The primary

elements of the continuation exception are identity of the officers, directors,

or shareholders, and the existence of a single corporation following the

transfer.” Continental I, 810 A.2d at 134-35.

      Rather than Vanadium being a continuation of Schneider, Inc. and

Pittsburgh Mechanical, the record reveals a quite different picture. Schneider,

Inc. and Pittsburgh Mechanical had no common officers, directors, or

shareholders with Vanadium or its subsidiaries that absorbed the assets of

Schneider Engineers, SSI, Jones-Krall, and CRS. Furthermore, there is no

evidence that Schneider, Inc. or Pittsburgh Mechanical ceased to exist after

the 1990 asset purchase and the only evidence submitted by the parties

indicates that Schneider, Inc. remains an active corporation to this day. The

record thus shows that Vanadium was solely a continuation of Schneider

Engineers, SSI, Jones-Krall, and CRS and not of Schneider, Inc. or Pittsburgh

Mechanical.

      In arguing that there was a triable issue of fact regarding Vanadium’s

successor liability for Schneider, Inc. and Pittsburgh Mechanical, Plaintiff

stresses two factors: Matthew Schneider’s investment of over $2 million in

Vanadium with funds borrowed from his parents and the purported

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intermingling of operations among the various Schneider Companies. As the

trial court aptly surmised, however, “the source of funds to purchase assets

is not part of the test for de facto merger/mere continuation.” Trial Court

Opinion, 5/28/21, at 8. Nothing in the record reflects anything other than

that Matthew’s loan from his parents was an arm’s length’s transaction, which

Matthew repaid with interest according to the terms of the loan. Response,

Exhibit A at 125-26; Motion, Exhibit 16, at 106-07. While Plaintiff attempts

to connect this loan to Frank Schneider’s employment at Vanadium, there is

no indication that Matthew ran Vanadium at the behest of his father or that

Frank otherwise exerted control over Vanadium through his loan to Matthew.13

       Plaintiff also falls short of showing that Vanadium inherited the liabilities

of Decedent’s former employers, Schneider, Inc. and Pittsburgh Mechanical,

based upon the Schneider Companies’ purported failure to adhere to corporate

formalities and intermingling of operations. Without saying as much, Plaintiff

appears to be arguing that the trial court should have pierced the corporate

veil of the various Schneider Companies and found that Frank Schneider

____________________________________________

13 We note that Plaintiff has not asserted the fraud exception to the general
rule against successor liability by arguing that Matthew’s investment in
Vanadium was a sham transaction to create the appearance of a change of
ownership of the Schneider Companies to avoid liabilities. See Fizzano
Brothers, 42 A.3d at 954 n.2 (stating that fraud exception is met where “the
transaction was fraudulently entered into to escape liability”) (citation
omitted). The record here plainly would not support a finding that the 1990
asset sale was fraudulent. Cf. Continental I, 810 A.2d at 136 n.6 (agreeing
with trial court that Continental Insurance could not recover from Vanadium
under the fraud exception to the rule against successor liability).

                                          - 26 -
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operated the various constituent companies as a single business enterprise as

to which Vanadium is the successor in liability. However, Plaintiff’s complaint

does not contain allegations that would substantiate a veil piercing claim. See

Lumax Industries, Inc. v. Aultman, 669 A.2d 893, 895 (Pa. 1995)

(providing that a plaintiff must “set out material, relevant, well-pleaded facts”

to recover under a veil piercing theory). Instead, Plaintiff’s arguments are

largely based on references to the “Schneider Group” or simply “Schneider”

even when the conduct at issue is attributable to specific Schneider

Companies, eliding the distinction between the four companies whose assets

Vanadium purchased—Schneider Engineers, SSI, Jones-Krall, and CRS—and

Decedent’s employers—Schneider, Inc. and Pittsburgh Mechanical. See, e.g.,

Plaintiff’s Brief at 24; Response at 8; see also Trial Court Opinion, 5/28/21,

at 10 (“Plaintiff’s defense of the Motion for Summary Judgment cannot be

based on the careless application of terms and labels.”).

      Furthermore, Plaintiff has failed to produce evidence to overcome the

“strong presumption in Pennsylvania against piercing the corporate veil.”

Mortimer v. McCool, 255 A.3d 261, 268 (Pa. 2021) (quoting Lumax, 669

A.2d at 895).   As our Supreme Court has explained, the “distribut[ion] of

related businesses across multiple corporate entities to secure liability

protection and legal advantage” is not by itself cause for piercing the corporate

veil. Id. at 283. Instead, veil-piercing cases “typically involve truly egregious

misconduct” where the corporate form is abused to such a degree that

“adherence to the corporate fiction under the circumstances would sanction

                                     - 27 -
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fraud or promote injustice.” Id. at 283, 287 (citation omitted). While the

record here contains evidence that the Schneider Companies disregarded

some corporate formalities, such as by not holding regular board meetings,

and shared some overlapping officers and a 401(k) plan,14 Plaintiff has fallen

far short of showing “such unity of interest and ownership that the separate

personalities of the [individual Schneider Companies] no longer exist[ed].”

Id. at 286-87 (citation omitted).

       Accordingly, we conclude that the trial court did not err in determining

that the record lacked sufficient evidence of facts to make out a prima facie

claim that Vanadium was liable under a theory of successor liability for the

acts of Decedent’s former employers, Schneider, Inc. and Pittsburgh

Mechanical. Pa.R.Civ.P. 1035.2; Cigna, 111 A.3d at 210-11. We therefore

affirm the order granting summary judgment in favor of Vanadium

       Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 01/26/2022

____________________________________________

14See Response, Exhibit A at 177, Exhibit H (Paul Fallert Deposition) at 12,
146-47.

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