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Germain v. A.O. Smith Water Products Co.

Sup Ct, NY County

October 23, 2013

Robert Germain, Sr., Plaintiff,
A.O. Smith Water Products Co., et al., Defendants.

Unpublished Opinion

Attorneys for Plaintiffs: SETH A. DYMOND, ESQ. Belluck & Fox

Attorneys for Defendant: Eric J. Voigt, Esq. Mound Cotton Wollan & Greengrass One Battery Park Plaza

Sherry Klein Heitler, J.

In this asbestos personal injury action, Liberty Mutual Insurance Company ("Liberty Mutual") moves pursuant to CPLR § 602 to join this action with five similarly situated actions [1] on the issue of defendant Jenkins Bros. ("Jenkins") amenability to suit. [2] Liberty Mutual further seeks dismissal of the Actions pursuant to CPLR §§ 3211(a)(1), 3211(a)(7), and 3211(a)(8) for lack of personal jurisdiction, failure to state a cause of action, and on the basis of documentary evidence on the ground that Jenkins, as a fully dissolved and liquidated corporation, does not exist. Plaintiff Robert Germain, Sr. cross-moves: (1) pursuant to CPLR 311(a)(1) [3] and Business Corporation Law ("BCL") § 306 [4] for an order declaring that service of process has been properly effectuated on Jenkins in the Antle, Valensi, and Lantenschuetz cases; (2) pursuant to CPLR § 602 for an order joining the Actions under the global index number for all New York City Asbestos Litigation ("NYCAL") cases (Index No. 40000/1988) on the issue of permitting substituted service of process [5] upon Jenkins by way of service upon its insurer Liberty Mutual, in respect of this action, the Khan and Cunningham actions, and any future NYCAL action in which Jenkins is named as a defendant; and (3) for an order directing the Clerk of the Court to enter a default judgment in plaintiffs' favor against Jenkins in the Antle, Valensi, and Lantenschuetz actions for failing to timely answer or otherwise move in those cases.

Defendant Jenkins Bros., which manufactured valves that are alleged to have contained asbestos, was incorporated under the laws of New Jersey in 1907. In or about 1944 it became authorized to do business in New York as a foreign corporation by filing with the New York Secretary of State. Jenkins surrendered its authority to do business in New York in 1985. In January of 1989 Jenkins filed a voluntary petition in bankruptcy for reorganization pursuant to Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Pennsylvania. (See 11 USC § 1101, et seq.). Jenkins' petition was converted to a Chapter 7 liquidation proceeding (See 11 USC § 701, et seq.) in October of 1989. The entire proceeding was closed in 1997. Jenkins was involuntarily dissolved by the New Jersey Department of State in 2004.

It is undisputed that Liberty Mutual has standing to bring this motion on behalf of Jenkins insofar as the Actions seek to collect against insurance policies issued to Jenkins by Liberty Mutual in the 1970's. [6] As set forth in Saratoga Cnty. Chamber of Commerce, Inc. v Pataki, 100 N.Y.2d 801, 812 (2003), "New York courts have treated standing as a common-law concept, requiring that the litigant have something truly at stake in a genuine controversy." The insurance policies at issue require Liberty Mutual to defend and indemnify Jenkins for tortuous conduct committed by Jenkins prior to Jenkins' dissolution, including the time periods complained of in these Actions. [7]


I. Service of process in Antle, Valensi, and Lantenschuetz.

Plaintiffs' counsel [8] had unsuccessfully attempted to serve Jenkins with process at addresses in Connecticut, New York, and Pennsylvania. They were also unable to serve Jenkins through CT Corporation System, which had formerly acted as Jenkins' agent for service of process in New York.

Thereafter plaintiffs' counsel identified and located Jenkins' former Treasurer, Mr. Thomas Martin, and former registered agent for service of process in Connecticut, Mr. Michael Widland. Plaintiff alleges that pursuant to CPLR 311(a) process was served on Jenkins in the Antle, Valensi, and Lantenschuetz matters by personal service on Mr. Martin and that service of process was also effectuated on Jenkins in the Valensi matter by personal service on Mr. Widland. CPLR 311(a) permits service of process on a corporation by personal service on a corporate officer, including the treasurer. Fashion Page, Ltd. v Zurich Ins. Co., 50 N.Y.2d 265, 272 (1980). Such service fulfills the "statutory aim [of CPLR 311] since their positions are such as to lead to a just presumption that notice to them will be notice to the * * * corporation.'" Id. (quoting Tauza v Susquehanna Coal Co., 220 NY 259, 269 [1917]).

Liberty Mutual asserts that because Jenkins liquidated its assets approximately 16 years ago by way of the Chapter 7 bankruptcy proceeding [9] and was dissolved by proclamation of the New Jersey Secretary of State in 2004, there is no corporate entity which can be served. In support Liberty Mutual relies on a letter dated April 29, 2013 to the State of Connecticut Commercial Recording Division in which Mr. Widland resigned as an agent for service of process for Jenkins, noting that it had been out of business for almost 25 years. (Plaintiff's exhibit V). Likewise, the record indicates that Mr. Martin has declined to accept any further process, mailings, or default notices. [10] In the cases cited by the parties on this issue [11], the defendant corporation's were sued at most a few years after they had dissolved. Here, far more time had passed between Jenkins' dissolution and the filing of the complaint, and thus it is reasonable to question whether service on Jenkins' former officers would satisfy due process. "[T]he guiding principle must be one of notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" Raschel v Rish, et al., 69 N.Y.2d 694, 696 (1986) (quoting Mullane v Central Hanover Trust Co., 339 U.S. 306, 314 [1950]) In the circumstances of this case, the court will at this time hold in abeyance decision on the issue whether Jenkins was validly served in the Antle, Valensi, and/or Lantenschuetz actions by service on its former treasurer, Mr. Martin, and its former agent, Mr. Midland [12], and accordingly declines to hold Jenkins in default for failing to answer the complaints served on Messrs. Martin and Midland in those matters.

II. Joinder

" [A] motion seeking a joint trial pursuant to CPLR 602(a) rests within the sound discretion of the trial court.'" Alizio v Perpignano, 78 A.D.3d 1087, 1088 (2d Dept 2010) (quoting Glussi v Fortune Brands, 276 A.D.2d 586, 587 [2d Dept 2000]). [13] Generally, in order to join actions for trial, there must be a "plain identity between the issues involved in the two controversies." Vigo S.S. Corp. v Marship Corp. of Monrovia, 26 N.Y.2d 157, 161 (1970). "Consolidation or joint trials are favored by the courts in serving the interests of justice and judicial economy.'" Bruno v Capetola, 101 A.D.3d 785, 786 (2d Dept 2012) (quoting Flaherty v RCP Assoc., 208 A.D.2d 496, 498 [2d Dept 1994]).

That branch of Liberty Mutual's motion which seeks to join the issue of Jenkins' amenability to suit is granted insofar as it pertains to the Germain, Antle, Valensi, Cunningham, and Khan matters. Good cause has been shown why the five matters pending in New York County should be joined in this regard and plaintiff does not oppose joinder on this issue. [14] In accordance with plaintiff's application, the court will consider the issues of Jenkins' amenability to suit and substituted service on Jenkins via Liberty Mutual in a global NYCAL context (Index No. 40000/1988). I decline to include the Lantenschuetz matter as it is pending in a court of coordinate jurisdiction in Schenectady County. [15]

Accordingly, the Germain, Antle, Valensi, Cunningham, and Khan matters are hereby joined for such purposes, and this court's determination thereon shall apply to all NYCAL matters overseen by plaintiff's counsel herein in which Jenkins is a defendant.

III. Jenkins' Amenability to Suit

Liberty Mutual argues that plaintiffs cannot obtain a judgment against Jenkins because it is not amenable to suit and as such they are prohibited from recovering damages from Liberty Mutual pursuant to New York's Insurance Law and the insurance policies at issue. In this regard, New York Insurance Law § 3420 grants an injured party a cause of action against a tortfeasor's liability insurer if a judgment obtained against the insured remains unsatisfied. [16] Consistent with this statute, the insurance policies hereunder require that prior to commencing a direct action against Liberty Mutual the injured party must first obtain a judgment against Jenkins; they further declare that the bankruptcy or insolvency of the insured does not relieve Liberty Mutual of its obligations. [17]

Jenkins was incorporated in New Jersey and is subject to New Jersey's Business Corporation Act, N.J. Stat § 14A:1-1, et seq. Pursuant to N.J. Stat. § 14A:12-1(g), Jenkins was automatically dissolved on July 28, 2004 by proclamation of the New Jersey Secretary of State for failure to file annual reports. (Moving Affirmation, exhibit 12). Under N.J. Stat. § 14A:12-9, Jenkins' corporate existence continued despite its dissolution. [18]

Liberty Mutual contends that once the winding up process of a dissolved New Jersey corporation is completed there is no longer a corporation against which suits may be commenced. In this regard, section (1) of N.J. Stat. § 14A:12-9, upon which Liberty Mutual relies, establishes a finite post-dissolution list of activities that a dissolved corporation is permitted to undertake for the purpose of winding up its business. The activities identified in section (2) of N.J. Stat. § 14A:12-9, which include the ability to sue and be sued as if dissolution had not occurred, are subject to no such limitation because they do not constitute the carrying on of business of the dissolved corporation. If Liberty Mutual's interpretation of New Jersey law is that a dissolved corporation is only amenable to suit until it is finished winding up its affairs were correct, the ability to sue and be sued would be included under N.J. Stat. § 14A:12-9(1), not N.J. Stat. § 14A:12-9(2). Similarly, if all of the activities listed in N.J. Stat. § 14A:12-9(2) were intended to be limited to the winding up process, the New Jersey Legislature would have had no reason to draft two subsections to address this issue.

Liberty Mutual relies heavily on Global Landfill Agreement Grp. v 280 Dev. Corp., et al., 992 F.Supp 692 (DNJ 1998), in which the court granted a dissolved corporation's motion to dismiss pursuant to N.J. Stat. § 14A:12-9 because it had wound up its affairs prior to the commencement of the action. The court held that "[o]nce the corporation finishes [the winding up] process, it ceases to exist. A corporation may not be sued in perpetuity." Id. at 695.

The Global court observed that the plaintiff "pointed to no authority in New Jersey or in this district to support the position that a corporation which has wound up and distributed all of its assets is subject to suit." Id. Yet an analogous issue had already been addressed by the New Jersey Supreme Court in Hould v John P. Squire & Co., 81 NJL 103 (1911). In Hould, the sheriff attempted to serve the summons on the defendant corporation's agent but was informed that the corporation had voluntarily dissolved. The court determined that service on the agent was nonetheless proper. In so doing, the court interpreted N.J. Stat. § 14:13-4 [19], the predecessor to N.J. Stat. § 14A:12-9, and concluded that "corporations of this state are suable in tort after and notwithstanding dissolution, on causes of action theretofore arising." Id. at 106.

The Hould decision was cited with approval in Int'l Union of Operating Engineers, Local 68, AFL-CIO v RAC Atlantic City Holdings, LLC, et al., No. 11-cv-3932, 2013 U.S. Dist. LEXIS 11413 (DNJ Jan. 29, 2013), which was decided 15 years after Global Landfill by the same District Court of New Jersey. In Int'l Union, the plaintiff sought to nullify a New Jersey Limited Liability Company's ("LLC") dissolution so that the LLC could be sued in the action. The court denied that request, holding that "New Jersey's LCC Act does not allow cancelled entities to be served, prosecute, or defend suit." Id. at *30. However, the court unequivocally held that the New Jersey Legislature did not place the same limitation on suits against dissolved corporations (Id. at *34) [20]:

[T]he New Jersey legislature had the choice to create such a right of action but chose not to. Compare N.J. Stat. Ann. § 42:2B-50 (prohibiting suits against an LCC following its cancellation) with N.J. Stat. Ann. § 14A:12-9(2)(e) (a provision in New Jersey's Corporation Act which allows legal actions "by and against the corporation in the same manner [after it has been dissolved] as if dissolution did not occur."); see also Johnson v Four States Enters., Inc., 355 F.Supp. 1312, 1318 (E.D. Pa. 1972), aff'd, 495 F.2d 1368 (3d Cir. 1974) ("[U]nder New Jersey Law, a corporation after dissolution may be sued for a cause of action in tort [or contract] arising before such dissolution, and process may be served on the registered agent of the corporation.") (citing Hould v. John P. Squire & Co., 81 N.J.L. 103, 79 A. 282 (N.J. 1911)).The majority of courts that have ruled on this issue have agreed that a New Jersey corporation is amenable to suit even after the winding up process has been completed. See In re Krafft-Murphy Co., 62 A.3d 94, 103 (Del Ch 2013)(New Jersey "statutorily provide[s] for the endless continuation of a dissolved corporation."); Gilliam v Hi Temp Prods., et al., 260 Mich.App. 98, 123 (2003) ("Unlike Michigan, California, New Jersey, and Alaska have not followed the Model Business Corporation Act (1984) by establishing time limits for claims against a dissolved corporation."); Johnson v Four States Enterprises, Inc., 355 F.Supp. 1312, 1319 (ED Pa. Dec. 13, 1972), aff'd 495 F.2d 1368 (3d Cir. 1974) ("under New Jersey Law, a corporation after dissolution may be sued for a cause of action in tort arising before such dissolution....); Dr. Hess & Clark, Inc. v Metalsalts Corp., 119 F.Supp. 427, 429 (DNJ Mar. 4, 1954) (noting that "New Jersey has, by statute, preserved the right of suit" against dissolved corporations); Newmark v Abeel, 102 F.Supp. 993 n.1 (SDNY Mar. 3, 1952) (dissolved New Jersey corporations are subject to suit "for an indefinite period").

Liberty Mutual's reliance on this court's decision in Herlihy v A.F. Supply Corp, Index No. 190149/11 (Sup. Ct. NY Co. Jan. 10, 2012) is misplaced. This court dismissed the Herlihy complaint against an Alabama corporation which had dissolved in 2007 pursuant to Alabama law. Alabama law provides that a dissolved Alabama corporation is competent to be sued for only two years after publication of its dissolution notice. (SeeAla. Code §§ 10A-2-14.01 - 10A-2-14.05). While survival statutes similar to the one at issue in Herlihy are utilized by a number of states, no such statute exists in New Jersey.

Accordingly, the court declines to follow Global Landfill. Instead, and consistent with Hould, Int'l Union, and the plain meaning of N.J. Stat. § 14A:12-9, I find that New Jersey Law permits suit against Jenkins. In turn, the plaintiff may seek to obtain a judgment against Jenkins and consequently commence a direct action against Liberty Mutual under New York Insurance Law § 3420.

IV. Substituted Service on Jenkins via Liberty Mutual

CPLR 311(b) [21] vests this court with the discretion to direct an alternative method for service of process should it determine that the methods set forth in CPLR 311(a) are "impracticable." [22] Here, plaintiffs' counsel has clearly satisfied this standard in light of their efforts.

In "devising appropriate forms of alternate service", courts "have wide latitude to fashion ... means adapted to the particular facts of the case before [them].'" Snyder v Energy Inc., 19 Misc.3d 954, 960 (NY Civ. Ct. 2008) (quoting Dobkin v Chapman, 21 N.Y.2d 490, 498 [1968]). [23]

It is settled that substituted service may be effectuated on a defendant's liability insurer if it is the real party-in-interest and is contractually bound to defend and indemnify the defendant. See Cives Steel Co. v Unit Builders, Inc., 262 A.D.2d 164 (1st Dept 1999); Rego v Thom Rock Realty Co., 201 A.D.2d 270, 270 (1st Dept 1994); Esposto v Ruggerio, 193 A.D.2d 713, 714 (2d Dept 1993); Saulo v Noumi, 119 A.D.2d 657 (2d Dept 1986). In fact, substituted service of this nature has been explicitly permitted in New York state asbestos actions. See Cobb v Polaroid, Index No. 3677/10 (Sup. Ct. Oswego Co. Aug. 10, 2011); Massorana v A.C. & S., Inc., et al., Index No. 6035/02 (Sup. Ct. Onondaga Co. Aug. 30, 2004). [24] Under the circumstances of this case, I find that substituted service upon Jenkins via Liberty Mutual is the most effective and efficient means to apprise Jenkins of this action and all other NYCAL actions in which it is named as a defendant.


The court has considered Liberty Mutual's remaining contentions and finds them to be without merit. Accordingly, it is hereby

ORDERED that Liberty Mutual's motion to dismiss the complaint as against Jenkins in the Germain, Antle, Valensi, Cunningham, and Khan, and Lantenschuetz actions is denied in its entirety; and it is further

ORDERED that plaintiff's motion for an order directing the Clerk of the Court to enter a default judgment in its favor against Jenkins in the Antle, Valensi, and Lantenschuetz actions is denied in its entirety; and it is further

ORDERED that within 20 days of entry of this order, plaintiffs' counsel is directed to serve copies of the complaints in the Germain, Antle, Valensi, Cunningham, and Khan actions on Jenkins by substituted service on Liberty Mutual, and proof of such service shall be deemed good and sufficient service as to Jenkins; and it is further

ORDERED that copies of this decision shall be placed in the Germain, Antle, Valensi, Cunningham, and Khan files under their respective existing index numbers, and a copy shall be placed in the global NYCAL file bearing Index No. 040000/1988; such order shall be deemed to bear the following caption:

- - - - - - X


This document applies to:



- - - - - - X

and it is further

ORDERED that the Clerk is directed to mark his records accordingly.

This constitutes the decision and order of the court.

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