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RDS Real Estate, LLC v. Abrams Group Construction, LLC

United States District Court, S.D. Mississippi, Southern Division

January 10, 2017

RDS REAL ESTATE, LLC PLAINTIFF
v.
ABRAMS GROUP CONSTRUCTION, LLC, et al. DEFENDANTS

          ORDER DENYING MOTION FOR SUMMARY JUDGMENT

          LOUIS GUIROLA, JR., CHIEF U.S. DISTRICT JUDGE

         BEFORE THE COURT is the [138] Motion for Summary Judgment filed by Plaintiff RDS Real Estate, LLC, against Defendant Abrams Group Construction, LLC, on RDS's claim for declaratory judgment against Abrams. Having considered the parties' submissions and the relevant law, the Court is of the opinion that genuine issues of material fact remain for resolution by the jury.

         Background

         According to the [107] Amended Complaint, in 2009, Plaintiff RDS Real Estate contracted with another entity, S&S Construction, LLC, “to construct a building in Ocean Springs, Jackson County, Mississippi, that would be used for medical office space . . . .” (Id. at 4 (¶26)). RDS alleges that soon after it “accepted occupancy of the building, ” it began experiencing problems, including roof leaks, as a result of unworkmanlike construction. (See Id. at 5 (¶¶ 35-36)).

         RDS claims that “[i]n the time frame around December 2010 through April 2011, S&S Construction, LLC sold all its assets to Abrams Group Construction, LLC.” (Id. at 6 (¶42)). It also states that in July 2011, “Abrams Group Construction, LLC or S&S Construction, LLC changed the name of S&S Construction, LLC to Abrams Group Construction, LLC with the Mississippi Board of Contractors[, ]” although RDS did not have knowledge that S&S “had ceased doing business or that it had changed its name.” (See Id. at 6-7 (¶¶ 48, 56)).

         RDS contends that it eventually incurred approximately $214, 000.00 in costs “to correct the construction defects caused by S&S.” (See Id. at 8-9 (¶¶ 64-70)). It then filed a lawsuit in this district against S&S and Abrams, but later dismissed Abrams without prejudice and proceeded to arbitration with S&S. The arbitration resulted in “an award in favor of RDS in the amount of $240, 898.14[, ]” which the district court affirmed and on which its entered a final judgment. (See Id. at 9-10 (¶¶ 82-86)). RDS alleges that “[t]he judgment has not been paid[, and that] S&S has made representations that is has no money to pay the . . . judgment.” (See Id. at 10 (¶¶ 86-87)).

         As a result, RDS instituted this action against Abrams; George Spellmeyer, Norma Spellmeyer, and Michael Spellmeyer (collectively, “the Spellmeyer defendants”); and, by later amendment, Tusitala, Inc. RDS alleges that the Spellmeyer defendants “are, or were, members of S&S”, (see Id. at 13 (¶123)), and seeks to pierce S&S's and Tusitala's corporate veil.[1] It also “requests a declaratory judgment that the judgment RDS obtained against S&S also applies to Abrams, as they are the same entity. In other words, RDS requests a declaratory judgment that both S&S and Abrams are jointly and severally liable for the full amount of damages.” (See Id. at 11 (¶¶ 100-01); see also Id. at 13 (¶120)). It asserts that “Abrams should be liable to RDS for the judgment under theories of estoppel, merger and other successor liability theories.” (See Id. at 12 (¶¶ 102-03); see also Id. at 13 (¶120), 17 (¶157)).

         RDS has now moved for summary judgment on its declaratory judgment claim against Abrams. Abrams has opposed the Motion, and RDS has filed a Rebuttal.

         The Legal Standard

         A summary judgment motion shall be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). If the movant carries its burden of demonstrating the absence of a genuine issue of material fact, the burden shifts to the non-movant to show that summary judgment should not be granted. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). “[T]he court must view the facts in the light most favorable to the non-moving party and draw all reasonable inferences in its favor.” Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009). “In reviewing the evidence, the court must ‘refrain from making credibility determinations or weighing the evidence.'” Id. (citation omitted).

         Having conducted the required review, the Court finds that genuine issues of material fact remain with respect to RDS's claim for declaratory judgment against Abrams. Accordingly, the Court will deny summary judgment.

         Discussion

         RDS has stated that it is a Mississippi limited liability company and that S&S is an Alabama limited liability company. The Court's review of Mississippi and Alabama law shows that “[i]n the context of the present case, no true conflicts exists between the laws of these two states, and choice of law analysis is, therefore, unnecessary.” See Tupelo Mfg. Co. v. Cope Indus., Inc., No. 1:05CV114-B-D, 2006 WL 1313809, at *1 (N.D. Miss. May 11, 2006). The general rule in both states is “that a corporation which acquires the assets, but not the stock of another corporation, is not obligated for the liabilities of the acquired corporation.” Paradise Corp. v. Amerihost Dev., Inc., 848 So.2d 177, 179 (Miss. 2003). Furthermore, although the case law refers to “corporations, ” there is no authority for applying a different rule in cases involving limited liability companies, such as this one.

         There are four exceptions to the general rule. Those exceptions are “in instances where: (1) the successor expressly or impliedly agrees to assume the liabilities of the predecessor; (2) the transaction may be considered a de facto merger; (3) the successor may be considered a ‘mere continuation' of the predecessor; or ...


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