November 15, 2007
STEVONNE WILSON-SAMPSON, PLAINTIFF-APPELLANT,
DOUGLAS BROADCASTING, INC.; WNJR RADIO, INC.; JOHN GABEL; N. JOHN DOUGLAS; ARTHUR LIU; LITTLER MENDELSON, P.C.; ACHIEVEMENT HOLDINGS, INC.; PAR HOLDINGS, INC.; PERSONAL ACHIEVEMENT RADIO, INC.; Z SPANISH MEDIA; AND ENTRA-VISION COMMUNICATIONS CORP., DEFENDANTS, AND DARRYL B. THOMPSON; MULTI-CULTURAL RADIO BROADCASTING, INC.; AND TSG CAPITOL GROUP, LLC,*FN1 DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4411-98.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 29, 2007
Before Judges Stern, C.S. Fisher and C.L. Miniman.
Plaintiff commenced this action in 1998, alleging that defendants Douglas Broadcasting, Inc. (Douglas), WNJR Radio, Inc. (WNJR), and two individuals, discriminated against her based on race between May 1994 and April 1996, and wrongfully discharged her on April 24, 1996. Final judgment by way of default was entered against Douglas and WNJR, on September 13, 2001, in the amount of $1,149,556.62.
Unable to collect payment from the judgment debtors, plaintiff filed an amended complaint on July 11, 2003 to add claims against, among others, Darryl B. Thompson (Thompson), TSG Capital Group, LLC (TSG), and Multi-Cultural Radio Broadcasting, Inc. (Multi-Cultural). Plaintiff asserted that these defendants were either successors to Douglas or WNJR, and thus should be held responsible for the 2001 money judgment entered in her favor, or that they had engaged in acts or conspired to frustrate her collection efforts against the judgment debtors or other responsible parties.
In this appeal, plaintiff seeks the reversal of two orders, both entered on August 4, 2006, which resolved all remaining issues as to all parties and dismissed her claims against TSG, Thompson and Multi-Cultural. But for one modification, we find no merit in plaintiff's arguments and affirm.
TSG and Thompson moved for dismissal, claiming they were not susceptible to personal jurisdiction in New Jersey. TSG provided sworn evidential material that it was a Delaware limited liability company, which provides investment consulting services to private equity funds from its place of business in Connecticut. It asserted, among other things, that it had never registered to do business in New Jersey, that none of its clients were located in New Jersey, that it had not maintained an office, telephone, telephone listing or post office box in New Jersey, that it had never owned property in New Jersey, and that it had never employed plaintiff. Thompson asserted that he was an officer of TSG engaged in TSG's business in Connecticut, not New Jersey.
In its supporting certification, TSG acknowledged that a different entity -- TSG Associates II, Inc. (Associates) -- had acquired control of Douglas and other related entities, including WNJR, and later sold assets of Douglas to Multi-Cultural. Specifically, TSG revealed that Associates had owned all of the voting stock of PAR Holdings, Inc. (PAR), which had purchased the stock of Douglas for nearly $30 million. PAR subsequently sold some of Douglas's assets to Multi-Cultural for $54 million by way of an asset purchase agreement executed on January 26, 1998. Thompson acknowledged he was once an officer of Douglas, but that he did not assume that office until June 1996, after the incidents upon which plaintiff's claim of racial discrimination had occurred and after plaintiff had been terminated. Thompson also stated that he was an officer of Associates when PAR acquired Douglas's stock, but that he personally held none of PAR's voting stock, and that neither TSG nor Thompson were parties to the asset purchase agreement.
On October 27, 2005, the trial judge denied without prejudice the motion of TSG and Thompson for dismissal based upon the lack of personal jurisdiction. Rather than attempt to reach the merits regarding the contacts, if any, of TSG and Thompson with New Jersey, the judge correctly allowed plaintiff to take discovery on these issues. The judge defined the scope of this "limited discovery" as permitting plaintiff ninety days to serve "[r]equests for the production of documents and [to take the] deposition of Darryl B. Thompson on issues confined to in-personam jurisdiction, the relationship among and between Mr. Thompson and the various defendants and any other person or entity involved with him and the ultimate disposition of the $54,000,000 from the sale of Douglas Broadcasting and WNJR."
Plaintiff failed to serve any discovery requests on TSG and Thompson. The trial judge later granted, on January 4, 2006, plaintiff's request for an extension of the discovery period until February 28, 2006. Notwithstanding, plaintiff failed to serve any discovery requests on TSG or Thompson at any time.
However, contrary to the express terms of the October 27, 2005 order -- which authorized only plaintiff to seek jurisdictional discovery -- Multi-Cultural served interrogatories and noticed the deposition of Thompson, and later moved to compel responses to its discovery demands, which TSG and Thompson resisted. By way of an order entered on April 12, 2006, the trial judge denied Multi-Cultural's motion. We discern from the judge's handwritten comment in the April 12, 2006 order -- "[d]iscovery at this time is limited to that set forth in the [o]rder entered on Oct[ober] 27, 2005" -- that the judge denied Multi-Cultural's motion because she had determined that the October 27, 2005 order was limited to authorizing only plaintiff to take jurisdictional discovery.
As we have observed, plaintiff served no discovery requests on TSG or Thompson during the authorized period, nor did plaintiff serve any requests in the months that followed. As a result, on June 6, 2006, TSG and Thompson renewed their motion to dismiss for lack of personal jurisdiction. Despite having failed to seek jurisdictional discovery since being permitted to do so eight months earlier, on July 12, 2006, plaintiff cross-moved to compel responses from TSG and Thompson to the discovery demands served by Multi-Cultural. In her oral decision of August 4, 2006, the trial judge determined that plaintiff had failed to serve any discovery demands upon TSG and Thompson despite having had more than ample time to do so, and denied plaintiff's cross-motion for additional time to conduct discovery.
At that time, the trial judge also concluded, in a thorough decision, that the court lacked personal jurisdiction over TSG and Thompson. Since the sworn statements provided in support of their original motion to dismiss had not been rebutted by plaintiff, and since no discovery was taken by plaintiff to shed further light or generate a dispute about those assertions, the judge accepted as undisputed that: TSG was a different entity than Associates; Associates and not TSG acquired Douglas and sold some of its assets to Multi-Cultural; Thompson had been an officer of Douglas but had only gained that position after plaintiff was terminated; Thompson was an officer of Associates when PAR acquired its interest in Douglas, but he personally held none of PAR's voting stock; and neither Thompson nor TSG were parties to the PAR-Multi-Cultural asset purchase agreement. As a result, the judge concluded that neither Thompson nor TSG had sufficient contacts with New Jersey and that New Jersey's exercise of personal jurisdiction over either of them would offend our traditional notions of fair play and substantial justice.
The judge also went on to conclude that the factual allegations contained in the complaint filed against TSG and Thompson are "patently . . . baseless," finding that TSG was a consulting firm that never had any ownership or control over any person or entity in the field of broadcasting and that TSG's investment advice to its clients could not possibly be the cause for finding TSG or Thompson liable on any of plaintiff's claims.
In this appeal, plaintiff contends that the judge erred:
(1) in denying plaintiff's request for a further extension of discovery or in failing to compel TSG and Thompson to respond to Multi-Cultural's discovery requests; (2) in granting the motion of TSG and Thompson for a dismissal based on the lack of personal jurisdiction; and (3) in granting summary judgment in favor of TSG and Thompson on the merits.*fn2 After carefully examining the record in light of the contentions of the parties, we conclude there is no merit to plaintiff's first and second arguments, and we affirm both the judge's discovery rulings and the dismissal of the claims against TSG and Thompson for lack of personal jurisdiction substantially for the reasons set forth by the trial judge in her oral decision. However, because the judge's correct determination that the court lacked personal jurisdiction precluded her authority to reach the merits of plaintiff's claims against TSG and Thompson, we conclude that the judge mistakenly granted summary judgment. Accordingly, we affirm the order dismissing the complaint but only because the court lacked personal jurisdiction over TSG and Thompson; we vacate that part of the August 4, 2006 order which dismissed the claims against TSG and Thompson on their merits.
Plaintiff also appeals from the order of August 4, 2006, which granted summary judgment in favor of Multi-Cultural. Our review of that summary judgment requires application of the same Brill*fn3 standard that the trial court was obligated to apply. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998). This standard requires that we consider whether the evidential material presented on the motion, when viewed in the light most favorable to the opponent of the motion, is sufficient to allow a rational factfinder to render a verdict in favor of the opponent. Brill, supra, 142 N.J. at 540. As a result, "when the evidence 'is so one-sided that one party must prevail as a matter of law,' the trial court should not hesitate to grant summary judgment." Ibid. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed. 2d 202, 214 (1986)). We conclude that the judge correctly applied this standard and that our utilization of the same standard requires that we affirm the entry of summary judgment in favor of Multi-Cultural.
Generally, "where one company sells or otherwise transfers all of its assets to another company, the transferee of those assets is not ordinarily liable for the debts of the transferor company, including those arising out of the transferor's tortious conduct." Woodrick v. Jack J. Burke Real Estate, Inc., 306 N.J. Super. 61, 72-73 (App. Div. 1997) (quoting Ramirez v. Amsted Indus., Inc., 86 N.J. 332, 340 (1981)), cert. denied, 157 N.J. 537 (1998). However, liability may attach where: (1) the transferee expressly or impliedly agrees to assume such debts or liabilities; (2) the transaction amounts to a consolidation or merger of the transferor and transferee; (3) the transferee is merely a continuation of the transferor; (4) the transaction is entered into fraudulently in order to escape responsibility for such debts and liabilities; and (5) in product liability cases, where the transferee undertakes to continue the same product line as the transferor. Lefever v. K.P. Hovnanian Enters., Inc., 160 N.J. 307, 310 (1999); Woodrick, supra, 306 N.J. Super. at 72-73. In a thorough decision, the trial judge concluded that not one of these exceptions was met in this case.
The judge correctly observed that the first exception was inapplicable because the asset purchase agreement, and a later addendum, stipulated that Multi-Cultural would not acquire any obligation resulting from the claims plaintiff had filed against Douglas and WNJR by purchasing certain assets of Douglas.
In considering the second and third exceptions, the judge found that the following facts were undisputed:
[I]mmediately upon purchasing the assets, Multi-Cultural shut down the Newark facility where Douglas had been operated and where whatever events alleged in [p]lain-tiff's complaint took place.
Multi-Cultural also let all of the personnel go. Only five of the former employees were rehired, and the operation was thereafter essentially run out of New York. Four of the five employees [who were rehired] left after a few months. The only physical facility that was retained was the lease of the broadcasting tower, which is located in New Jersey.
Multi-Cultural paid about $54 million in cash for the assets that it acquired. At the time, Multi-Cultural had no reason to believe that Douglas Broadcasting was going to go out of business or in any way render itself unable to pay claims of creditors. There is no dispute that Multi-Cultural was not involved in the underlying litigation with the plaintiff, between the plaintiff and Douglas Broadcasting.
Multi-Cultural was not aware of the actions or inactions taken on behalf of Douglas Broadcasting or WNJR in the litigation, and it ha[d] no knowledge of the default judgment that [p]laintiff obtained in 2001 until years later when [p]laintiff began her effort to try to find other entities that might be responsible for payment of her judgment.
The trial judge concluded that these undisputed facts precluded a finding that Multi-Cultural's acquisition of assets amounted to a de facto consolidation or merger, or a continuation of Douglas's business. The undisputed evidence barred a finding that, following the acquisition, there was a continuity of management, a continuation of the business, the retention of the same physical facilities, an assumption of liabilities, or continuity of ownership.
In considering the fourth exception, the judge rejected plaintiff's unspecified allegations of fraud with regard to the transfer. And the fifth exception, which applies only to product liability actions, had no application here.
We affirm the summary judgment entered in favor of Multi-Cultural substantially for the reasons set forth by the trial judge in her oral decision.
To summarize, we vacate that part of the first August 4, 2006 order, which dismissed the claims against TSG and Thompson on their merits, but we affirm the dismissal of the claims asserted against TSG and Thompson because the court lacked personal jurisdiction over them. We also affirm the second order of August 4, 2006, which entered summary judgment in favor of Multi-Cultural.