IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI CAUSE NO IA TANFIELD ENGINEERING SYSTEMS, INC.
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1 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI CAUSE NO IA TANFIELD ENGINEERING SYSTEMS, INC. APPELLANT VS. PEGGY ANN THORNTON, as Widow of GREGORY THORNTON, DECEASED APPELLEE ON APPEAL FROM THE CIRCUIT COURT OF LAUDERDALE COUNTY, MISSISSIPPI NO.07-CV-132W BRIEF FOR APPELLEE BRITT V. BETHEA (BAR ~ GREENE & PHILLIPS 50 NORTH FLORIDA STREET MOBILE, AL (251) (251) FAX BENJAMIN L. LOCKLAR (PRO HAC VICE) BEASLEY ALLEN, CROW, METHVIN, PORTIS, & MILES, P.C. 218 COMMERCE STREET POST OFFICE BOX 4160 MONTGOMERY, AL (334) (334) FAX ben.locklar@beasleyallen.com Attorneys for Appellee, Peggy A. Thornton
2 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI CAUSE NO IA TANFIELD ENGINEERING SYSTEMS, INC. APPELLANT VS. PEGGY ANN THORNTON, as Widow of GREGORY THORNTON, DECEASED APPELLEE CERTIFICATE OF INTERESTED PERSONS The undersigned counsel of record certifies that the following listed persons and/or entities have an interest in the outcome of this case. These representations are made in order that the justices of the Supreme Court and/or the judges of the Court of Appeals may evaluate possible disqualification or recusal. 1. Tanfield Engineering Systems, Inc... Appellant 2686 S. Maple Avenue Fresno, CA Tanfield Group, PLC... Defendant Vigo Centre, Birtley Road Washington, Tyne And Wear NE389DA 3. Peggy Ann Thornton... Appellee c/o Benjamin L. Locklar, Esq. Beasley, Allen, Crow, Methvin, Portis & Miles, PC 218 Commerce Street Montgomery, AL Honorable Lester F. Williamson... Trial Judge Circuit Court Judge Post Office Box 86 Meridian, MS 39302
3 5. Benjamin L. Locklar, Esq... Attorney for Appellee Beasley, Allen, Crow, Methvin, Portis & Miles, PC 218 Commerce Street Montgomery, AL Britt V. Bethea, Esq... Attorney for Appellee Greene & Phillips 50 North Florida Street Mobile, AL Aaron R. Edwards, Esq... Attorney for Appellant Daniel, Coker, Horton & Bell, P.A Old Canton Road, Suite 400 Post Office Box 1084 Jackson, MS ii
4 TABLE OF CONTENTS CERTIFICATE OF INTERESTED PERSONS... i TABLE OF CONTENTS... iii TABLE OF AUTHORITIES... iv STATEMENT OF THE ISSUES... 1 STATEMENT OF THE CASE... 2 SUMMARY OF THE ARGUMENT... 5 ARGUMENT... 6 A. THE TRIAL COURT CORRECTLY APPLIED FIFTH CIRCUIT FACTORS IN DETERMINING THAT TANFIELD ENGINEERING IS AN ALTER EGO OF TANFIELD GROUP FOR SERVICE OF PROCESS... 6 B. THE TRIAL COURT CORRECTLY HELD THAT TANFIELD ENGINEERING IS AN ALTER EGO OF TANFIELD GROUP FOR SERVICE OF PROCESS... 8 CONCLUSION... 9 CERTIFICATE OF SERVICE iii
5 TABLE OF AUTHORITIES FEDERAL CASES Delta Constructors, Inc. v. Roediger Vacuum, GmbH, 259 F.R.D. 245 (S.D. Miss. 2009)... 6 Dickson Marine Inc. v. Panalpina, Inc., 179 F.3d 331 (5th Cir. 1999)... 7 Hargrave v. Fibreboard Corporation, 710 F.2d 1154 (5th Cir. 1983)... 7 STATE CASES Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So. 2d 969 (Miss. 2007)... 7 Johnson & Higgins, Inc. v. Commissioner of Ins., 321 So. 2d 281 (Miss. 1975)... 7 STATUTE Mississippi Rule of Civil Procedure 4(d)(4)... 6 iv
6 STATEMENT OF THE ISSUES A. WHETHER THE TRIAL COURT CORRECTLY APPLIED FIFTH CIRCUIT FACTORS IN DETERMINING THAT TANFIELD ENGINEERING IS AN ALTER EGO OF TANFIELD ENGINEERING FOR SERVICE OF PROCESS? B. WHETHER THE TRIAL COURT CORRECTLY HELD THAT TANFIELD ENGINEERING IS AN ALTER EGO OF TANFIELD GROUP FOR SERVICE OF PROCESS? 1
7 STATEMENT OF THE CASE A. NATURE OF THE CASE AND COURSE OF PROCEEDINGS Appellee Peggy Thornton, for and on behalf of her husband, Gregory Thornton, deceased ("Peggy Thornton"), filed a wrongful death action against Woodall Electric Company, Inc. and several fictitious defendants on August 14,2007. (R. 2). Peggy Thornton amended her complaint on July 16, 2009, adding Appellant Tanfield Engineering Systems, Inc. ("Tanfield Engineering"), its parent corporation Tanfie1d Group, PLC (''Tanfield Group"), and Bidgood Enterprises, Inc ("Bidgood"). (R. 7). On or about December 28,2010, Tanfield Engineering filed a Motion to Dismiss the Amended Complaint alleging that the Peggy Thornton had failed to serve it with a copy of the complaint within 120 days after the filing of the complaint. (R. 74). The trial court denied Tanfield Engineering's Motion to Dismiss on April 20, (R lsi). Tanfield Engineering filed a Petition for Interlocutory Appeal on May II, (R ). This Court granted Tanfield Engineering's Petition for Interlocutory Appeal on August 4, 20 II. (R. 159). B. STATEMENT OF FACTS Peggy Thornton's husband, Gregory Thornton, fell from a scissor lift at work and died on or about July 27,2007. (R. 4). Gregory Thornton was working for Woodall Electric Company, Inc. at the time of this death. (R. 4). Appellee Peggy Thornton, for and on behalf of her husband, Gregory Thornton, deceased, filed a wrongful death action against Woodall Electric Company, Inc. and several fictitious defendants on August 14,2007. (R. 2). Peggy Thornton amended her complaint on July 16, 2009, adding Tanfie1d Engineering, its parent corporation Tanfield Group, and Bidgood. (R. 7). On or about December 28, 2010, Tanfield Engineering filed a Motion to Dismiss the Peggy Thornton's Complaint alleging that the Peggy Thornton had failed to serve it 2
8 with a copy of the complaint within 120 days after the filing of the complaint. (R. 74). Thereafter, on or about January 5, 2011, Peggy Thornton filed her opposition to the Motion to Disrniss wherein she averred that Tanfield Engineering was the alter-ego of its parent corporation, Tanfield Group, a co-defendant who had been undisputedly properly served with the complaint according to the Hague Convention. (R. 107). In support of the Peggy Thornton's argument, she showed the trial court the following: (R ). As set forth in the Plaintiffs First Amended Complaint, '\[14, Plaintiffs husband, Gregory Thornton, was killed while using a dangerous and defective UpRight aerial lift to perform electrical work. Tanfield Group, PLC filed an Answer to the Amended Complaint on September 18, Legal counsel for Tanfield Group and Tanfield Engineering are the same: Daniel, Coker, Horton & Bell, P.A. Tanfield Group, PLC is located in the United Kingdom. The company profile for Tanfield Group, PLC, reveals that Tanfield Engineering Systems (US), Inc., is an American subsidiary, specializing in "powered access." The Tanfield Group, PLC, website provides: "Tanfield is one of only three aerial lift manufacturers to have a truly global presence in terms of production, sales and service. The two brands, UpRight and Snorkel, service different geographical markets, but manufacture a common portfolio of electric and diesel-powered aerial lifts... " The Defendant's website further provides: "Founded in 1946, UpRight is one of the world's most respected names in the industry and is now Britain's biggest manufacturer of aerial work platforms... UpRight has achieved global growth following its acquisition by The Tanfield Group Pic in June " Tanfield Group's "global growth," as referenced in its website, is carried out in the United States through the company's subsidiary, Tanfield Engineering Systems (US), Inc., the same defendant who contends that the claims against it are due to be dismissed. Per the California Secretary of State, Tanfield Engineering Systems (US), Inc., is authorized to do business in that state. The company is reflected as a Delaware Corporation. The Delaware Secretary of State reveals that Tanfield Engineering Systems (US), Inc., has been incorporated in that state since March 17,
9 Thereafter, the trial court's clerk via an , asked the Tanfield Defendants to answer seven questions. The stated as follows: Judge Williamson and I talked through the Motion to Dismiss this afternoon. In light of Delta Constructors, Inc. v. Roediger Vaccum, 259 F.R.D. 245 (S.D. Miss. 2009) and Hargrave v. Fibreboard Corporation, 710 F.2d 1154 (5 th Cir. 1983), Judge Williamson would like to know the answer to the following factors concerning Tanfield Group, PLC and Tanfield Engineering Systems, Inc.: 1) Amount of stock owned by the parent of the subsidiary; 2) Do the two corporations have separate headquarters; 3) Do they have common officers and directors; 4) Do they observe corporate formalities; 5) Do they maintain separate accounting systems; 6) Does the parent exercise complete authority over general policy; 7) Does the subsidiary exercise complete authority over daily operations. Obviously, the Defendant provided a flow chart of the parent company, Tanfield Group, PLC, but details to these factors will be more instructive in determining this Motion to Dismiss. (R. 281). In response to the trial court's questions, it was learned that the parent company, Tanfield Group, owns 100 percent of the stock of Tanfield Engineering. (R. 153). They share common officers. (R. 154). Charles Brook is the Secretary and Finance Director of both Tanfield Group, PLC and Tanfield Engineering Systems, Inc. Darren Kell is the Chief Executive Officer of Tanfield Group, PLC and Chief Executive Officer of Tanfield Engineering Systems, Inc. (R. 154). The trial court found, based on the evidence before it, that Tanfield Group, PLC had "the right to decide ifthey are involved in day to day operations of Tan field Engineering" and further noted that "ultimately, any financial gain or loss of Tanfield Engineering is the sole benefit or burden of Tanfield Group, PLC." (R ) On April 20, 2011, the trial court denied Tanfield Engineering's Motion to Dismiss. (R ) Thereafter, on May 11, 2011, Tanfield Engineering filed a Petition for Interlocutory Appeal by permission. (R ). This Court granted Tanfield Engineering's Petition for Interlocutory Appeal on August 3, (R. 159). 4
10 SUMMARY OF THE ARGUMENT The trial court correctly applied Fifth Circuit factors in determining that Tanfield Engineering is an alter ego of Tanfield Group for service of process. The issue in this case is whether Tanfield Engineering is an alter ego of Tanfield Group for service of process. The doctrine of piercing the corporate veil is inapplicable. Peggy Thornton has a direct cause of action against Tanfield Engineering, negating any need to pierce Tanfield Group's corporate veil to get to Tanfield Engineering. The factors applied by the trial court in this case are used to determine whether a parent corporation may accept service on behalf of its subsidiary. The trial court never even discussed piercing the corporate veil since that doctrine has never been an issue in this case. Therefore, the trial court did not err in applying the Fifth Circuit's alter ego factors in determining whether Tanfield Engineering had notice of the action when its parent corporation, Tanfield Group, received the complaint naming Tanfield Engineering as a Defendant. The trial court correctly held that Tanfield Engineering is an alter ego of Tanfield Group for service of process. Tanfield Group owns 100 percent of Tanfield Engineering's stock. Although they maintain separate headquarters and accounting systems, Charles Brooks serves as secretary and finance director of Tanfield Group and as treasurer of Tanfield Engineering. Darren Kell serves as Chief Executive Officer of both Tanfield Group and Tanfield Engineering. The two corporations share corporate formalities. Since Tanfield Group owns 100% of the Stock in Tanfield Engineering, Tanfield Group has the right to decide if they are involved in day to day operations of Tanfield Engineering. In addition, any financial gain or loss of Tanfield Engineering, is the sole benefit or burden of Tanfield Group. Therefore, Tanfield Engineering is an alter-ego of Tanfield Group and service upon Tanfield Group was effective service upon Tanfield Engineering. 5
11 ARGUMENT A. THE TRIAL COURT CORRECTLY APPLIED FIFTH CIRCUIT FACTORS IN DETERMINING THAT TANFIELD ENGINEERING IS AN ALTER EGO OF TANFIELD GROUP FOR SERVICE OF PROCESS. The trial court correctly applied Fifth Circuit factors in determining that Tanfie1d Engineering is an alter ego of Tanfield Group for service of process. The issue in this case is whether Tanfield Engineering is an alter ego of Tanfield Group for service of process. The doctrine of piercing the corporate veil is inapplicable.' Peggy Thornton has a direct cause of action against Tanfield Engineering, negating any need to pierce Tanfield Group's corporate veil to get to Tanfield Engineering. The factors applied by the trial court in this case are used to determine whether a parent corporation may accept service on behalf of its subsidiary. The trial court did not discuss piercing the corporate veil since that doctrine has never been an issue in this case.. Therefore, the trial court did not err in applying the Fifth Circuit's alter ego factors in determining that Tanfield Engineering had notice of the action when its parent corporation, Tanfield Group, received the complaint naming Tanfield Engineering as a Defendant. Under Mississippi Rule of Civil Procedure 4(d)(4), service shall be made: Upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. Therefore, service is proper upon a domestic or foreign corporation if Plaintiff properly serves that corporation's "agent by law." "A parent may be held a subsidiary's agent by law for service of process where the evidence shows that one is the agent or alter ego of the other." Delta Constructors, Inc. v. Roediger Vacuum, GmbH, 259 F.R.D. 245, (S.D. Miss. 2009) I Plaintiff cited Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So. 2d 969 (Miss. 2007) in her Opposition to Defendant's Motion to Dismiss for comparative purposes and not as the exclusive Mississippi authority on alter ego theory for service of process purposes. 6
12 (emphasis added). While courts generally presume that subsidiary corporations are independent from their parent corporation, this presumption may be overcome by clear evidence that the parent corporation is "asserting sufficient control to make the other its agent or alter ego." Dickson Marine Inc. v. Panaipina, Inc., 179 F.3d 331 (5th Cir. 1999). The Fifth Circuit applies several factors in determining whether a subsidiary is the alter ego of its parent for service of process purposes: (1) amount of stock owned by the parent of the subsidiary; (2) did the two corporations have separate headquarters; (3) did they have common officers and directors; (4) did they observe corporate formalities; (5) did they maintain separate accounting systems; (6) did the parent exercise complete authority over general policy; (7) did the subsidiary exercise complete authority over daily operations. Hargrave v. Fibreboard Corporation, 710 F.2d 1154 (5th Cir. 1983). Tanfield Engineering misconstrues the alter ego theory as applying solely to piercing the corporate veil doctrine and urges this Court to hold that Tanfield Engineering cannot be an alter ego of Tanfield Group unless Tanfield Engineering is: 1) A mere instrumentality of Tanfield Group; or 2) Being used in fraud by Tanfield Group. See Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So. 2d 969, 978 (Miss. 2007) (citing Johnson & Higgins, Inc. v. Commissioner of Ins., 321 So. 2d 281,285 (Miss. 1975). Buchanan is inapplicable to the facts of this case. In Buchanan, Plaintiff initially filed an action against a subsidiary corporation. After learning that the parent corporation and the subsidiary corporation did not have separate financial statements, Plaintiff amended the complaint and added the parent corporation four years after filing the initial complaint. The Supreme Court of Mississippi held that the parent corporation was not the alter ego of its subsidiary for the purpose of holding the parent corporation responsible for its subsidiary's actions. Service of process was not an issue in Buchanan as it is in this case. 7
13 The alter ego standard for piercing the corporate veil is not the same alter ego standard for service of process. Mississippi state courts have not defined the contours of the alter ego theory for service of process purposes; therefore, it was appropriate for the trial court to consider Fifth Circuit factors in determining that Tanfield Engineering had notice of the action upon service to Tanfield Group. This Court should affirm the trial court's decision to deny Tanfield Engineering's Motion to Dismiss. 8. THE TRIAL COURT CORRECTLY HELD THAT TANFIELD ENGINEERING IS AN ALTER EGO OF TANFIELD GROUP FOR SERVICE OF PROCESS. The trial court correctly held that Tanfield Engineering is an alter ego of Tanfield Group for service of process purposes. The alter ego standard for piercing the corporate veil is not the same alter ego standard for service of process. As previously stated, a court can consider several factors in determining whether a subsidiary is an alter ego of a parent corporation. The trial court correctly considered those factors in determining that Tanfield Engineering had notice of the action upon service on its parent Tanfield Group. The trial court first considered the amount of stock owned by the parent of the subsidiary and discovered that Tanfield Group owns 100 percent of Tan field Engineering's stock. (R. 153). The trial court considered this fact the most important in concluding that Tanfield Engineering is an alter ego of Tanfield Group. (R. 150). The trial court reasoned that Tanfield Group's sole ownership of Tanfield Engineering gave Tanfield Group the right to decide to be involved in Tanfield Engineering's day to day operations if Tanfield Group wished to do so. (R. 150). In addition, any financial gain or loss of Tanfield Engineering is the sole benefit or burden of Tanfield Group. (R. 150). Even if Tanfield Engineering is not "a mere instrumentality" of Tanfield Group at the moment, Tanfield Group's complete ownership of Tanfield Engineering's 8
14 stock leaves open the opportunity for Tanfield Group to exercise complete control over Tanfield Engineering. That opportunity for complete control is the essence of alter ego theory. Next, the trial court noted that the two corporations maintain separate headquarters and accounting systems. (R. 150). Yet, the two corporations share three key figures: I) Chief Executive Officer; 2) Financial Directorrrreasurer; and 3) Legal Counsel. Darren Kell serves as Chief Executive Officer of both Tanfield Group and Tanfield Engineering. Charles Brooks serves as secretary and finance director of Tanfield Group and as treasurer of Tanfie1d Engineering. Legal counsel for Tanfield Group and Tanfield Engineering are the same: Daniel, Coker, Horton & Bell, P.A. The fact that both corporations share these three key figures makes it clear that notice to Tanfield Group constituted notice to Tanfield Engineering, especially since Tanfield Engineering was named in the complaint served to Tanfield Group. CONCLUSION For the reasons stated herein, Plaintiff requests this Court to affirm the trial court's decision to deny Tanfield Engineering's Motion to Dismiss. Respectfully Submitted, PEGGY THORNTON, as Widow of GREGORY THORNTON, deceased BiI:r'cI~. OF OUNSEL 9
15 BRITT V. BETHEA GREENE & PHILLIPS 50 NORTH FLORIDA STREET MOBILE, AL BENJAMIN L. LOCKLAR-. BEASLEY ALLEN, CROW, METHVIN, PORTIS, & MILES, P.C. 218 COMMERCE STREET POST OFFICE BOX 4160 MONTGOMERY, AL (334) (334) FAX ben.locklar@beasleyallen.com CERTIFICATE I, Benjamin L. Locklar, of counsel for Peggy Thornton, do hereby certify that I have this day served by United States mail a true and correct copy of the above and foregoing pleading to: Aaron R. Edwards Daniel Coker Horton & Bell, P.A Old Canton Road, Suite 400 Post Office Box 1084 Jackson, MS rth. This, the ~~ f day of December, ft. 10
CERTIFICATE OF INTERESTED PERSONS
IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI CAUSE NO. 2011-IA-00682 T TANFIELD ENGINEERING SYSTEMS, INC. APPELLANT VS. PEGGY ANN THORNTON, as Widow of GREGORY THORNTON, DECEASED APPELLEE CERTIFICATE
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