Court Opinion

ID: 62813
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:47:58+00
Date Added: 2024-06-11T09:03:15.246392
License: Public Domain

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             IN THE UNITED STATES COURT OF APPEALS
                                                                   FILED
                    FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                      ________________________ ELEVENTH CIRCUIT
                                                            JULY 30, 2008
                             No. 08-10359                 THOMAS K. KAHN
                         Non-Argument Calendar                 CLERK
                       ________________________

                D. C. Docket No. 05-00136-CV-ORL-DAB

CENTIMARK CORP.,

                                                               Plaintiff-Appellee,

                                  versus

A TO Z COATINGS & SONS, INC.,
a Georgia corporation,
A TO Z COATINGS, INC.,
a Florida corporation,

                                                       Defendants-Appellants.

                       ________________________

                Appeal from the United States District Court
                    for the Middle District of Florida
                     _________________________

                              (July 30, 2008)

Before HULL, MARCUS and WILSON, Circuit Judges.

PER CURIAM:
      In this commercial dispute, defendants A to Z Coatings & Sons, Inc. (“A to

Z Georgia”) and A to Z Coatings, Inc. (“A to Z Florida”) appeal from a bench trial

verdict and final judgment of $168,434.36 in favor of plaintiff Centimark

Corporation (“Centimark”). After review, we affirm.

                               I. BACKGROUND

      Plaintiff Centimark is a roofing contractor. Defendant A to Z Georgia is a

now defunct, family-owned, Georgia corporation, but it performed a series of roof-

coating jobs for Centimark in 2001 and 2002. A to Z Georgia informally dissolved

and ceased doing business in approximately December 2004.

      Centimark filed this lawsuit in January 2005. Centimark’s amended

complaint sought approximately $230,000 in damages as a result of A to Z

Georgia’s failure to provide acceptable coatings on four jobs that Centimark

subcontracted to A to Z Georgia in 2001 and 2002. Centimark further contended

that defendant A to Z Florida was liable for those damages as A to Z Georgia’s

successor corporation. As explained in more detail below, A to Z Georgia and A

to Z Florida were owned and operated by three members of the Robb family:

Teresita Robb (“Teresita”), Gerald Robb, Sr., (“Senior”), and Gerald Robb, Jr.

(“Junior”).

                                         2
       After a bench trial, the court1 found for Centimark and entered judgment for

$168,434.36 against A to Z Georgia and A to Z Florida, jointly and severally. The

court determined that A to Z Georgia was liable to Centimark for two of the four

jobs at issue, and that A to Z Florida was also liable to Centimark for those jobs as

A to Z Georgia’s successor.

       Preliminarily, the court observed that A to Z Georgia had a default judgment

entered against it for failure to answer Centimark’s complaint, but that A to Z

Florida had appeared and defended against both liability and damages. In light of

A to Z Florida’s timely appearance and challenge to A to Z Georgia’s liability, the

court decided to ignore the default judgment and determined that A to Z Georgia

would receive the benefit of A to Z Florida’s challenge to liability, if that challenge

proved successful.

       However, A to Z Florida’s challenge to liability did not prove entirely

successful. On the merits, the court found that A to Z Georgia had agreed to coat

the Taylor Wharton commercial building for Centimark, and that A to Z Georgia

was paid for that work. The court further found that the Taylor Wharton roof

leaked in certain spots; that A to Z Georgia had promised to provide “a roof that

didn’t leak”; and that Centimark incurred a total cost of $108,434.36 in dealing

       1
        The parties consented to trial before a federal magistrate judge. We refer to the
magistrate judge as the “court.”

                                                3
with the leaky roof. Accordingly, the court found that A to Z Georgia was liable to

Centimark for $108,434.36.

       The court also found that A to Z Georgia had agreed to coat and install a

foam roof on the Talla-Com commercial building for Centimark, and that A to Z

Georgia was paid for that work as well. The court further determined that the foam

on the Talla-Com roof cracked and Centimark was forced to fix the problem at a

cost of $60,000; the parties had an “oral agreement, followed by a purchase order

and an invoice,” for the Talla-Com project; and A to Z Georgia was liable to

Centimark for the $60,000 that Centimark incurred in repair costs.

       Finally, the court found that A to Z Florida was liable to Centimark as A to

Z Georgia’s successor corporation. The court determined that A to Z Florida was a

mere continuation of A to Z Georgia, due to the similar principals, similar nature of

the businesses, the timing of A to Z Florida’s incorporation, and other evidence we

discuss later. A to Z Georgia and A to Z Florida timely appealed.2

                                      II. DISCUSSION

A.     Pleading deficiencies

       First, we address defendants’ contention that Centimark’s amended

       2
        After a bench trial, we review a trial court’s findings of fact for clear error and its
conclusions of law de novo. See A.I.G. Uruguay Compania de Seguros, S.A. v. AAA Cooper
Transp., 334 F.3d 997, 1003 (11th Cir. 2003).

                                                 4
complaint did not set forth sufficient allegations to provide a legal basis for the

default judgment against A to Z Georgia, such that the judgment against both A to

Z Georgia and A to Z Florida must be reversed. The problem with this argument is

that the court disregarded the default judgment against A to Z Georgia and actually

tried the case as to A to Z Georgia’s liability, because A to Z Florida timely

appeared to challenge A to Z Georgia’s liability. Instead of relying on the default

judgment, the court specifically determined that A to Z Georgia agreed to provide

non-faulty roofs for Centimark on the Taylor Wharton and Talla-Com jobs; that A

to Z Georgia failed to do so; and that A to Z Georgia was liable to Centimark for

the resulting damages of $168,434.36.3

       Moreover, to the extent defendants argue that Centimark pled only a cause

of action for breach of written contract, such that the court’s judgment cannot

stand, we disagree. Centimark’s amended complaint pled three distinct causes of

action: (1) breach of contract, based on an April 2002 written agreement that

Centimark attached to its original complaint; (2) breach of warranty, based on

Centimark having contracted in 2001 for A to Z Georgia to coat Centimark’s roofs

and A to Z Georgia having performed defective and faulty coating work; and (3)

       3
        In contrast, had the court entered judgment based on A to Z Georgia’s default, A to Z
Georgia would be liable for all of the jobs referenced in the amended complaint and not merely
the Taylor Wharton and Talla-Com jobs.

                                               5
unjust enrichment, based on Centimark having paid A to Z Georgia for coating

work on those roofs despite A to Z Georgia’s improper performance of that work.

      The court’s order does not specify the precise basis for its grant of relief to

Centimark, but it does make clear that the judgment is not based on the April 2002

written contract. The court’s order recognized (1) that all but one of the four

coating jobs pre-dated the April 2002 contract, and (2) that as to the one post-April

2002 job (Talla-Com), the April 2002 contract was “woefully incomplete” and

lacked “essential terms,” such that the Talla-Com job was governed by an oral

agreement between the parties and not the April 2002 contract. Instead of relying

on the April 2002 written contract, the court’s order found the parties had

proceeded as they always had, with oral agreements for roof coating work followed

by purchase orders and invoices.

      Furthermore, as to Centimark’s breach of warranty and unjust enrichment

counts, defendants’ initial brief on appeal does not seriously challenge the court’s

underlying determination that A to Z Georgia was obligated to provide non-leaky

roofs (at the Taylor Wharton and Talla-Com sites) and failed to do so. See United

States v. Gupta, 463 F.3d 1182, 1195 (11th Cir. 2006) (stating that if a party fails

to provide arguments on the merits of an issue and makes only passing reference to

the issue in its briefs, the argument is waived), cert. denied, 127 S. Ct. 2446 (2007).

                                           6
In any event, the trial evidence supports the court’s judgment that A to Z Georgia

agreed to provide non-leaky roofs but failed to do so. Even Senior—the Vice

President of A to Z Georgia—acknowledged that Centimark was “attempting to get

a roof which did not leak”; that a non-leaky roof was the “basis of the agreement”

between the parties; and that a non-leaky roof was what A to Z Georgia was “going

to provide.” Testimony of Gerald Robb, Sr., at 144 (discussing the Taylor

Wharton building); see also Testimony of James Esterly, at 68, 71, 75 (explaining

that Centimark hired A to Z Georgia to provide a leak-free roof for the Talla-Com

building but the roof continually leaked). Moreover, A to Z Georgia was paid

$174,132 for its work on the Taylor Wharton building and $260,000 for its work

on the Talla-Com building, despite having provided leaky roofs.

      In short, there was ample evidence to support the court’s determination that

the parties proceeded, as they always had, on oral agreements for non-leaky roofs;

that Centimark fully paid A to Z Georgia for non-leaky roofs; that the roofs leaked;

and that A to Z Georgia was liable to Centimark for $168,434.36. At a minimum,

Centimark proved a viable unjust enrichment claim, and defendants have failed to

show any reversible error in the judgment against them. See W.R. Townsend

Contracting, Inc. v. Jensen Civil Constr., Inc., 728 So. 2d 297, 300, 303 (Fla. Dist.

Ct. App. 1999) (detailing the elements of breach of oral contract and unjust

                                          7
enrichment under Florida law).4

B.     Successor liability of A to Z Florida

       Defendants argue that even if A to Z Georgia is liable to Centimark, the

court erred in finding A to Z Florida liable to Centimark as A to Z Georgia’s

successor. We disagree.

       Under Florida law, a predecessor corporation’s liability may be imposed on

its successor corporation if: (1) the successor assumes the obligations of the

predecessor; (2) the transaction is a de facto merger; (3) the successor is a mere

continuation of the predecessor; or (4) the transaction is a fraudulent effort to avoid

the liabilities of the predecessor. See Bernard v. Kee Mfg. Co., 409 So. 2d 1047,

1049 (Fla. 1983); Lab. Corp. of Am. v. Prof’l Recovery Network, 813 So. 2d 266,

269 (Fla. Dist. Ct. App. 2002). On appeal, Centimark argues only for the third

type of successor liability and asserts that A to Z Florida is a mere continuation of

A to Z Georgia.5

       4
         The court applied Florida law, and the parties agree that Florida law governs this
dispute. Accordingly, we apply Florida law. To prove unjust enrichment, a plaintiff must
establish facts that demonstrate: (1) that a benefit was conferred upon and flowed to the
defendant; (2) that the defendant either requested the benefit or knowingly and voluntarily
accepted it; and (3) that under the circumstances, it would be inequitable for the defendant to
retain the benefit without paying the value thereof. W.R. Townsend, 728 So. 2d at 303. Because
Centimark’s unjust enrichment claim supports the judgment, we need not examine whether,
under Florida law, Centimark also proved a breach of implied warranty claim arising from the
oral promises.
       5
        The court found the alter ego theory of successor liability inapplicable to A to Z Florida
and instead found A to Z Florida liable under the mere continuation theory. In its appeal brief,

                                                 8
       “The concept of continuation of business arises where the successor

corporation is merely a continuation or reincarnation of the predecessor

corporation under a different name.” Amjad Munim, M.D., P.A. v. Azar, 648 So.

2d 145, 154 (Fla. Dist. Ct. App. 1994). “The key element of a continuation is a

common identity of the officers, directors and stockholders . . . .” Id. Mere

continuation

       occurs when one corporation is absorbed by another, i.e., there is a
       continuity of the [first] corporation evidenced by such things as the
       same management, personnel, assets, location and stockholders. The
       bottom-line question is whether each entity has run its own race, or
       whether[] there has been a relay-style passing of the baton from one to
       the other.

Id. (quotation marks, ellipses, and citations omitted); see also Lab Corp., 813 So.

2d at 270 (“While having common attributes does not automatically impose

liability on a successor corporation, merely repainting the sign on the door and

using new letterhead certainly gives the appearance that the new corporation is

simply a continuation of the predecessor corporation.”).

       At trial, Centimark established that A to Z Georgia and A to Z Florida were

both “family businesses” and essentially “nobody else” worked for the companies

besides the Robb family. As to A to Z Georgia, Teresita owned 51% of the stock

and was the Secretary/Treasurer. Her stepson, Junior, owned 49% of the stock and

Centimark focuses only on mere continuation. Accordingly, we address only mere continuation.

                                             9
was the CEO. Teresita’s husband and Junior’s father, Senior, previously owned a

49% share, but transferred his share to Junior prior to the events in this case.

However, Senior remained employed by A to Z Georgia as its Vice President, and

he personally worked on the Taylor Wharton and Talla-Com jobs at issue in this

case. At some point, Teresita and Senior moved, leaving Georgia for Florida, and

A to Z Georgia was registered to do business in Florida for a short time.

       As to A to Z Florida, in late March 2005—approximately two months after

this lawsuit was filed—the Robbs formed A to Z Florida.6 At the time of A to Z

Florida’s incorporation, Teresita owned 49% of its stock, and Senior owned 51%.7

Teresita is A to Z Florida’s Secretary/Treasurer, while Senior is its President.8

       In summary, Centimark’s evidence showed that: (1) the Robbs owned A to Z

Georgia and A to Z Florida in similar capacities; (2) Teresita, Junior, and Senior

were the officers and directors of A to Z Georgia; (3) Teresita and Senior were the

officers and directors of A to Z Florida; (4) purchase orders from A to Z Georgia

were sometimes issued in A to Z Florida’s name; (5) Senior and Junior still worked

       6
        Centimark’s original complaint named only A to Z Georgia as a defendant. Thereafter,
Centimark discovered that A to Z Georgia had ceased doing business and that the Robbs had
incorporated A to Z Florida in March 2005, and in May 2005, Centimark filed its amended
complaint naming both A to Z Georgia and A to Z Florida as defendants.
       7
           Teresita is now the sole shareholder of A to Z Florida.
       8
           Junior is neither a shareholder nor an officer of A to Z Florida.

                                                   10
jointly on jobs even after A to Z Georgia ceased doing business, with Junior going

to Florida frequently in the winter and Senior going to Pennsylvania frequently in

the summer;9 (6) the Robbs personally owned a lot of the A to Z companies’ fixed

assets and leased the equipment to the companies; (7) A to Z Florida and A to Z

Georgia performed the same type of work and provided the same type of services;

(8) from the perspective of the former A to Z Georgia Director of Operations (who

moved to Florida with Senior and Teresita), “there were no changes” in day-to-day

operations even after A to Z Georgia ceased doing business in December 2004 and

A to Z Florida was incorporated in March 2005;10 and (9) A to Z Florida did not

even bother to use “new letterhead” upon its formation, cf. Lab Corp., 813 So. 2d

at 270, and instead, in October 2005, several months after A to Z Georgia

discontinued its operations and A to Z Florida was incorporated, the Robbs were

still using A to Z Georgia’s stationery.

       This wealth of evidence establishes that A to Z Georgia and A to Z Florida

had great overlap in their officers, directors, personnel, assets, and stockholders,

       9
         Junior moved to Pennsylvania in approximately 1999-2000, and A to Z Georgia was
registered to do business in Pennsylvania for a short time prior to its December 2004 dissolution.
In January 2005, Junior formed A to Z Coatings, Inc., a Pennsylvania corporation (“A to Z
Pennsylvania”). A to Z Pennsylvania is not a party to this lawsuit.
       10
          Richard Schwenk was A to Z Georgia’s Director of Operations and one of the few non-
Robbs who worked for the A to Z companies. He left the Robbs’ employ in October 2005
(seven months after A to Z Florida’s incorporation) and testified that as far as he knew, even
after A to Z Florida’s incorporation, he was still an employee of A to Z Georgia.

                                                11
and accordingly, defendants have not shown that the court erred in finding A to Z

Florida liable to Centimark as a mere continuation of A to Z Georgia. See Lab

Corp., 813 So. 2d at 270 (stating that to avoid successor liability, the successor

“corporation must not merely be a ‘new hat’ for the [predecessor] corporation, with

the same or similar entity or ownership”) (quotation marks and citation omitted);

Amjad Munim, 648 So. 2d at 154 (stating that mere continuation is shown “by

such things as the same management, personnel, assets, location and

stockholders”) (quotation marks and citations omitted).11

                                     III. CONCLUSION

       For the foregoing reasons, we affirm the court’s verdict and entry of

judgment of $168,434.36 in favor of Centimark against A to Z Georgia and A to Z

Florida.

       AFFIRMED.

       11
          Finally, to the extent that defendants claim Centimark failed to adequately plead
successor liability, we reject that argument as well. Centimark’s amended complaint gave
defendants sufficient notice of the successor liability claim by alleging, inter alia, that “A to Z
[Florida] is the alter ego of A to Z [Georgia] as it [is] a mere continuation of the business of the
latter,” and that A to Z Florida and A to Z Georgia have common shareholders. Amended
Complaint, ¶¶ 20-21.

                                                 12