[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.