Rose Ana Forbes Lemelle, Rose Ana Forbes Lemelle v. Universal Mfg. Corp., Universal Mfg. Corp., Werts Novelty Co., Inc., Usf & G

18 F.3d 1268
CourtCourt of Appeals for the Fifth Circuit
DecidedMay 27, 1994
Docket93-4181
StatusPublished
Cited by170 cases

This text of 18 F.3d 1268 (Rose Ana Forbes Lemelle, Rose Ana Forbes Lemelle v. Universal Mfg. Corp., Universal Mfg. Corp., Werts Novelty Co., Inc., Usf & G) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rose Ana Forbes Lemelle, Rose Ana Forbes Lemelle v. Universal Mfg. Corp., Universal Mfg. Corp., Werts Novelty Co., Inc., Usf & G, 18 F.3d 1268 (5th Cir. 1994).

Opinion

KING, Circuit Judge:

Rosemary Forbes, the mother of decedents Michael Tyrone Forbes and John Clarence Berchman Forbes, filed suit in federal district court against Universal Manufacturing Corp. and United States Fidelity and Guaranty Co. for the wrongful death of the decedents. The district court entered summary judgment for the defendants, and the plaintiff appeals. We reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

I. BACKGROUND

A. Factual Background .

Winston Mobile Homes, Inc. was incorporated in Alabama on August 10, 1965. On April 24, 1969, the corporation changed its name to Winston Industries, Inc. (Winston). Winston was a business generally involved with the manufacture, marketing, and sale of mobile homes.

On September 9,1982, Winston — a wholly-owned subsidiary of Shelter Resources Corp. (Shelter), a Delaware corporation — filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio. Shelter and another of its wholly-owned subsidiaries, Lancer Homes, Inc. — a California corporation — filed voluntary petitions under Chapter 11 at the same time. The bankruptcy court consolidated all three proceedings for administrative purposes only.

On November 29,1982, pursuant to a court order, the consumer products division of Winston was sold to American Consumer Products, Inc. (American). On January 4, 1983, pursuant to the same court order, Winston’s operating assets relating to the production and sale of manufactured housing were sold to Don N. Tidwell. Tidwell gave as consideration for Winston’s manufacturing assets $3,137,000 in cash and the secured assumption of accrued warranty liabilities to-talling $2,399,000. After the sales to American and Tidwell, Winston’s remaining assets were its corporate books and records, some cash, an income tax refund due from the sale of one of its foreign subsidiaries, notes and an account receivable from the sale of its foreign subsidiaries, and approximately twenty-four acres of undeveloped real property in Orangeburg, South Carolina.

Winston then filed its reorganization plan with the bankruptcy court on January 7, 1983. The bankruptcy court confirmed the reorganization plan on August 30, 1983, and Winston was discharged. Shelter continued to own all of the issued and outstanding capital stock of Winston.

On September 20,1985, Werts Novelty Co. (Werts) — a Delaware corporation — purchased all of the issued and outstanding *1271 shares of capital stock of Winston from Shelter. Five days later, Winston — still an Alabama corporation — was merged into Universal Chicken Farms, Inc., a Delaware corporation and a wholly-owned subsidiary of Werts. The surviving corporation was named Winston Industries, Inc. (Winston II). On November 25,1985, Winston II was merged into Universal Manufacturing Corp. (Universal), another subsidiary of Werts. On March 13, 1987, Werts was merged with Universal.

B. Procedural History

Rosemary Forbes (Forbes), the mother of Michael Tyrone Forbes and John Clarence Berchman Forbes (decedents), brought suit against Universal in the United States District Court for the Eastern District of Louisiana on January 17, 1986, on the basis of diversity jurisdiction. 1 The suit was transferred to the Western District of Louisiana on August 13, 1986. Subsequently, Forbes also named United States Fidelity and Guaranty Company (USF & G), Universal’s liability insurer, as a co-defendant. 2

Forbes alleged that on December 24,1985, a fire and the resulting damage, caused by the design and manufacture of a mobile home, directly resulted in the death of the decedents. The mobile home in question had been designed and manufactured by Winston in approximately 1970.

Universal filed a motion for summary judgment on November 2, 1987, asserting that Forbes’ claim, premised on an act that did not occur until a time subsequent to Winston’s discharge from bankruptcy under Chapter 11 in 1983, had been effectively foreclosed because the bankruptcy court had discharged Winston from “all supplications, demands, and/or claims of whatever character, whether provisional, liquidated, or unliquidat-ed, fixed or contingent.” Universal alternatively asserted that neither Universal nor Werts was a successor corporation to Winston and hence could not be liable for the wrongful deaths of the decedents. Universal pointed out that prior to the bankruptcy court’s confirmation of Winston’s reorganization plan, the operational and manufacturing assets of Winston had been sold at a court-ordered sale to Tidwell and that all that remained of Winston was a “corporate shell.” It was this “corporate shell,” Universal argued, that was eventually merged into other corporations and then into Universal, indicating that Universal was not a successor corporation of Winston’s mobile home manufacturing business.

On December 23, 1987, the district court granted Universal’s motion, dismissing Forbes’ claim against Universal. The court stated that Winston’s reorganization plan “clearly discharged Winston II from all obligations and demands” and that Universal had merged with Winston II on that basis. The court further stated that “[t]o hold otherwise would rearrange the careful planning and the balance of equities inherent in a bankruptcy reorganization, and would expose the purchaser of a reorganized corporation to astronomical, unpredictable liability.” On January 25,1988, USF & G filed a motion for summary judgment, asserting that inasmuch as Universal had been granted summary judgment, there could be no damages to Forbes for which USF & G was legally obligated to pay. On February 8, 1988, the court denied Forbes’ motion for rehearing and granted USF & G’s motion for summary judgment. Forbes’ claims against other defendants remained.

Nearly four years later, on January 31, 1992, Forbes sought reconsideration of the district court’s rulings of December 23, 1987, and February 8, 1988. The district court denied Forbes’ request, stating that although it agreed with Forbes that a tort claim was not cognizable in reorganization unless the cause of action accrued under non-bankruptcy law prior to the confirmation of a plan, it did not agree that Universal was a successor corporation that would have liability for Winston’s manufacture of mobile homes. The court based this decision on the facts that all of Winston’s manufacturing and operational *1272 assets had been sold at public sale and that its mobile home business had been completely liquidated. The court thus determined that Universal, as a successor corporation, would have no liability for Forbes’ tort claim.

Forbes filed a timely notice of appeal. This court dismissed her appeal, however, because a certification that the district court’s rulings of December 23, 1987, and February 8, 1988, were final under Federal Rule of Civil Procedure 54(b) had not been issued. See Forbes v. Universal Manufacturing Co., No. 88-4201 (5th Cir.

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18 F.3d 1268, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rose-ana-forbes-lemelle-rose-ana-forbes-lemelle-v-universal-mfg-corp-ca5-1994.