Coco v. Winston Industries, Inc.

383 F. Supp. 405
District Court, W.D. Louisiana·Decided October 23, 1974·No. Civ. A. No. 16463·Published·Cited by 1 cases

Opinion

RULING ON MOTION FOR SUMMARY JUDGMENT

DAWKINS, Senior District Judge.

Plaintiff, Gary James Coco, brings this action to recover damages for injuries he allegedly suffered while operating a “dado saw” at his employer’s mobile home manufacturing plant.

As a result of the alleged accident, plaintiff’s right hand, except for the thumb, was amputated. Named as defendants are Winston Industries, Inc. (Winston), (formerly Winston Mobile Homes, Inc.), Don Tidwell, former President of Winston, Burton Burdick, a former Vice-President of Winston, and John Posey, Jr., former Secretary-Treasurer of Winston. The three individual defendants also were directors and sole shareholders of Winston. Plaintiff additionally has named as defendants Universal Underwriters Insurance Company (Universal), the workmen’s compensation and employer’s liability insurer of Winston Industries, and the officers and executive officers and directors of Winston Industries, Inc., whose names, addresses, and locations were not known to plaintiff when the action was filed.* [407] Universal also intervened, claiming priority for all workmen’s compensation benefits and medical expenses it has paid in plaintiff’s behalf. Since there is complete diversity and plaintiff’s demand exceeds $10,000, we have subject matter jurisdiction. 28 U.S.C. § 1332.

We now are concerned solely with a motion for summary judgment, filed pursuant to Rule 56, F.R.Civ.P., by defendants Tidwell, Burdick, and Posey against the claims by plaintiff and intervenor. Under that Rule, we may grant that motion only if there is “no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.” We are well aware that any such movant bears the burden of showing without dispute that he is entitled to prevail. We also realize that summary judgment seldom is appropriate in actions based upon negligence. Wright & Miller, Federal Practice and Procedure: Civil, §§ 2727, 2729. Notwithstanding, after thorough consideration of the evidence presented through affidavits, exhibits, and depositions filed here, we hold that these defendants’ motion for summary judgment must be granted. We now turn to our reasons for this ruling.

First, we outline what we find to be undisputed facts. In 1965, Winston Mobile Homes, Inc., was incorporated. There were ten shareholders, each with 100 shares. Later, defendants Tidwell, Burdick, and Posey became Winston’s sole shareholders. In July, 1968, Sherwood Homes, Inc., located in Natchitoches, Louisiana, was formed as a wholly-owned subsidiary of Winston. Sherwood operated a facility for manufacturing mobile homes there.

Tidwell, Burdick, and Posey continued to own all of Winston’s stock until March, 1969. Up to that date, Tidwell functioned as President, Chief Executive Officer, and director. Burdick and Posey were officers and directors; however, neither took an active part in management of the company. Posey’s role principally was that of legal advisor, while Burdick essentially was an investor in the company. In short, of the three, only Tidwell had an active role in the day-to-day management of the corporation.

In 1969, Tidwell sold all of his stock in Winston to Electronics Capital Corporation (Electronics) for cash and notes. Simultaneously, he severed all connection with Winston and its subsidiaries, including Sherwood. On the same date, Posey and Burdick sold substantially all of their stock in Winston to Electronics, retaining only a 9% interest each. This minority interest thereafter was sold to Electronics in September, 1969. Posey’s association with Winston then came totally to an end; however, Electronics continued to list Burdick as a member of Winston’s board of directors until some time after April 9, 1970 (the date of plaintiff’s accident).

March 26, 1970, Coco applied for and obtained employment with Winston at its Sherwood plant. April 9, following, while working on a “dado saw” at the Sherwood plant, plaintiff suffered the injury which is the subject of this suit. The “dado saw” was constructed at the Sherwood plant site by one Harold Bridges, an employee of Winston who had been employed by Tidwell.

To summarize briefly, it is undisputed that when plaintiff was employed by Winston (Sherwood), Tidwell had no connection whatever with that company, having sold his shareholdings and resigned his position more than a year earlier. Moreover, Posey, who never had taken an active role in managing Winston, had ended his relationship with the company seven months prior to Coco’s employment by Winston (Sherwood). Only Burdick was listed as a director of Winston at the time of the accident; however, since he essentially was merely an investor in the company, he never had taken an active role in its management. Finally, the saw which allegedly injured plaintiff was designed and built by an employee of Winston (Sherwood) who had been hired by Tidwell.

[408] Given the foregoing undisputed material facts and considering applicable Louisiana law, which we are Erie-bound to follow in this diversity action, we are convinced that movants are entitled to summary judgment as a matter of law.

The essence of plaintiff’s claim is that movants breached an employment-imposed duty to provide Winston’s (Sherwood’s) employees with a safe place to work; that plaintiff was included within the class of persons thus protected and hence is entitled to tort compensation for his damages. This we must reject.

In its recent decision in Canter v. Koehring Company, 283 So.2d 716 (La.S.Ct., 1973), the Louisiana Supreme Court squarely faced the broad legal question: “When and under what circumstances is the officer, agent, or employee of an employer or principal liable to a third person (including a co-employee), when injuries caused to such third person result from the breach of a duty imposed by his employer or principal upon the officer, agent, or employee?” The following criteria then were given by the Court for the purpose of determining when individual executive officer liability may be imposed;

“1. The principal or employer owes a duty of care to the third person (which in this sense includes a co-employee), breach of which has caused the damage for which recovery is sought.
“2. This duty is delegated by the principal or employer to the defendant.
“3. The defendant officer, agent, or employee has breached this duty through personal (as contrasted with technical or vicarious) fault. The breach occurs when the defendant has failed to discharge the obligation with the degree of care required by ordinary prudence under the same or similar circumstances — whether such failure be due to malfeasance, misfeasance, or nonfeasance, including when the failure results from not acting upon actual knowledge of the risk to others as well as from a lack of ordinary care in discovering and avoiding such risk of harm which has resulted from the breach of the duty.

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Coco v. Winston Industries, Inc., 383 F. Supp. 405 (W.D. La. 1974).

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