Court Opinion

ID: 4302267
Source: CourtListenerOpinion
Date Created: 2018-08-09 15:06:05.43809+00
Date Added: 2024-06-11T14:29:36.970872
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),                                      FILED
this Memorandum Decision shall not be                                   Aug 09 2018, 7:47 am
regarded as precedent or cited before any
court except for the purpose of establishing                                CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
the defense of res judicata, collateral                                      and Tax Court

estoppel, or the law of the case.

ATTORNEY FOR APPELLANTS                                  ATTORNEYS FOR APPELLEE
Thomas E. Scifres                                        TITAN TRANSFER, INC.
Thomas E. Scifres, P.C.                                  Darren A. Craig
Salem, Indiana                                           Carly J. Tebelman
                                                         Frost Brown Todd LLC
                                                         Indianapolis, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Garrell “Gary” McCutcheon Jr.,                           August 9, 2018
and Melissa K. McCutcheon,                               Court of Appeals Case No.
Appellants-Plaintiffs,                                   10A05-1711-PL-2713
                                                         Appeal from the Clark Circuit
        v.                                               Court
                                                         The Honorable Andrew Adams,
Pavco Trucking Co. Inc., and                             Judge
Titan Transfer, Inc.,                                    Trial Court Cause No.
Appellees-Defendants.                                    10C01-1505-PL-44

Robb, Judge.

Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018           Page 1 of 11
                                Case Summary and Issue
[1]   Garrell and Melissa McCutcheon appeal following the trial court’s grant of

      summary judgment to Titan Transfer, Inc. (“Titan”). The McCutcheons raise

      several issues on appeal which we consolidate and restate as whether the trial

      court erred when it granted summary judgment to Titan. Concluding that no

      genuine issues of material fact remained and that Titan was entitled to

      summary judgment as a matter of law, we affirm.

                            Facts and Procedural History
[2]   Pavco Trucking Company, Inc. (“Pavco”), operated a trucking company in

      Clarksville, Indiana. Pavco employed the McCutcheons to haul freight by

      truck. Pavco terminated the McCutcheons’ employment on February 14, 2014.

[3]   On March 1, 2014, Titan and Pavco executed the Purchase Agreement which

      enumerated a number of Pavco’s assets that would be transferred to Titan in

      exchange for consideration of $40,000, an additional amount of cash equal to

      two weeks of Pavco’s payroll, and a covenant-not-to-compete. The Purchase

      Agreement provided in relevant part in Section 3:

              [Pavco] represents and warrants to [Titan]:

              ***

              (b) There are no judgments, liens, claims, actions or proceeding
              [sic] against the assets being conveyed except as described herein.

      Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 2 of 11
      Appellant’s Appendix, Volume 2 at 87.

      The Purchase Agreement further provided in Section 11:

              [Pavco] shall be responsible for all debts, obligations, leases and
              expenses of the business prior to February 28, 2014, at midnight,
              and shall indemnify and hold [Titan] harmless from any liability
              thereon. [Titan] shall be responsible for all debts, obligations and
              expenses of the business after said effective date and shall
              indemnify and hold [Pavco] harmless from any liability thereon.

      Id. at 90.

[4]   The McCutcheons filed suit against Pavco and Titan on April 27, 2015, alleging

      four claims of retaliatory discharge and wrongful termination. Id. at 19-24.

      Titan appeared in the suit and answered the complaint. Pavco did not appear.

      The McCutcheons ultimately obtained a default judgment against Pavco for

      $180,656.28. Id. at 79-80. On April 6, 2017, the McCutcheons filed

      proceedings supplemental against Titan seeking satisfaction of their default

      judgment, arguing that, as a term of the Purchase Agreement, Titan had agreed

      to assume liability for Pavco’s debts and obligations after February 28, 2014.1

      Id. at 10, 83-84.

[5]   On May 19, 2017, Titan moved for summary judgment, arguing in relevant part

      that Titan could not be held liable for any of the allegations in the

      1
        As of the last date in the trial court’s chronological case summary, no hearing on the McCutcheons’
      proceedings supplemental had occurred. Appellant’s App., Vol. 2 at 15.

      Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018           Page 3 of 11
      McCutcheon’s complaint because Titan had never employed the McCutcheons

      and because Titan had not assumed any liability from Pavco arising from

      Pavco’s employment of the McCutcheons. Id. at 10, 95. In support of its

      motion, Titan designated the Affidavit of Phillip Edwards, President of Titan,

      who averred that Pavco and Titan had no mutual stockholders, members of

      boards of directors, or shareholders. Id. at 121-22. Edwards also averred that

      the transfer of assets from Pavco to Titan did not involve the transfer of any

      stock. Id. at 122. In addition, Titan designated a certificate of existence from

      the Indiana Secretary of State showing that Pavco existed and was authorized

      to conduct business as of May 19, 2017. Id. at 136. The McCutcheons opposed

      Titan’s motion and also moved for summary judgment, reasserting their

      argument that, pursuant to the Purchase Agreement, Titan had assumed

      liability for Pavco’s debts and obligations after February 28, 2014, and that their

      default judgment was a debt that arose after that date. Id. at 140-52. As part of

      the evidence in support of their summary judgment filings, the McCutcheons

      designated their Affidavit in which they averred that after the transaction

      between Pavco and Titan, Titan continued to use Pavco’s phone and facsimile

      numbers, office personnel, equipment, and accounts, and that no change in

      business had occurred. Id. at 137-38. The McCutcheons also designated the

      Purchase Agreement and an article from the Shelbyville Times-Gazette

      announcing Titan’s “acquisition” of Pavco. Id. at 161-68, 178.

[6]   On October 19, 2017, the trial court entered its order granting summary

      judgment for Titan, providing in relevant part:

      Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 4 of 11
                 The McCutcheons’ claims fail against [Titan] because the events
                 alleged in the [complaint] occurred while the McCutcheons were
                 working for [Pavco], and the McCutcheons never worked for
                 [Titan]. Although [Titan] later acquired some of Pavco’s assets,
                 it did not assume any liability arising from Pavco’s employment
                 of the McCutcheons.

      Id. at 16. This appeal ensued.

                                     Discussion and Decision
[7]   The McCutcheons contend that the trial court erred in concluding that Titan

      was entitled to judgment as a matter of law, arguing that Titan expressly agreed

      to assume liability for their default judgment against Pavco as part of the

      Purchase Agreement.2

                                           I. Standard of Review
[8]   When reviewing a trial court’s grant or denial of summary judgment, we apply

      the same standard as the trial court. Travelers Cas. & Sur. Co. v. United States

      Filter Corp., 895 N.E.2d 1172, 1176 (Ind. 2008). “We must decide whether

      there is a genuine issue of material fact that precludes summary judgment and,

      if not, whether the moving party is entitled to judgment as a matter of law.” Id.

      (citing Ind. Trial Rule 56(C)). “We also construe the designated evidence in a

      light most favorable to the nonmoving party.” Id.

      2
          Pavco does not participate in this appeal.

      Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 5 of 11
[9]    Matters of contract interpretation are particularly well-suited for de novo

       appellate review because they generally present questions purely of law. In re

       Indiana State Fair Litig., 49 N.E.3d 545, 548 (Ind. 2016). A contract may be

       construed on summary judgment if it is not ambiguous or uncertain, or if any

       ambiguity may be resolved without the aid of a factual determination. Id. “The

       meaning of a contract is a question for the factfinder, precluding summary

       judgment, only where interpreting an ambiguity requires extrinsic evidence.”

       Id.

                                   II. Assumption of Liability
                                           A. Asset Only Transfer
[10]   In Indiana3 the general rule concerning corporate successor liability is that when

       one corporation simply purchases the assets of another, as opposed to

       purchasing the stock of another, the buyer does not assume the debts and

       liabilities of the seller. Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228, 1233

       (Ind. 1994). There are four generally recognized exceptions to the rule, namely

       where (1) there is an implied or express agreement to assume the obligation; (2)

       a fraudulent sale of assets was done in order to escape liability; (3) the purchase

       3
          The Purchase Agreement contained a choice of law provision dictating that the Agreement would be
       interpreted according to Tennessee law. Appellant’s App., Vol. 2 at 92. However, in their appellate briefs,
       both parties cite Indiana law only. The McCutcheons assert that Titan acknowledged in a summary
       judgment pleading that no conflict exists between Indiana and Tennessee law on contract interpretation.
       Brief of Appellant at 13 n.2. However, the McCutcheons did not include that pleading in their Appendix.
       As neither party has invoked the Purchase Agreement’s choice of law provision, we will interpret the
       Agreement according to Indiana law.

       Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018            Page 6 of 11
       was actually a de facto consolidation or merger; and (4) the purchaser is a mere

       continuation of the seller. Id. It is the first of these exceptions upon which the

       McCutcheons rely, arguing that Titan expressly agreed through the Purchase

       Agreement to assume Pavco’s liability for their judgment. Brief of Appellant at

       15. The McCutcheons contend that there “is disagreement on the issue of

       whether this was simply, and solely, an ‘asset purchase,’” id. at 14, but they also

       acknowledge that the transfer of assets from Pavco to Titan did not involve the

       transfer of any stock, id. at 17. In their reply to Titan’s brief on appeal, the

       McCutcheons acknowledge that Titan did not assume all of Pavco’s debt as a

       result of the asset transfer. Appellant’s Reply Brief at 6. Thus, inasmuch as the

       McCutcheons argue that Titan assumed liability for their judgment strictly

       because of the nature of the transfer of assets from Pavco to Titan, we reject that

       argument as waived. See Reed v. Reid, 980 N.E.2d 277, 296-97 (Ind. 2012)

       (holding that failure to comply with Indiana Appellate Rule 46(A)(8) by failing

       to support a contention with cogent reasoning, citation to authority, and

       citation to the record results in waiver of the issue).

[11]   As an additional preliminary matter, we note that Winkler, which is cited by

       both parties, itself relied on Markham v. Prutsman Mirror Co., 565 N.E.2d 385

       (Ind. Ct. App. 1991), as authority for the above-referenced rule of successor

       liability and its exceptions. Winkler, 638 N.E.2d at 1233. In enunciating the

       rule and its exceptions, the Markham court also held that “[s]uccessor in assets

       liability, under these exceptions, takes place only when the predecessor

       corporation no longer exists, such as when a corporation dissolves or liquidates

       Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 7 of 11
       in bankruptcy.” Markham, 565 N.E.2d at 387. However, nothing in the

       authority cited by the court in Markham for this proposition explains why this

       should be so where two corporate entities have expressly contracted for one to

       assume the other’s liabilities. See id. (citing Wewoka Petroleum Corp. v. Gilmore,

       319 P.2d 285, 289 (Okla. 1957) (holding that, pursuant to state statute,

       voluntarily dissolved corporations continue to exist for purposes of being sued);

       and Wilkerson v. C.O. Porter Mach. Co., 567 A.2d 598, 600-09 (N.J. Super. Law

       Div. 1989) (examining the applicability of New Jersey’s product-line theory of

       successor liability to the purchase of assets from predecessor corporation’s

       bankruptcy)). In Winkler, our supreme court did not adopt this portion of

       Markham, and we see no reason to disregard a contractual agreement made by

       two corporate entities in an arms-length transaction simply because the

       predecessor corporation continues to exist. As such, we address the issue of

       whether Titan agreed to assume Pavco’s liability for the instant judgment as

       part of the Purchase Agreement without reference to Pavco’s continued

       corporate viability.

                                     B. The Purchase Agreement
[12]   The goal of the interpretation of contracts is to give meaning and effect to the

       intention of the parties as expressed in the language of the contract itself. U.S.

       Fidelity & Guar. Co. v. Warsaw Chem. Co., 990 N.E.2d 18, 21 (Ind. Ct. App.

       2013), trans. denied. We construe the instrument as a whole, giving effect to

       every portion, if possible. Id. Furthermore, we attempt to construe contractual

       provisions so as to harmonize the agreement. Grimes v. Crockrom, 947 N.E.2d

       Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 8 of 11
       452, 455 (Ind. Ct. App. 2011). We discern the meaning of a contract by

       considering all of its provisions, not individual words, phrases, or even

       paragraphs read alone. Care Grp. Heart Hosp., LLC, v. Sawyer, M.D., 93 N.E.3d
745, 756 (Ind. 2018). We first examine the contract language to determine

       whether it is ambiguous. Id. at 752. If the language is unambiguous, we give

       the words used their plain and ordinary meaning in the context of the whole

       contract, without substitution or addition. Id.

[13]   Both parties contend that the Purchase Agreement is unambiguous, see Br. of

       Appellant at 19-22; Appellee’s Brief at 11-14, and we agree. Pursuant to the

       plain wording of the contract, Pavco was to be responsible for all “obligations”

       of the business which existed prior to February 28, 2014. Appellant’s App.,

       Vol. 2 at 90. The word obligation “has many wide and varied meanings [and]

       may refer to anything that a person is bound to do or forbear from doing,

       whether the duty is imposed by law, contract, promise, social relations,

       courtesy, kindness, or morality.” Black’s Law Dictionary (10th ed. 2014). In

       addition, Pavco unambiguously warranted to Titan in the Purchase Agreement,

       “There are no . . . claims . . . against the assets being conveyed except as

       described herein.” Appellant’s App., Vol. 2 at 87. A claim may be defined as a

       cause of action. Id. The word “claim” as used in the Purchase Agreement is

       not modified by any language limiting its meaning to claims which were

       already filed. No claims against Pavco’s assets were otherwise described in the

       Purchase Agreement. Id. at 86-94.

       Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 9 of 11
[14]   Reading these terms and provisions together so as to give effect to each, the

       warranty provision indicates that parties intended that no existing claims were

       being transferred from Pavco to Titan as part of the transfer of assets. A claim

       against a party falls within the general definition of “obligation” because the

       party’s legal duties are implicated by the accrual of a cause of action. The

       McCutcheons had a cause of action against Pavco as of the date of their

       termination on February 14, 2014. See Jean v. Dugan, 20 F.3d 255, 265 (7th Cir.

       1994) (applying Indiana law and holding that a claim for retaliatory discharge

       accrues upon termination of employment). Since the McCutcheons’ claim

       against Pavco was an obligation of the business that existed prior to February

       28, 2014, it fell within the obligations reserved to Pavco pursuant to the

       Purchase Agreement and for which Pavco agreed to hold Titan harmless. Any

       other reading of the Purchase Agreement would render Pavco’s warranty

       pertaining to claims meaningless and ineffective. The McCutcheons do not

       address the warranty provision pertaining to claims. Rather, they invite us to

       discern the meaning of the Purchase Agreement by concentrating solely upon

       Section 11 in isolation, see Appellant’s Reply Br. at 5, and by considering their

       action against Pavco and Titan only in its last incarnation when it was reduced

       to judgment. This invitation runs afoul of the rule of contract construction

       which requires us to discern the intent of the parties by examining the contract

       as a whole. Care Grp. Heart Hosp., 93 N.E.3d at 756. Titan did not expressly

       assume Pavco’s liability for any claim resulting from Pavco’s employment of

       the McCutcheons, and the trial court’s grant of summary judgment was proper

       because Titan was entitled to summary judgment as a matter of law.
       Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 10 of 11
                                               Conclusion
[15]   Concluding that Titan did not expressly assume liability for a claim that existed

       against Pavco prior to the effective date of the Purchase Agreement, we affirm

       the trial court’s grant of summary judgment to Titan.

[16]   Affirmed.

       Najam, J., and Altice, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 10A05-1711-PL-2713 | August 9, 2018   Page 11 of 11