Charles Barnes Hayes, Jr. and Patricia Jean Kernan Hayes v. Air & Liquid Systems Corporation, et al.

Shreveport LA - Personal Injury lawyer represented Plaintiffs-Appellant with a mesothelioma case.

Beginning in May of 1953, Charles Hayes ("Hayes”) was employed

as a general laborer for approximately three months at the Commercial

Solvents ammonia plant in Sterlington, Louisiana. He then worked as an

assistant operator at the nearby Commercial Solvents fertilizer plant before

leaving in April of 1954. Hayes believed that he experienced direct and

bystander exposure to asbestos while working with insulation, gaskets, and

packing materials at the plants. He recalled that construction and

maintenance at the fertilizer plant was performed by employees of Ford,

Bacon & Davis.

According to a certificate from the New York Department of State,

the certificate of incorporation of EI Associates, Inc. ("EI”) was filed on

March 26, 1931, under the name of Ford, Bacon & Davis Construction

Corporation ("FBD”). The certificate further states that FBD changed its

name to SFB Construction Corporation ("SFB”) on December 11, 1996, and

that SFB changed its name to EI on May 21, 1998.

Records from the Louisiana Secretary of State reveal that SFB was

known as FBD until December 17, 1996. The registration date for FBD was

May 1, 1931. Its mailing address and principal business office were in

Monroe, Louisiana. The president and a director were also listed at that

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Monroe address. Its domicile address was in New York. SFB was

considered to be on inactive status by the Louisiana Secretary of State, with

its last report filed on May 8, 1996.

A stock purchase agreement executed on or about September 22,

2000, between SYSTRA USA, Inc. as the buyer and EI Associates Group,

Inc. as the seller was filed under seal. EI Associates Group, a New Jersey

corporation, was the sole stockholder of EI, a New York corporation. In

consideration of the sale, SYSTRA USA, Inc., a New Jersey corporation,

transferred, conveyed, and assigned all of the issued and outstanding stock

of EI Builders, Inc., a New Jersey Corporation. The new name of the

company was SYSTRA Engineering, Inc. ("SYSTRA”). SYSTRA averred

that the sole purpose of the purchase was to be "grandfathered in” to have a

professional engineering license in order to do business in the State of New

York due to a change in the law in New York.

Hayes, who moved to the state of Washington in 1964, was diagnosed

with mesothelioma in April of 2016. On September 21, 2017, Hayes and his

wife, Patricia Hayes, filed suit in Ouachita Parish against numerous

defendants who were divided into three classifications: (i) miners,

manufacturers, sellers, suppliers, and distributors of asbestos; (ii) employers,

premises owners, contractors, and executive officers; and (iii) insurers. The

petition alleged that Hayes was exposed to asbestos through his employment

at Commercial Solvents.

The petition was amended on June 14, 2018, and again on July 31,

2018. SYSTRA (f/k/a SFB Construction Corporation and Ford, Bacon &

Davis) was named as a defendant in the second amended petition.

Unfortunately, Charles Hayes died on August 19, 2018. The petition was

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amended for a third time on December 11, 2018, to add his children as party

plaintiffs.

Exception of lack of jurisdiction over the person

On September 11, 2018, SYSTRA filed an exception of lack of

jurisdiction over the person. SYSTRA, a New York corporation, maintained

it had never been registered with the Louisiana Secretary of State to conduct

or contract business in Louisiana or directed to Louisiana. SYSTRA argued

it lacked the minimum contacts with Louisiana necessary to afford courts of

Louisiana personal jurisdiction over it under La. R.S. 13:3201 or any other

provision consistent with due process. SYSTRA further argued that there

was insufficient proof of minimum contacts that would permit a Louisiana

court to exercise personal jurisdiction over SYSTRA as a corporate

successor.

In support of its exception, SYSTRA attached an affidavit from Garry

Hartwig, the Secretary of SYSTRA. He stated that SYSTRA never

manufactured, designed, or distributed asbestos or asbestos-related products.

Furthermore, SYSTRA was never registered to do business in Louisiana and

had never done or contracted business in Louisiana or directed to Louisiana.

Hartwig also stated that SYSTRA purchased the stock of EI in 2000 and

changed the name to SYSTRA. He added that EI was formerly known as

SFB and before that, FBD. According to Hartwig, FBD was first registered

to do business in New York in 1931 as an engineering company and it and

its successors have consistently operated as an engineering company since

1931. He asserted that FBD is not the same company as Ford, Bacon &

Davis, Inc.

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Plaintiffs argued in opposition to the exception that there was no

reason to treat SYSTRA differently from FBD for purposes of personal

jurisdiction. They maintained that the trial court had jurisdiction over

SYSTRA under La. R.S. 13:3201 because SYSTRA is the successor to

FBD. Plaintiffs asserted that Hayes worked near FBD employees when he

was exposed to asbestos dust in Louisiana, all of the tortious dust exposure

by FBD occurred in Louisiana, and SYSTRA lacked evidence to controvert

the claim that Hayes was exposed while working around FBD in Louisiana.

Attached to their opposition to the exception were: (i) the certificate

from the New York Department of State; (ii) SYSTRA's responses to

personal jurisdiction discovery requests in the East Baton Rouge Parish case

of Bannister v. SFB Companies, Inc., 2019-0079 (La. App. 1 Cir. 11/15/19),

290 So. 3d 1134, writ denied, 20-00263 (La. 5/1/20), 295 So. 3d 943; (iii)

Hayes's depositions taken in November of 2017 and August of 2018; (iv)

Hartwig's responses on behalf of SYSTRA to a deposition by written

questions in Bannister; (v) the record from the Louisiana Secretary of State

regarding SFB Construction Corporation; and (vi) a construction contract

entered into by FBD in Louisiana in 1960.

In its discovery responses in Bannister, SYSTRA provided the names

of four cases when it was asked to identify every tort suit filed against it in

Louisiana for an occupational asbestos disease. Three of the four cases were

filed in the Fourth Judicial District Court in Louisiana, and the fourth case

was Bannister. SYSTRA stated that the nature of its business was providing

engineering services. SYSTRA admitted that its name and employer tax ID

number appeared on the itemized statement of earnings received by

Bannister from the Social Security Administration.

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When asked in the written deposition what SYSTRA's relationship to

FBD Construction Corporation was, Hartwig replied:

SYSTRA USA, INC., the parent company of what is known

today as SYSTRA Engineering, Inc. purchased the stock of EI

Associates, Inc. from its sole stockholder, EI Associates Group,

Inc. in 2000. The name of EI Associates, Inc. was then changed

to SYSTRA Engineering, Inc.

EI Associates, Inc. was formerly known as SFB Construction

Corporation and before that, SFB Construction Corporation was

formerly known as Ford, Bacon & Davis Construction

Corporation.

Beyond being a successor corporation, SYSTRA Engineering,

Inc. has no relationship with Ford, Bacon & Davis Construction

Corporation.

Hartwig denied that SYSTRA purchased the stock of EI in 2000.

Instead, it was SYSTRA USA, INC. which purchased the stock of EI from

its sole stockholder EI Associates Group, Inc. Hartwig also stated that the

tax ID number of SYSTRA is the same tax number formerly held by FBD.

Finally, SYSTRA did not exist prior to 2000.

In its reply to plaintiffs' opposition, SYSTRA argued that plaintiffs

failed to present any admissible evidence establishing that SYSTRA's

corporate predecessor was at the Commercial Solvents facility when Hayes

was working there. Plaintiffs' allegations contradict whether FBD or

another Ford, Bacon & Davis entity was actually there. Submitted in

support of the reply memo were Hartwig's affidavit, plaintiffs' responses to

FBD's discovery requests, and Charles Hayes's itemized statement of

earnings from the Social Security Administration.

At the hearing on the exception, counsel for SYSTRA told the court

that "Systra Engineering, Inc. which has the same employer ID number as

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Ford, Bacon, and Davis Construction Corporation is by virtue of name

change the same entity as Ford, Bacon, Davis Construction Corporation.”

When the trial court asked SYSTRA's counsel if SYSTRA assumed

the liabilities of the predecessor corporations, he replied, "That is correct.

There is no limitation of liability. These were not asset sales. These were

name changes.”

The trial court also asked SYSTRA's counsel if he agreed that

SYSTRA assumed the liabilities of the predecessor corporation. He

answered:

I can't stipulate[ ] to that and I'm going to tell you. I don't

know because I haven't seen all the documents going back in

time. We don't have the documents going back in time. I will

stipulate that the Systra Engineering, Inc., but for a name

change is the same corporation, but I don't - I haven't seen the

documents and I can only be honest in that regard.

The trial court found that for all intents and purposes SYSTRA and

FBD were one and the same and SYSTRA was a continuation of the

business. Accordingly, the trial court denied the exception.

On February 26, 2019, the trial court rendered judgment denying

SYSTRA's exception of lack of personal jurisdiction. The court designated

the judgment as a final judgment pursuant to La. C.C.P. art. 1915. SYSTRA

filed a motion for an appeal or, in the alternative, an application for a

supervisory writ.

On June 14, 2019, this Court found the judgment was not an

appealable judgment despite the designation of the ruling as final and

appealable. This Court converted the appeal to an application for a

supervisory writ. This writ was denied. Hayes v. Air & Liquid Systems

Corp., 52,962 (La. App. 2 Cir. 9/5/19). The Louisiana Supreme Court also

7

denied the writ. Hayes v. Air & Liquid Systems Corp., 19-01544 (La.

11/19/19), 282 So. 3d 1067.

Bannister

In Bannister, supra, which involved a mesothelioma lawsuit filed in

East Baton Rouge Parish, the trial court denied an exception of lack of

personal jurisdiction raised by SYSTRA. SYSTRA appealed and also

sought supervisory review. The First Circuit dismissed the appeal, granted

the writ, and reversed the judgment denying the exception. The First Circuit

concluded that irrespective of whether FBD had sufficient minimum

contacts to permit a Louisiana court to exercise personal jurisdiction over it,

the record was devoid of evidence necessary to support a finding that

imputation of those contacts to SYSTRA was warranted under the facts of

the case.

Second hearing on the exception

Six days after the First Circuit rendered its opinion in Bannister,

SYSTRA filed a motion in this matter for the trial court to reconsider its

exception of lack of personal jurisdiction in light of the First Circuit's ruling.

SYSTRA contended that Bannister was "factually and legally on all fours”

with the personal jurisdiction issues in this matter. SYSTRA asserted that

when opposing its exception of lack of personal jurisdiction, the plaintiffs in

Bannister and in this matter relied on essentially the same evidence.

SYSTRA argued that the only differences between the evidence were

Hayes's depositions, his records from the Social Security Administration,

and invoices from the Commercial Solvents facility.

On January 20, 2020, plaintiffs filed their response to the motion to

reconsider the exception. They noted that counsel for SYSTRA repeatedly

8

conceded at the earlier hearing that SYSTRA was the same entity as FBD.

They particularly noted that the First Circuit in Bannister did not have the

benefit of that stipulation.

SYSTRA's counsel argued at the hearing on the reconsidered

exception that there was an absence of proof that SYSTRA is liable for

FBD's liabilities. He additionally argued that SYSTRA did not exist before

2000, its current configuration never operated in Louisiana, it operates

exclusively as an engineering consulting firm in New York, it did not

continue the line of business of FBD, and it was not in a position to accept

any liability for FBD.

The trial court concluded that Bannister was "on all fours” with the

issue in this matter. Accordingly, the court, after conceding that the

correctness of its initial determination was questionable, granted SYSTRA's

exception of lack of jurisdiction over the person. A judgment to that effect

was rendered on February 6, 2020. All claims against SYSTRA were

dismissed with prejudice. The plaintiffs appealed.

DISCUSSION

An appellate court conducts a de novo review of a trial court's legal

ruling on an exception of lack of personal jurisdiction, but any factual

findings underlying the decision are reviewed under the manifest error

standard. Hunt Guillot & Assocs., LLC v. Clark, 53,434 (La. App. 2 Cir.

4/22/20), 293 So. 3d 1278.

When there is a contradictory evidentiary hearing on the exception,

the plaintiff's burden is to prove facts supporting jurisdiction by a

preponderance of the evidence. However, where the exception is decided on

the pleadings, memoranda, and depositions, the plaintiff, as the nonmoving

9

party, bears a relatively slight burden and all reasonable inferences from the

record and the allegations of the complaint are to be drawn in the nonmoving

party's favor. Lewis v. Pine Belt Multipurpose Community Action

Acquisition Agency, Inc., 48,827 (La. App. 2 Cir. 4/9/14), 138 So. 3d 776,

writ denied, 14-0965 (La. 8/25/14), 147 So. 3d 1119.

Personal jurisdiction over a nonresident can be established pursuant to

the Louisiana Long Arm Statute. La. R.S. 13:3201 provides in pertinent

part:

A. A court may exercise personal jurisdiction over a

nonresident, who acts directly or by an agent, as to a cause of

action arising from any one of the following activities

performed by the nonresident:

(1) Transacting any business in this state.

(2) Contracting to supply services or things in this state.

(3) Causing injury or damage by an offense or quasi offense

committed through an act or omission in this state.

(4) Causing injury or damage in this state by an offense or quasi

offense committed through an act or omission outside of this

state if he regularly does or solicits business, or engages in any

other persistent course of conduct, or derives revenue from

goods used or consumed or services rendered in this state.

. . . .

B. In addition to the provisions of Subsection A, a court of this

state may exercise personal jurisdiction over a nonresident on

any basis consistent with the constitution of this state and of the

Constitution of the United States.

Due process requires that a nonresident defendant, in order to be

subject to personal jurisdiction, must have certain minimum contacts with

the state such that the maintenance of the suit does not offend traditional

notions of fair play and substantial justice. International Shoe Co. v.

Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). When

determining "minimum contacts,” the United States Supreme Court has

separated general and specific jurisdiction. J & J Livestock, LLC v. Musa

Slaughterhouse, LLC, 52,651 (La. App. 2 Cir. 4/10/19), 268 So. 3d 1232,

10

citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131

S. Ct. 2846, 180 L. Ed. 2d 796 (2011). Specific jurisdiction gives a state

jurisdiction over a defendant when the suit arises out of or is related to the

defendant's contacts with the forum state. Helicopteros Nacionales de

Colombia, S.A. v. Hall, 466 U.S. 408, 104 S. Ct. 1868, 80 L. Ed. 2d 404

(1984).

The minimum contacts prong is satisfied by a single act or actions by

which the defendant "purposely avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits and protections

of its laws.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S. Ct.

2174, 85 L. Ed. 2d 528 (1985); Guillot, supra. When a nonresident

defendant commits a tort within the state, that conduct amounts to sufficient

minimum contacts with the state by the defendant to constitutionally permit

courts within that state to exercise personal jurisdiction over the tortfeasor

and the causes of actions arising from its offenses or quasi-offenses. Guidry

v. U.S. Tobacco Co., Inc., 188 F.3d 619 (5th Cir. 1999). By its actions, the

nonresident defendant should reasonably anticipate being haled into court in

the forum state. Guillot, supra.

In Patin v. Thoroughbred Power Boats Inc., 294 F. 3d 640 (5th Cir.

2002), the trial court found that the defendant's consent to personal

jurisdiction could be imputed to its alter ego corporation and its successor

corporation. The appellate court noted that "federal courts have consistently

acknowledged that it is compatible with due process for a court to exercise

personal jurisdiction over an individual or a corporation that would not

ordinarily be subject to personal jurisdiction in that court when the

individual or corporation is an alter ego or successor of a corporation that

11

would be subject to personal jurisdiction in that court.” Id., 294 F. 3d at

653. The court theorized that, because the corporations (or the corporation

and its individual alter ego) are the same entity, the jurisdictional contacts of

one are the jurisdictional contacts of the other for the purposes of the

International Shoe due process analysis.

Once the plaintiff meets his burden of proving minimum contacts, "a

presumption of reasonableness of jurisdiction arises” and "the burden then

shifts to the opposing party to prove the assertion of jurisdiction would be so

unreasonable in light of traditional notions of fair play and substantial justice

as to overcome the presumption of reasonableness created by the

defendant's minimum contacts with the forum.” SteriFx, Inc. v. Roden,

41,383 (La. App. 2 Cir. 8/25/06), 939 So. 2d 533, citing de Reyes v. Marine

Management and Cons., Ltd., 586 So. 2d 103 (La. 1991).

In de Reyes, supra, the Louisiana Supreme Court adopted factors

established by the United States Supreme Court to determine whether any

exercise of personal jurisdiction would be fundamentally fair. Such factors

include: (1) the defendant's burden; (2) the forum state's interest in

adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient

and effective relief; (4) the interstate judicial system's interest in obtaining

the most efficient resolution of controversies; and (5) the shared interest of

several states in furthering substantive social policies. The defendant's

burden is a primary concern. World-Wide Volkswagen Corp. v. Woodson,

444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980).

Without question, FBD had sufficient contacts with this state for a

Louisiana court to assert personal jurisdiction over it. FBD purposely

availed itself of the privilege of conducting activities within Louisiana. It

12

registered in Louisiana in 1931. FBD was involved in building the fertilizer

plant where Hayes was employed. The claim in this matter also arose out of

FBD's conduct in this forum. Hayes asserted he was exposed to asbestos

through the activities of FBD's workers at the plant. This leads to the

question of whether FBD's contacts can be imputed to SYSTRA.

The Bannister court rejected the argument that the evidence in that

case supported a finding that imputation of FBD's contacts to SYSTRA was

warranted. The court stated:

Admitted into evidence was the Stock Purchase Agreement

between El Associates and SYSTRA. While the Bannisters

suggest that the transfer of all of El Associates' liabilities to

SYSTRA would have necessarily included liability for damages

arising from tortious conduct that El Associates may have had

and, therefore, constituted a contact sufficient to hale SYSTRA

into court, we find this showing insufficient to warrant

imputation of FB&D's liability for damages arising from

tortious conduct directed at Mr. Bannister to SYSTRA.

Conspicuously absent from this record are the agreements that

transfer FB&D to SFB and SFB to El Associates. Thus, we are

unable to ascertain whether either or both of those agreements

included transfers of all FB&D's liabilities such that at the time

El Associates conveyed its liabilities to SYSTRA pursuant to

the Stock Purchase Agreement in 2000, any liability FB&D

may have had for damages arising from tortious conduct while

Mr. Bannister was in its employ would have transferred as well.

Given the lack of evidence in this record establishing that

"SYSTRA is FB&D,” the Bannisters did not sustain their initial

burden of proving minimum contacts, and the trial court erred

in imputing any minimum contacts FB&D may have had with

Louisiana to SYSTRA.

Id., 2019-0079 at 10, 290 So. 3d at 1141-2. Citations omitted.

SYSTRA argues there is no proof that the liabilities of FBD

transferred to SFB and then from SFB to EI and finally from EI to SYSTRA.

SYSTRA also maintains that the minimum contacts of the predecessor

cannot be imputed to the nonresident successor without proof that the

liabilities of the predecessor transferred to the successor. Plaintiffs concede

13

that the evidence in Bannister was largely the same as the evidence in this

matter, absent counsel for SYSTRA's concessions in this matter that

SYSTRA is the same entity and same corporation as FBD. However, we

take a view of the common evidence that is different from the one taken by

the First Circuit. We agree with the plaintiffs' argument that the Bannister

decision was wrong. Although we respect our other circuits, their decisions

are not binding on us.

While the First Circuit noted that the agreements that transferred FBD

to SFB and SFB to EI were "conspicuously absent” from the records, we

emphasize that as shown in the state corporate records, FBD changed its

name to SFB in 1996, and that SFB changed its name to EI in 1998. It is

speculation to assume what occurred between these entities beyond a name

change. We also note that SYSTRA and FBD shared the same tax ID

number.

In response to a deposition question, Hartwig, the Secretary of

SYSTRA wrote:

I have no personal knowledge of the corporate history of EI

Associates, Inc. and/or SFB Construction Corporation and/or

Ford, Bacon & Davis Construction Corporation. My

knowledge of the corporate history of EI Associates, Inc. and/or

SFB Construction Corporation and/or Ford, Bacon & Davis

Construction Corporation is based upon information in the

public record.

What those public records show are merely name changes from FBD to SFB

and from SFB to EI. Plaintiffs in this matter should not be prejudiced by the

unavailability of any additional records that would shed light on the nature

of any transaction.

The stock purchase agreement between SYSTRA USA and EI

Associates Group stated that SYSTRA will have no liabilities, debts, or

14

obligations at the time of closing. However, the agreement also contained

an indemnification clause requiring EI Associates Group to indemnify

against any loss, liability or damage for a period of two years. An exhibit to

the agreement showed that "the Corporation” had received a subpoena duces

tecum in a lawsuit against Owens-Corning Fiberglass, among other

defendants, that had been filed in 1998 in the 23rd JDC. The location of the

23rd JDC was not provided.

Plaintiffs argue that a significant difference between this case and

Bannister involves the statements made by SYSTRA's counsel at the initial

hearing. A judicial confession is a declaration made by a party in a judicial

proceeding. La. C.C. art. 1853. It constitutes full proof against the party

who made it, it is indivisible, and it may be revoked only on the ground of

error of fact. Id.; Blackjack Farms, L.L.C. v. Richmond, 53,986 (La. App. 2

Cir. 6/30/21), __ So. 3d __, 2021 WL 2676935. A stipulation has the effect

of a judicial admission or confession, which binds all parties and the court.

Collins v. Hill, 52,457 (La. App. 2 Cir. 2/27/19), 265 So. 3d 1202.

To constitute a judicial confession, the statement must be the express

acknowledgment of an adverse fact. Additionally, the adverse party must

have believed the fact was no longer at issue or relied on it to his detriment

for the statement to be a judicial confession. Sand Beach Properties, LLC v.

City of Shreveport, 52,436 (La. App. 2 Cir. 1/16/19), 264 So. 3d 1219, writ

denied, 19-0485 (La. 5/20/19), 271 So. 3d 1274.

Even if we assume the statements from counsel do not rise to the level

of a judicial confession, we cannot ignore these statements when attempting

to discern the nature of the corporate progression from FBD to SYSTRA.

Counsel told the trial court that SYSTRA was by virtue of a name change

15

the same entity as FBD. When counsel was asked if SYSTRA had assumed

the liabilities of the predecessor corporations, he replied, "That is correct.

There is no limitation of liability. These were not asset sales. These were

name changes.” When the trial court later asked counsel if he agreed that

SYSTRA assumed the liabilities of the predecessor corporation, he said he

could not stipulate to that and did not know because they did not have the

documents that went that far back. However, he stipulated that SYSTRA

was the same corporation but for the name change. We note that our reading

of the hearing transcript leaves us with the impression that counsel's strategy

at that initial hearing was to argue the unfairness of a Louisiana court

asserting personal jurisdiction over a distant successor company such as

SYSTRA.

Based on the foregoing, we conclude that the minimum contacts that

FBD had with Louisiana can be imputed to SYSTRA under the

circumstances of this case. The trial court erred in granting the exception

upon reconsideration. Our inquiry now turns to whether SYSTRA met its

burden of proving that the assertion of jurisdiction would be so unreasonable

in light of traditional notions of fair play and substantial justice as to

overcome the presumption of reasonableness created by its minimum

contacts with the forum.

SYSTRA did not meet this burden. Hayes was born and raised in

Farmerville, Louisiana. His asbestos exposure occurred in this state.

Louisiana has an interest in not only protecting those employed in the state

but also in ensuring that those workers have a fair and efficient venue for

seeking compensation for their injuries. Accordingly, the assertion of

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personal jurisdiction over SYSTRA in Louisiana is reasonable under these

circumstances

The judgment granting SYSTRA’s exception of lack of personal

jurisdiction and dismissing plaintiffs’ claims against SYSTRA is reversed at

SYSTRA’s costs. This matter is remanded to the trial court for further

proceedings.



REVERSED AND REMANDED.