Motion-Secondary: ROBERT ROSS et al VS. C.C. MOORE & CO. ENGINEERS

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                                1 |} JOHN Shwraiegpbcratew vom’ CSB# 96375
jcowperthwaite@bsralaw.com
2 | BENNETT, SAMUELSEN, REYNOLDS & ALLARD ELECTRONICALLY
A Professional Corporation FILED
3 || Attorneys at Law Superior Court of California,
AL-4.30-4-Marina. Vilage Parkway. Suite BOQ anne neni . . County. of. San Francisco...
4 | Alameda, California 94501-
Telephone: (510) 444-7688 FEB 22 2013
5 || Facsimile: (510) 444-5849 BY: CAROL BALISTRERI
Deputy Clerk
6 || Attorneys for Defendant
SLAKEY BROTHERS, INC.
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8
SUPERIOR COURT OF THE STATE OF CALIFORNIA
9
IN AND FOR THE COUNTY OF SAN FRANCISCO
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11 | ROBERT ROSS and JEAN ROSS, NO. CGC-10-275731
DB Plaintiffs,
3 MEMORANDUM OF POINTS AND
vs. AUTHORITIES IN SUPPORT OF
14 MOTION FOR ORDER GRANTING
C.C. MOORE & CO., ENGINEERS, et al. SUMMARY JUDGMENT IN FAVOR OF
15 DEFENDANT SLAKEY BROTHERS,
Defendants. ; INC.
16 Date: May 10, 2013
7 Time: 9:30 a.m.
Dept.: 503
18 Trial Date: June 10, 2013
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BENNETT, SAMUELSER,
REYNOLDS € ALLARD MEMORANDUM OF POINTS AND AUTHORITIES
BARR EGF Foo
ALAMEDA ca sic1 TABLE OF CONTENTS
2 PAGE
3 | TABLE OF AUTHORITIES .. se 3
4 I INTRODUCTION AND STATEMENT OF FACTS voce 4
5 a. “Slakey Brothers” Corporate History
b. Plaintiffs Testimony re Slakey Brothers
6
I. POINTS AND AUTHORITIES - THERE IS NO
7 EVIDENCE THAT SLAKEY BROTHERS, INC.
EXPOSED PLAINTIFF ROBERT ROSS
8 TO ANY ASBESTOS-CONTAINING PRODUCTS ............. 8
9 a. Defendant Did Not Sell Asbestos-Containing
Products in Alameda, Contra Costa or San
10 Francisco Counties During The Relevant
Time Period and Therefore Defendant Is
lI Not a Legal Clause of Plaintiffs Asbestos
Related Injuries.
12
b. Defendant Slakey Brothers, Inc. is Not a
13 Successor to Any of the San Francisco
Bay Area Based Slakey Brothers Entities.
14
c. Successorship Liability Does Not Exist
15 Since There Was No Transfer of Assets
from Slakey Brothers Oakland, Inc. To
16 any of the Sacramento Based Slakey
Brothers Operations: None of the
17 Ray v Alad Exceptions Apply.
18 d. There is no Agency Relationship Between
the Sacramento-Based and Oakland-Based
19 Slakey Brothers Operations Which Would
Establish Either Direct or Vicarious Liability.
20
e. No Liability Can Attach to the Subsequent
ai Stakey Brothers, Inc. by Virtue of Its Director's
Former Stockholdings or the Previous Holders
22 of its Stock.
23 || CONCLUSION ooo cccccseccecenceeccresrensne recesses sanseserteansueieaeenseeseeneneatecesees 19
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BENNETT, SAMUELSEN,
REXNOLDS ALLARD MEMORANDUM OF POINTS AND AUTHORITIES
PARKWAY. SHES 300
Biahenae OMBENNETT, SAMUELSEN,
REYNOLDS & ALLARD
A BROBESSIONAL CORP.
(30% MARINA VIELAGE
PARKWAY, SUFTE 300
ALAMEDA,'CA 98501-H84
(510) W788

TABLE OF AUTHORITIES

California Court of Appeal Cases

Aguilar-v.-Atlantic- Richfield-Go.-(2004)
25 Cal. 4" 826

McGonnell v. Kaiser Gypsum Co., Inc. (2002)
98 Cal_App. 4® 1098

Scheiding v. Dinwiddie Construction Co. (1999)
69 Cal.App.4th 64, 82-82

Krasley v. Superior Court (1980)
101 Cal.App. 3d 425, 427

Rochlis v. Walt Disney Co. (1980)
19 Cal.App. 4" 201, 219

Union Bank v. Superior Court (1995)
31 Cai.App. 4° 573

Penasquitos v. Superior Court (1991)
53 Cal. 3d 1180

Kaminski v. Western MacArthur Co. (1985)
175 Cal. App. 3d 445

Ray v. Alad (1977)
19 Cal. 3d 22, 28

Phillips v. Cooper Laboratories (1989)
215 Cal App. 3d 1648

CenterPoint Energy. Inc. v. Superior Court (2007)
157 Cal. App. 4th 11017

Cislaw v. Southland Corporation (1992)
4 Cal. App. 4th 1284

Potlatch Corp. v. Superior Court (1984)
154 Cal. 3d 1144

Federal Authorities
Celotex Corp. v. Catrett 477 U.S. 317, 385 (1986)

dames v. Otis Elevator Co. 854 F.2d 429, 432
at footnote 3 (11° Cir. 1989)

California Legislative Authority
California Code of Civil Procedure §437c
3

MEMORANDUM OF POINTS AND AUTHORITIES

PAGE

10BENNETT, SAMUELSEN,
REYNOLDS & ALLARD

L
INTRODUCTION AND STATEMENT OF FACTS

This matter arises out of a claim by plaintiff Robert Ross that he sustained an

asbestos related injury as a result of exposure to asbestos. The claim of Plaintiff,
Ross, for loss of consortium is derivative of the claim of Mr. Ross. Plaintiff's claim against
Slakey Brothers is limited to alleged deliveries of asbestos containing materials made by
“Slakey Brothers” in Alameda, Contra Costa, and San Francisco Counties in the 1950s,
1960s and 1970s. Robert Ross testified in his deposition that he recalled three sites to
which Slakey Brothers made deliveries: the Avon Refinery in Martinez (Avon), California, a
courthouse in Oakland, California and Golden Gate University in San Francisco,
California. [Undisputed Material Fact to Separate Statement Number 2 herein after
referred to as “UMF”]. He could not recall any other worksites where Slakey Brothers
made deliveries. [UMF 3].

Plaintiff testified that his work at each of the three sites took place in the 1950s,
1960s or 1970s. [UMF 4 and 8] On direct examination he testified that his work at the
Avon Refinery and the Alameda Court House took place sometime within the late 1950s
to 1970s time period. [UMF 4] He subsequently testified that he first worked at the Avon
Refinery in the early 1960s. [UMF 4]. He claims to have seen Slakey Brothers make
deliveries to the Avon refinery, including a delivery of transite pipe. [UMF 5] He believes
that he saw transite pipe delivered to the Avon Refinery sometime in the 1960s. [UMF 4]
He claims that Slakey Brothers made a delivery of transite pipe to the Alameda
Courthouse job in Oakland. [UMF 6]

Plaintiff claims that Slakey Brothers made a single delivery of transite pipe to his
job site at Golden Gate University in San Francisco, California. [UMF 7] He believes that
delivery was made sometime during the 1960s or the early 1970s. [UMF 4]

Alt
uit

4.

MEMORANDUM OF POINTS AND AUTHORITIESDefendant served plaintiff with Special Interrogatories on October 26, 2011. [UMF

8]. Plaintiffs responses to said Special Interrogatories claim exposure to asbestos

Oi Co., Avon, California in 1961-1962 and Alameda County Administr
Street, Oakland, California in 1967-1972; 1977-1979. [UMF 8]

containing products supplied by defendant Siakey Brothers, Inc., at two sites: Tidewater
cae oak

The defendant, Slakey Brothers, Inc. is a California Central Valley based wholesale
plumbing and sheet metal distributor with stores in Northern California, Oregon and
Nevada. Defendant was incorporated in 1973. The “Slakey Brothers’, Oakland entity is a
separate, distinct, now defunct, corporation which did business in the San Francisco Bay

Area and had other stores in the Bay Area. [UMF 10, 13, 14, 16, 17 & 19] Neither

oC Oe NW Dh RB WON

11 || defendant Slakey Brothers, Inc. nor its predecessors did business in San Francisco,
42 | Alameda or Contra Costa Counties in the 1940s,1950s, 1960s or 1970s. [UMF 23]

3 | Plaintiff's allegations with regard to defendant are misplaced. '

13
14 a. “Slakey Brothers” Corporate History
15 In 1939, William Slakey and Roger Slakey formed a partnership, Slakey Brothers,

16 | for the sale of the tools, heating equipment and sheet metal supplies. [UMF 9] In the early
17 | 1940s, Slakey Brothers began selling plumbing supplies. The business of the partnership
18 || Was located in Sacramento, California. In approximately 1942 or 1943, the partnership

19 | Opened an office in Oakland, California. [UMF 10] William Slakey moved to Alameda

99 || County and ran the Oakland based office.

4 In 1946 the business was incorporated as "Slakey Brothers, Inc." (not the

27 || defendant in this matter). The former corporation, Slakey Brothers. Inc, assumed the

' Defendant has previously litigated the corporate successorship issues related to Slakey
25 |Brothers, Oakland, inc. Attached is the unpublished California First Appellate District, Division Four,
[Decision in the matter of Annah_K. Coe v. Slakey Brothers, Case No. A064949 (San Francisco
26 (Superior County Super. Ct. No, 948807). The Coe decision sets forth, in detail, the corporate history
bof Slakey Brothers. It clearly holds that defendant Slakey Brothers, Inc. is not liable as a successor
27 ito the San Francisco Bay Area Slakey Brothers entities including Slakey Brothers, Oakland.

5.

BENNETT, SASIUELSEN,
REYNOLDS:

‘A PROFESSIONAL CORP. MEMORANDUM OF POINTS AND AUTHORITIES
130? MARINA VILLAGE .

PARKWAY, “SUITE 300

ALAMEDA, Ca 94:01-084
{510} 444-7088we

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BENNETT, SAMUELSEN,
REYNOLDS & ALLARD

ITE 300
ALAMEDA, Ca 94301-1084
(510) s44.7688

liabilities of the partnership and the partnership dissolved. [UMF 11] Its principal place of
business was Sacramento County.

In approximately 1946 an office was opened in San Jose and, in approximately

| 1948 an office was opened in Modesto. It was agreed among the family that Roger

Slakey and his family would assume sole responsibility for operations in Sacramento and
Modesto, and that William and his family would run the stores in Oakland and San Jose.
As is evident from the 1946 articles of incorporation, Roger Slakey made his home in
Sacramento and William Slakey in Alameda County. [UMF 11]

in 1956 a corporate plan of reorganization was instituted whereby Slakey Brothers,
Inc. continued its corporate existence but proceeded to incorporate each of the Slakey
Brothers stores as separate subsidiary corporations. [UMF 15]

As a result of the 1956 reorganization, the parent company, Slakey Brothers Inc.,
limited its functions to the holding of the land and buildings in Sacramento, cash on hand
to meet current obligations, cash surrender value of insurance policies, and stock in
operating subsidiary corporations. [UMF 15, 16 & 17] Upon transfer by the parent
corporation, the newly formed subsidiary corporations continued to assume full
responsibility for general conduct of the business and all liability pertaining to the
operation of the business previously carried on by the parent corporation. [UMF14, 16, 17
& 24] The San Francisco Bay Area stores (Oakland and San Jose) continued to be
operated by the William Slakey family and the Central Valley based stores (Sacramento
and Modesto) continued to be operated by the Roger Slakey family. The William Slakey
operations opened offices in Petaluma, Richmond, San Francisco and Hayward and each
office was separately incorporated. [UMF 16] The Sacramento based Slakey Brothers
operations opened offices in Stockton, Redding, Chico, Yuba City and South Lake Tahoe
and each office was separately incorporated. [UMF 16]

In 1963, there was a divisive reorganization of the company. Effective July 8, 1963,

the former, Slakey Brothers Inc., was wound up and dissolved. The assets, debts and
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MEMORANDUM OF POINTS AND AUTHORITIESBENNETT, SAMUELSEN,

SUITE 300
ALAMEDA, 'CA S4301-i08¢

liabilities of the former Slakey Brothers, inc., were transferred to Slakey Brothers,
Oakland, Inc. [UMF 17] Slakey Brothers, Oakland, Inc. continued as the parent for the
wholly owned Bay Area subsidiaries. Following the divisive reorganization, the Bay Area
based Slakey Brothers stores continued to operate separate and apart from the
independent Sacramento based operations.

In July of 1965 the San Francisco Bay Area based Slakey Brothers outlets in
Petaluma, Richmond, San Francisco and Hayward merged with Slakey Brothers, Oakland
inc. to become a single corporate entity, Slakey Brothers Oakland Inc. [UMF 18] Two
months later Slakey Brothers, San Jose, Inc. merged with Slakey Brothers Oakland Inc.
[UMF 18]

On February 1, 1973, the Sacramento based Slakey Brothers operations (i.e.
Sacramento, Redding, Yuba, Stockton, Chico, Tahoe and Delta Pipe & Supply)
consolidated to form the defendant, Slakey Brothers, inc.

b. Plaintiff Testimony re “Slakey Brothers”

As set forth above, Slakey Brothers, Oakland, Inc. is a separate entity, distinct from
the Central Valley based defendant in this matter. The defendant in this matter, Slakey
Brothers, Inc., did not do business in San Francisco, Alameda or Contra Costa Counties
in the 1940s, 1950s, 1960s or 1970s. [UMF 23] In addition, defendant has no documents
evidencing the sale of any products to plaintiffs employers at the subject work sites during
the subject time periods. Defendant is not responsible for plaintiff's alleged asbestos
exposure.

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MEMORANDUM OF POINTS AND AUTHORITIES:Ul.
1
3 POINTS AND AUTHORITIES

3 THERE 1S NO EVIDENCE THAT SLAKEY BROTHERS,
INC.'S ACTIVITIES EXPOSED PLAINTIFF ERNEST M. ORNELLAS -
4 TO ANY ASBESTOS-CONTAINING PRODUCTS
5 Code of Civil Procedure section 437c provides, in pertinent part, that:
(a) Any party may move for summary judgment in any
6 action or proceeding if itis contended that the action
7 has no merit or that there is no defense to the action ...
8 (c) The motion for summary judgment shall be granted
if all the papers submitted show that there is no triable
9 issue as to any material fact and that the moving party
is entitled to judgment as a matter of law. in determining
10 whether the papers show that there is no triable issue
as to any material fact the court shall consider all of
1 the evidence..., and ail inferences reasonably deducible
from the evidence...
BR (o) A cause of action has no merit if either of the following exists:
8 (1) One or more of the elements of a cause of action cannot ‘
14 be separately established, even if that element is separately :
pleaded.
8 (2) A defendant establishes an affirmative defense to that
16 cause of action.
7 (py) A defendant... has met his or her burden of showing
that a cause of action has no merit if that party has
18 shown that one or more elements of the cause of action,
even if not separately pleaded, cannot be established,
19 or that there is a complete defense to that cause of action.
Once the defendant... has met that burden, the burden
20 shifts to the plaintiff... to show that a triable issue of one
or more material facts exists as to that cause of action or
24 a defense thereto. The plaintiff... may not rely upon the
mere allegations or denials of its pleadings to show that
2 a triable issue of material fact exists but, instead, shall
set forth the specific facts showing that a triable issue
3 of material fact exists as to that cause of action or a
defense thereto.
24 The purpose of summary judgment is to provide courts with a mechanism to "cut
25 through" the parties’ pleadings in order to determine whether, despite their allegations,
6 trial is in fact necessary to resolve their dispute. Aguilar v. Atlantic Richfield Co. (2001) 25
27

Cal. 4th 826, 843. Where no triable issue of material fact exists, summary judgment will

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BENNETT, SAMUELSEN,
REYNOLDS & ALLARD

MEMORANDUM OF POINTS AND AUTHORITIES

AL
S10) 444-7688,SB 0 GB WR mW & YW Ye

lie. The trial court has no discretion to refuse summary judgment where the evidence
before the court discloses no triable issue as to any material fact and that the moving
party is entitled to summary judgment as a matter of law. Krasley v. Superior Court (1980)
101 Cal. App. 3d 425, 427.

The initial burden is on the moving party to establish evidentiary facts entitling that
party to judgment either by demonstrating (a) that plaintiffs cannot establish one or more
elements of their cause of action or (b) there is a complete defense to the cause of action.

Code of Civil Procedure §437c(c) and 437¢(0)(2). Such a showing may be made by

pointing to the absence of essential evidence needed to support plaintiffs’ cause of action.
Code of Civil Procedure 437c(o)(2); Celotex Corp. v. Catrett (1986) 477 U.S. 317, 385.

Here, plaintiffs have provided no evidence supporting a claim that defendant Slakey
Brothers, Inc. exposed decedent to asbestos.

In Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, the California Supreme

Court clarified the law that courts must apply in ruling on motions for summary judgment.
The court adopted language similar to the more liberai Federal model and held that the
party moving for summary judgment bears the burden of persuasion that there is no
triable issue of material fact. The court noted that it is a burden of persuasion, not proof.
The defendant bears the burden of persuasion that one or more elements of the cause of
action in question cannot be established or that there is a complete defense thereto.

[T]he party moving for summary judgment bears
an initial burden of production to make a prima
facie showing of the non-existence of any triable
issue of material fact; if he carries his burden of
production he causes a shift, and the opposing
party is then subjected to the burden of production
of his own to make prima facie showing of the
existence of a triable issue of material fact.
Although not expressly, the 1992 and 1993
amendments impliedly provide in this regard for a
burden of production as opposed to a burden of
persuasion. A burden of production entails only
the presentation of “evidence”... further, although
not expressly, the 1992 and 1993 amendments
impliedly provide for a burden of production to
make a prima facie showing. A prima facie

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MEMORANDUM OF POINTS AND AUTHORITIES0 OB DD HW BR BY oe

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26
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BENNETT, SAMUELSEN,
REYNOLDS & ALLARD.

showing is one that is sufficient to support the
position of the party in question. (Citations
omitted). No more is it called for.

Id at 850-851.

In McGonneil v. Kaiser Gypsum, inc, (2002), 98 Cal.App.4th 1098, the Appellate

Court found that the submission of a deposition excerpt showing lack of knowledge of
exposure to the defendant's product was sufficient to shift the burden of proof under
C.C.P. §437(c)(o). id at1103-1104. Here, both in his deposition testimony and in
answers to interrogatories, plaintiff has identified "Slakey Brothers, “Oakland” and
“Slakey Brothers” “Bay Area”. The only products he associates with the entity "Slakey
Brothers" are products he used in the 1940s and 1950s and 1960 in Sonoma or Marin
counties. As set forth above, neither the defendant in this matter, Slakey Brothers, Inc.,
nor its corporate predecessors sold products at those times in those locations. Hence,
Slakey Brothers, Inc. is not a proper defendant and there is a complete defense to each
of plaintiff's causes of action.

Once the moving defendant has established a reasonable inference that plaintiff
cannot produce evidence to support their claim, the burden shifts to plaintiffs to set forth
specific, admissible facts to demonstrate that a triable issue of fact exists. Code of

Civil Procedure 437c(0)(2); Scheiding v. Dinwiddie Construction Co, (1999) 69
Cal. App.4th 64, 82-84; Union Bank v. Superior Court (1995) 31 Cal.App.4th 573.

Furthermore, plaintiffs’ speculative inferences are insufficient to avoid summary
judgment. James y. Otis Elevator Co., 854 F.2d 429, 431 at Fn.3 (11th Cir. 1989).
Where such inferences are nothing more than a “smoke and mirrors presentation,” the
court should not hesitate to summarily dispose of such meritless litigation. Rochiis v.
Walt Disney Co. (1993) 19 Cal. App.4th 201, 219.

Mi

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MEMORANDUM OF POINTS AND AUTHORITIESa. Defendant Did Not Sell Asbestos-Containing Products in
Sonoma or Marin Counties During The Relevant Time
Period and Therefore Defendant Is Not a Legal Clause
of Plaintiffs Asbestos Related Injuries.

As set forth above, plaintiff contends that he was exposed to asbestos containing
products supplied by defendant during the 1950s, 1960s, and 1970s in San Francisco,
Alameda and Contra Costa Counties. [UMF 8]

Defendant Slakey Brothers, Inc. was not incorporated untif 1973 when the
Sacramento based Slakey Brothers companies were consolidated into one corporation.
[UMF 214] At no time did those entities, (Sacramento, Delta, Redding, Yuba City,
Stockton, Chico, Tahoe and Delta Pipe & Supply) market, sell or distribute asbestos-
containing products in San Francisco, Alameda and Contra Costa Counties. [UMF 23]
The deposition testimony of Mr. Ross clearly creates an inference that the entity he
recalled delivering materials to his job sites was a Bay Area Siakey Brothers not the
defendant, Slakey Brothers, Inc. [UMF 5 & 7] As set forth above, Slakey Brothers,
Oakland, Inc. was a separate corporate entity which consolidated with the other San
Francisco Bay Area-based Slakey Brothers corporate entities and assumed the liabilities
of the earlier, "Slakey Brothers, Inc." [UMF 17 & 18] The earlier Slakey Brothers, inc. had
been incorporated in 1946 and was dissolved in 1963. Slakey Brothers, Oakland, Inc.
was suspended in 1971. [UMF 20]

Defendant herein, Slakey Brothers, inc., conducted its business separately from
Slakey Brothers, Oakland, Inc. whose shares were owned by the William Slakey family.
[UMF 23 & 24] These were two separate companies which shared a similar name
(although not a common corporate name) because of the fact that the brothers had the
same last name.

b. Defendant Slakey Brothers, Inc. is Not a Successor to Any
of the San Francisco Bay Area Based Slakey Brothers Entities.

The original Slakey Brothers, inc., was incorporated in 1946 as successor to the

original Slakey Brothers partnership. [UMF 11] The original corporation wound up and

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MEMORANDUM OF POINTS AND AUTHORITIES(S10) aaa. 7888

dissoived in 1963. Pursuant to the dissolution, Slakey Brothers, Inc. conveyed all of its
assets and liabilities to Slakey Brothers Oakland, Inc. which, as described above,
subsequently, in 1971, suspended its operations. The Slakey Brothers plumbing and sheet
metal stores conducted by Roger Slakey in Sacramento and by William Slakey in the
Oakland-San Francisco Bay area operated independently. The defendant Slakey Brothers,
Inc. did not succeed to the Slakey Brothers Bay Area operations. There is no basis for
successorship liability.
c. Successorship Liability Does Not Exist Since There
Was No Transfer of Assets from Slakey Brothers
Oakland, Inc. to Any of the Sacramento Based

Slakey Brothers Operations: None of the Ray v Alad
Exceptions Apply.

The well-established test for successor liability is set forth in Ray v. Alad_ 1977) 19
Cal. 3d 22, 28. Where, as here, there is a sale of assets in good faith for an adequate
consideration, a sticcessor corporation is not liable for the obligations of the former
corporation unless (1) there is an express or implied agreement of assumption, (2) the
transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing
corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser
is for the fraudulent purpose of escaping liability for the seller's debts. ld at 28. Plaintiff
cannot prove that any of the exceptions enumerated in Ray are applicable here.

First, there is no evidence of an express or implied assumption mentioned in Ray.
Here, the defendant, Slakey Brothers, Inc. was not in existence until its incorporation in
1973. There is no evidence that defendant agreed to assume the liabilities of the former
Slakey Brothers, Inc. or Slakey Brothers, Oakland, Inc. or any of the other San Francisco
Bay Area Slakey Brothers entities. The former Slakey Brothers, Inc. was incorporated in
1946 and dissolved in 1963. All of the assets and all of the liabilities of the former, Slakey
Brothers, Inc., were transferred to Slakey Brothers, Oakland, Inc. [UMF 17] Thereafter,
when Slakey Brothers Oakland, Inc. suspended operations in 1971, there was no sale or

merger of the Slakey Brothers Oakland, entity with any Slakey Brothers entity in Sacramento.

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MEMORANDUM OF POINTS AND AUTHORITIESaD Ww BRB BW WN

BENNETT, SAMUELSEN,
REY!

ALAM!
(510) 489.7688)

There is also no evidence of a consolidation or merger of defendant with the former
Slakey Brothers Inc. or Slakey Brothers Oakland, Inc. As stated in Ray, the consolidation
or merger exception occurs where one corporation takes all of another's assets without
providing any consideration that could be made available to meet claims of the other's
creditors or where the consideration consists wholly of shares of the purchaser's stock which
are promptly distributed to the seller's shareholders in conjunction with the seller's liquidation.
Id. at 28. Here, defendant Slakey Brothers, Inc. was not incorporated until after the
dissolution of Slakey Brothers Oakland, Inc. in addition, the events in 1956 and 1963 were
not a merger or consolidation of any interest with the Sacramento based Slakey Brothers
entities but were in fact the opposite. Indeed, the divisive restructuring of the businesses
effected the pre-existing de facto separateness of the organizations.

This is not a case where, pursuant to the third exception in Ray, the defendant is a
mere continuation of the seller. Likewise, there is no evidence that under the fourth
exception in Ray, there was a transfer of assets to the purchaser for the fraudulent purpose
of escaping liability for the seller's debts.

Ray v. Alad created a special exception imposing successorship liability upon a
manufacturer in products cases where, among other things, the purchaser corporation
continues the established business of the seller corporation and where the acquisition results
in a destruction of the plaintiff's remedies against the original manufacturer. Id. at 31-33.
In Ray, the personal injury plaintiff sued the successor to the manufacturer of the ladder from
which he fell and was injured. The defendant (Alad II) neither manufactured nor sold the
ladder but purchased the assets of the original manufacturer (Alad |). The defendant, Alad
li, continued to use the seller's plant, equipment, inventory, trade name, and goodwill and
continued to manufacture the same line of ladders with the same "Alad" name and
equipment, designs, and personnel. The defendant also continued to solicit Alad I's
customers to the same sales representatives with no outward indication of change in

ownership of the business. Id. at 25.

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MEMORANDUM OF POINTS AND AUTHORITIESIn Ray v. Alad, the trial court, based upon the general exceptions stated above,
granted defendant's motion for summary judgment finding that there was no successor
liability as to the personal injury claim. The Appellate Court upheld the summary
judgment but the California Supreme Court reversed finding that the imposition of liability
on the defendant for injuries for Alad's defective product was fair and equitable in the
view of the fact that the acquisition included the trade name, goodwill and customer lists
as well as the fact that the defendant continued to produce the same line of ladders
holding itself out to potential customers as the same enterprise. Id at 33. The Court
reasoned that this deliberate exploitation of Alad's established reputation as a going
concern manufacturing a specific product line gave the defendant a substantial benefit
which its predecessor could not have enjoyed without the burden of potential liability for
injuries from previously manufactured units. Id. The court noted that by taking over and
continuing the established business of producing and distributing Alad ladders, the
defendant became an integral part of the overall producing and marketing enterprise that
should bear the cost of injuries resulting from defective products. Id.

in formulating the exception to the genera! rule that there is no successorship
liability, the Ray court stated,

Justification for imposing strict liability upon a successor
or to a manufacturer under the circumstances here
presented rests upon (1) the virtual destruction of the
plaintiffs remedies against the original manufacturer
caused by the successor's acquisition of the business,
(2) the successor's ability to assume the original
manufacturer's risk-spreading role, and (3) the

fairness of requiring the successor to assume a
responsibility for defective products that was a burden
necessarily attached to the original manufacturer's good
will being enjoyed by the successor in the continued
operation of the business. Id at 31.

The facts in the instant case are wholly inconsistent with the facts in Alad. Here,
Slakey Brothers Sacramento, Inc., together with several subsequently formed

corporations, merged in 1973 to form the current defendant, Slakey Brothers, Inc. This

“14.

MEMORANDUM OF POINTS AND AUTHORITIESwas a business completely separate and apart in personnel, assets, sales, business
location, customers, and goodwill from the Oakland operations for which plaintiff seeks to
attach liability in this matter. The Oakland company went out of business in 1971. There
is no indication that any entity whatsoever succeeded to the former Slakey Brothers
Oakiand, Inc. Furthermore, there is no indication that the suspension of Slakey Brothers,
Oakland, Inc. operations, or the other Bay Area operations, was caused or contributed to
in any way by the separate operations of the Sacramento based Slakey Brothers
Corporation. There is no evidence that plaintiffs’ remedies, against Slakey Brothers,

Oakland have been foreclosed.

SO em ID A BF HR WH

In Penasquitos v. Superior Court (1991) 53 Cal. 3d 1180, the California Supreme

11 || Court held that post-dissolution claims against corporations are not barred. The

12 || Penasquitos Court based its holding in part on Corporations Code Section 210 (a) which

13 | states:
14 A corporation which is dissolved nevertheless continues
to exist for the purpose of winding up its affairs, prosecuting
15 and defending actions by or against it and by enabling it to
collect and discharge obligations. Id. at 1185.
16
Penasquitos went on to explain,
17
[T]he effect of dissolution is not so much a change in the
18 corporation's status as a change in its permitted scope
of activity... Thus, the corporation's dissolution is best
19 understood not as its death, but merely as its retirement
from active business. Id at 1190.
20
In Kaminski v. Western MacArthur Co. (1985) 175 Cal. App. 3d 445, the court
21
extended Alad's holding to distributors of products. Additionally, Kaminski reiterated the
22
requirement that there be a causal connection between the successor's acquisition and
23
the availability of the predecessor as a potential defendant for the injured plaintiff. Here,
24
not only was this defendant, Slakey Brothers, Inc., not a successor to any of the Oakland
25
based Slakey Brothers entities, but there was no causal connection between the
26
suspension of Slakey Brothers Oakland, Inc.'s activities in 1971, and the Sacramento
27

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MEMORANDUM OF POINTS AND AUTHORITIES

PARRWA Ba
ALAMEDA, CA 94501-1084
(S10) 244-7888,companies. Likewise, there was no connection between the Slakey Brothers Oakland
entities' dissolution and this defendant's incorporation in 1973.

In Phillios v Cooper Laboratories (1989) 215 Cal App 3d 1648, the Appellate

Court recognized the fact that in order for the Ray product line exception to apply, ail
three of the prongs in Ray must be satisfied. Id at 1657. The destruction of the remedy
against the predecessor must be caused by the successor. Id. Here, there is no
evidence that defendant had any relationship to the operation of the Bay Area Slakey
Brothers after the 1963 reorganization.

In CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal. App. 4th 1101, the

California Appellate Court addressed the holding in Ray v Alad. The Court determined
that the trial court had erred as a matter of law in applying the rule of successor liability
for jurisdictional purposes to the defendant. That matter arose out of a complex
corporate history involving the reorganization of the parent company and the creation of a
business separation pian to comply with Texas Tax Law. The court found that the
ordinary rules of successor liability still apply even where two successor companies are
part of a one predecessor “reorganization” rather than a buy out. In that case there was
no evidence that the defendant CenterPoint expressly assumed or was assigned the
liabilities of the businesses that were doing business in California.

The CenterPoint Appellate Court found that none of the four exceptions
enumerated in Ray v. Alad were applicable despite the integral relationship between the
entities. The Court found that the important inquiries in employing prongs two and three
of the Ray analysis (i.e. (2) did the transaction amount to a consolidation or merger of the
successor and the predecessor (3) was the successor or a mere continuation of the
predecessor) were whether the two corporations have preserved their separate identities
and whether recourse to the debtor corporation is available. Along these lines the court
stated that the crucial factor in determining whether a corporate acquisition constitutes
either a de facto merger or mere continuation is the same: whether adequate cash

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MEMORANDUM OF POINTS AND AUTHORITIES:wm WD

ALAMEDA oa 34501-4084

consideration was paid for the predecessor corporation's assets. Id at 1121. The court
determined that CenterPoint was not a successor to the California businesses and thus
was not subject to jurisdiction on a successor liability theory. Although the instant case
concerns successor liability in a products liability situation, the principles are the same.
Here, there is no question but that the Slakey Brothers entities operated as adequately
capitalized separate companies. The Slakey Brothers Sacramento operation was not the
parent of, controller or franchisee or of the Oakland entities.
d. There is No Agency Relationship Between the Sacramento-Based
and Oakland-Based Slakey Brothers Operations Which Would
Establish Either Direct or Vicarious Liability.

In Cislaw v. Southland Corporation (1992) 4 Cal. App. 4th 1284, the parents of a

17-year old boy brought a wrongful death action against a franchisor, Southland
Corporation, and a 7-Eleven convenience store. The parents alleged that their son died
of respiratory failure after a 7-Eleven franchisee sold their son clove cigarettes.
Southland Corporation moved for summary judgment arguing that its franchisees were
independent contractors and thus, as a matter of law, it did not have any direct or
vicarious liability.

Summary judgment was granted and the Court of Appeal affirmed holding that a
principal-agency relationship exists as a matter of law only when the franchisor can
exercise complete control of the means and manner in which the franchisee ran the
store. Furthermore, where the franchisor retained only enough control as is necessary to
protect and maintain its trademark, trade name, and goodwill, no agency relationship is
established and therefore no liability exists. Finally, the Cislaw Court noted that
Southland Corporation did not participate in the 7-Eleven store's net profits or losses.

In the instant case, the separately owned Sacramento based Slakey Brothers
Company exercised no control over the Slakey Brothers San Francisco Bay Area
Companies owned and run by the William Slakey family. William and Georgia Slakey as
president and secretary, respectively, of the Oakland based Slakey Brothers Corporation,

~17-

MEMORANDUM OF POINTS AND AUTHORITIES1 | had complete control over their employees, inventory, product line, insurance, and hours
2 | of operation. The Central Valley (Sacramento) Company of the Roger Slakey family

3 || conducted its business separate and apart from that of the William Slakey family as
4 || evidenced by Board of Directors meetings of the Sacramento based Slakey company

5 | which revealed no participation by Oakland based Slakey Company or owners.

6 || Furthermore once the original Slakey Brothers, Inc. (incorporated 1946, dissolved in

7 |, 1963) was wrapped up and dissolved, not even an indirect profit or loss sharing a parent
8 | might gain from its subsidiaries occurred. Once this split occurred, and the original

9 || Slakey Brothers, Inc. was dissolved, the separately incorporated Oakland based Slakey
10 || entity not only assumed all prior debts and liabilities of the original entity, but continued to
11 ] operate independently and ultimately consolidated with the other Bay Area Companies.

12 | The operations of Slakey Brothers Oakland, Inc. were suspended in 1971.

13 e, No Liability Can Attach to the Subsequent Slakey
Brothers, Inc. by Virtue of Its Director's Former
14 Stockholdings or the Previous Holders of its Stock.
15 In Potlatch Corp. v. Superior Court (1984) 154 Cal. 3d 1144, the Court of Appeal

16 || held that a shareholder is not liable for the debts of the corporation whose stock it owned
17 | and it is immaterial that a shareholder happens to be a corporation. Id at 1151.

18 In Potlatch, a division of Speedspace Corporation manufactured glue-laminated
19 | wood beams. These beams were used in the construction of an automobile dealership.
20 || When the beams collapsed, Royal Insurance, the auto dealers's carrier, sued under its
21 || subrogation rights.

22 After the beams were originally purchased, Potlatch acquired 100% of

23 | Speedspaces' stock and Speedspace (now a wholly-owned subsidiary of Potlatch)

24 | continued its manufacturing operations. Later, Speedspace dissolved and its plant and
25 | equipment were liquidated. Potlatch did not take over the operation.

26 The Court of Appeal ordered the trial court to enter summary judgment in favor of

27 | Potlatch, reasoning that Potlatch was merely a shareholder and as such owned no part of

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RPROPESSIORAL CORP. MEMORANDUM OF POINTS AND AUTHORITIES
36E MARINA VILLAGE

(S10) 445-76881 | the property of the corporation. Id at 1150-51. The shareholder is not liable for the debts
2 || of the corporation and it is immaterial that the shareholder happened to be a corporation.
3 | id at 1151.

4 Here, after the divisive split in 1963, like the Speedspace corporation in Potlatch,

5 | the Oakland based Slakey entities continued their activities independent of the

6 || Sacramento based Slakey Brothers operations or the former shareholders. At this time,
7 | the family of William Siakey obtained all the outstanding stock of the Oakland based

8 || Slakey stores. Thus, as former shareholders of the dissolved parent, the Roger Slakey
9 | family, owners of the Sacramento based outlet can have no liability. Slakey Brothers

10 | Oakland, Inc. suspended operations in 1971, this business was wrapped up and

11 dissolved and, presumably, its assets distributed to members of the William Slakey family
12 || who comprised its shareholders. There is absolutely no indication that the Sacramento
13 || based Slakey Brothers operations ever took over or succeeded to the now-defunct

14 || Slakey Brothers Oakland, Inc.

15 Moreover, there can be no liability here on the part of the former subsidiaries

16 | (merged in 1973 as defendant Slakey Brothers, Inc.) for the debts of their former parent,
17 || the Slakey Brothers, inc. which was dissolved in 1963. Plaintiffs in Potlatch were

18 || stretching too far to impose liability on the parent-shareholder for the subsidiary's product.

19 | The stretch would have been even further here, as a subsidiary does not assume or carry
20 || with it the liabilities of a former parent, ie., a former shareholder.

21 CONCLUSION

22 Slakey Brothers, Inc., the defendant herein, which encompasses the Sacramento
23 || based Slakey Brothers outlets, did not sell, indeed could not have sold, asbestos related
24 || products in San Francisco, Alameda or Contra Costa Counties in the 1950s, 1960s or

25 || 1970s.

26 Slakey Brothers-Oakland, Inc., which succeeded to the assets and liabilities of

27 || the original Slakey Brothers, Inc. (incorporated 1946), was suspended in 1971. The

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MEMORANDUM OF POINTS AND AUTHORITIES.

PARKWAY, | SUITE 300
ALAMEDA, GA 94501-1084
(510) 444-76881 | Sacramento based Slakey Brothers outlets never succeeded to any of the Oakland
based Slakey Brothers operations and there is no indication that the Sacramento
corporate entities caused the dissolution of the Bay area-based Slakey Brothers stores.
Quite the contrary, following the divisive split in 1963, the consolidated Slakey Brothers
Oakland, Inc. continued to operate for another eight years until its suspension.

Here, there is no evidence to create a reasonable inference that it is more likely

SA WA FF BN

than not that plaintiff was exposed to asbestos from products sold by the defendant,

8 || Slakey Brothers, Inc.

9 It is respectfully submitted that defendant's Motion for Summary Judgment be
10 | granted.

11 || Dated: February 22, 2013 BENNETT, SAMUELSEN, REYNOLDS & ALLARD

7 Tie
13 BY*.

“Jorn G. Cowperthwaite
14 Attorneys for Defendant
SLAKEY BROTHERS, INC.

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ROROPESSIONAE CORD MEMORANDUM OF POINTS AND AUTHORITIES

RIVAY,
ALAMEDA. CA 94501-1084
(510) 444-7688