Toni G. Milmoe, of the Estate of Thelma Marie Sturgeon v. Paramount Senior Living at Ona, LLC ( 2022 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2022 Term FILED
_____________
June 13, 2022
No. 21-0183 released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
_____________ SUPREME COURT OF APPEALS
OF WEST VIRGINIA
TONI G. MILMOE,
EXECUTRIX OF THE ESTATE OF
THELMA MARIE STURGEON,
Plaintiff Below, Petitioner,
V.
PARAMOUNT SENIOR LIVING AT ONA, LLC,
Defendant Below, Respondent.
________________________________________________
Appeal from the Circuit Court of Cabell County
The Honorable Christopher D. Chiles, Judge
Civil Action No. 19-C-370
AFFIRMED
________________________________________________
Submitted: March 2, 2022
Filed: June 13, 2022
Matthew P. Stapleton, Esq. Douglas C. Hart, Esq.
Stapleton Law Offices Pittsburgh, Pennsylvania
Huntington, West Virginia Anthony C. Sunseri, Esq.
W. Stephen Flesher, Esq. The Maxwell Centre
Law Offices of W. Stephen Flesher, Wheeling, West Virginia
LLC Attorneys for the Respondent,
Barboursville, West Virginia Paramount Senior Living at Ona,
Attorneys for the Petitioner LLC
JUSTICE ARMSTEAD delivered the Opinion of the Court.
JUSTICE BUNN did not participate in the decision in this case.
SYLLABUS BY THE COURT
1. “[T]he purchaser of all the assets of a corporation [is] not liable for
the debts or liabilities of the corporation purchased.” Syllabus Point 2, in part, Davis v.
Celotex Corp., 187 W. Va. 566, 420 S.E.2d 557 (1992).
2. “This Court may, on appeal, affirm the judgment of the lower court
when it appears that such judgment is correct on any legal ground disclosed by the record,
regardless of the ground, reason or theory assigned by the lower court as the basis for its
judgment.” Syllabus Point 3, Barnett v. Wolfolk, 149 W. Va. 246, 140 S.E.2d 466 (1965).
3. “Where a party is unable to resist a motion for summary judgment
because of an inadequate opportunity to conduct discovery, that party should file an
affidavit pursuant to W. Va. R. Civ. P. 56(f) and obtain a ruling thereon by the trial court.
Such affidavit and ruling thereon, or other evidence that the question of a premature
summary judgment motion was presented to and decided by the trial court, must be
included in the appellate record to preserve the error for review by this Court.” Syllabus
Point 3, Crain v. Lightner, 178 W. Va. 765, 364 S.E.2d 778 (1987).
4. “A litigant may not silently acquiesce to an alleged error, or actively
contribute to such error, and then raise that error as a reason for reversal on appeal.”
Syllabus Point 1, Maples v. W. Va. Dep’t of Com., 197 W. Va. 318, 475 S.E.2d 410 (1996).
i
Armstead, Justice:
Plaintiff below, Toni Milmoe (“Ms. Milmoe”), as executrix of the estate of
Thelma Marie Sturgeon (“Ms. Sturgeon”), her mother, appeals an order of the Circuit Court
of Cabell County that granted summary judgment in favor of the defendant below,
Paramount Senior Living at Ona, LLC (“Paramount”). In its summary judgment order, the
circuit court concluded that Paramount, who operates a senior-care home, was not
responsible as a successor corporation for alleged wrongful conduct by Passage Midland
Meadows Operations, LLC (“Passage”), a limited liability company that previously
operated the home when Ms. Sturgeon was a resident there. In this appeal, Ms. Milmoe
alleges that the circuit court improperly applied and expanded the general rule that “the
purchaser of all the assets of a corporation [is] not liable for the debts or liabilities of the
corporation purchased” in reaching its determination that Paramount was not liable as a
successor corporation. Syl. Pt. 2, in part, Davis v. Celotex Corp., 187 W. Va. 566, 420
S.E.2d 557 (1992). In addition, she claims that the circuit court erred in failing to find
Paramount could be held liable under two exceptions to that general rule. Finally, Ms.
Milmoe contends that the circuit court erred because the case was not ripe for summary
judgment. After reviewing the briefs and oral arguments of the parties, the appellate
record, and relevant law, we conclude that, on the record presented in this case, Ms. Milmoe
has failed to produce evidence that Paramount is the corporate successor of Passage. We
also find no merit in Ms. Milmoe’s claim that the case was not ripe for summary judgment
1
because the discovery deadline had not yet passed. Contrary to her assertions on appeal,
during the summary judgment hearing before the circuit court her counsel acknowledged
that the evidence was sufficient for a summary judgment ruling. Accordingly, we affirm
the circuit court’s summary judgment order.
I.
FACTUAL AND PROCEDURAL HISTORY
The basic facts of this case do not appear in dispute. Petitioner’s decedent,
Ms. Sturgeon, became a resident of a nursing home and/or assisted living facility (“senior-
care home”) in Ona, West Virginia, on August 20, 2016. At the time Ms. Sturgeon moved
into the senior-care home, and throughout her residency there, the facility was operated by
Passage, a Delaware limited liability company owned by Andrew Turner and William
Lasky. Passage did not own the senior-care home facility. The senior-care home was
instead owned by Welltower, Inc. (“Welltower”), who is not a party to this action. Passage
operated the senior-care home pursuant to a sublease agreement. 1
1
According to documents in the record from the United States Bankruptcy
Court for the Southern District of West Virginia, Welltower had a master lease agreement
with Passage Property (believed to be Passage Healthcare Properties, LLC, one of the
debtors in bankruptcy), through which it leased three separate senior-care home facilities
to Passage Property as tenant. Passage Property, in turn, subleased each of the three
facilities to an affiliated subtenant, one of which was Passage Midland Meadows
Operations, LLC, referred to herein as “Passage.” Under this sublease, Passage operated
the senior-care facility in Ona, West Virginia. According to a motion to dismiss filed by
the United States Bankruptcy Trustee (“Bankruptcy Trustee” or “Trustee”) in Passage’s
bankruptcy proceedings, sometime prior to March 2017, when Passage filed for Chapter
(continued . . . )
2
Ms. Milmoe alleges that, during Ms. Sturgeon’s time at the senior-care home,
she was the victim of negligence, including the fact that she repeatedly suffered slip and
fall accidents as well as “eloping” incidents in which she left the facility. One “eloping”
incident resulted in Ms. Sturgeon being found lying on the ground on the side of a nearby
road. Ms. Milmoe contends that this continuous course of negligence caused serious
personal injury to Ms. Sturgeon, which resulted in medical expenses, pain, suffering, and
ultimately proximately caused her death on November 13, 2017.
In March 2017, about midway through the period during which Ms. Sturgeon
resided at the senior-care home, Passage, along with three affiliated companies
(collectively “the Passage Companies”), 2 filed for Chapter 11 bankruptcy protection in the
United States Bankruptcy Court for the Southern District of West Virginia. Thereafter, in
December 2017, after Ms. Sturgeon’s death, the Passage Companies filed an “Emergency
Motion for Authorization to Enter into Operations Transfer Agreement and Related
Transactions,” in which they, inter alia, sought authority to enter into an Operations
11 bankruptcy protection, Welltower terminated the master lease it had with Passage
Property and filed an action in the United States District Court for the Northern District of
Ohio seeking the appointment of a receiver. On December 1, 2017, the district court
entered an order finding that “the master lease was lawfully terminated and that there was
no insolvency related bar to continuation of the receivership proceeding by Welltower to
recover possession of the facilities and transition to a new lease[.]”
The three affiliated companies that, along with Passage, sought Chapter 11
2
bankruptcy protection were Passage Healthcare Property, LLC; Passage Village of Laurel
Run Operations, LLC; and Passage Longwood Manor Operations, LLC.
3
Transfer Agreement (“OTA”) with Paramount. The Passage Companies also sought
permission to “turn over and release to Welltower, Inc. (or its designee),” as the accounts
lienholder, certain of the Passage Companies’ cash collateral consisting of cash and the
proceeds of accounts receivable that pre-dated the closing of the OTA. 3
By order entered on December 29, 2017, the bankruptcy court granted the
Passage Companies’ motion, expressly finding that “good cause exist[ed] to grant the
Motion and that the relief requested in the Motion [was] in the best interests of the Debtors,
their estates, creditors, residents and employees.” The bankruptcy court authorized the
Passage Companies to “enter into and implement the OTA with Paramount,” and also
granted relief from the bankruptcy stay “to the extent necessary to permit the Debtors to
promptly turn over and release to the Accounts Lienholder [Welltower] or its designee the
Closing Date Cash and the proceeds of the Pre-Closing AR [accounts receivable] received
3
In the motion, the Passage Companies further sought permission to obtain
“postpetition advances from Welltower, Inc. or an affiliate thereof . . . to assist with
meeting payroll obligations and certain other essential expenses, in an amount not to
exceed $500,000.00.” In their motion, the Passage Companies represented that
Welltower understands that the Debtors do not presently have
an ability to repay the Postpetition Advance and that there is a
substantial probability that the Postpetition Advance will never
be repaid by the Debtors. Nonetheless, Welltower is willing to
make the Postpetition Advance as a part of the overall
negotiated arrangements described herein, in order to facilitate
a smooth transition to the replacement operator.
The bankruptcy court authorized the requested advances.
4
on or after the Closing Date.” In the bankruptcy court’s order, the Passage Companies
were “authorized and directed to turn over and release such Pre-Closing AR.”
On January 1, 2018, in accordance with the authority granted by the
bankruptcy court, Passage and Passage Healthcare, LLC, 4 entered into the OTA with
Paramount, a company owned solely by James Cox. 5 Paramount assumed the operation of
the senior-care home on the same day, as that was the purpose for which Paramount had
been formed. The OTA was not a purchase agreement, though some of Passage’s
4
Insofar as Passage Healthcare LLC is identified in the OTA as a Puerto Rico
limited liability company, it does not appear to be the same entity as Passage Healthcare
Property, LLC, which was one of the debtors in bankruptcy. Passage Healthcare Property,
LLC, is identified in a bankruptcy filing as a Delaware limited liability company.
5
Ms. Milmoe’s complaint and the circuit court’s summary judgment order
both identify Paramount as a West Virginia limited liability company. However,
Paramount states in its answer to the complaint that it is a Pennsylvania limited liability
company with its principal place of business in Pennsylvania. Similarly, the OTA
identifies Paramount as a Pennsylvania limited liability company. It has been recognized
that:
In West Virginia, successor liability is analyzed under the law
of the transferee corporation’s state of incorporation. See State
ex rel. Elish v. Wilson, 189 W. Va. 739, [744,] 434 S.E.2d 411,
416 (1993) (adopting, for issues involving the rights and
liabilities of a corporation, [the] “general rule regarding choice
of law requir[ing] that the substantive law of the place of
incorporation is to be applied unless another state has a more
substantial connection or the application of the other state’s
law would be contrary to our public policy.”).
Carter Enters., Inc. v. Ashland Specialty Co., 257 B.R. 797, 802 (S.D.W. Va. 2001). The
circuit court and the parties have applied West Virginia law in addressing the issues
pertinent to this appeal.
5
consumable goods, which are described in more detail below, did transfer to Paramount as
part of the OTA transaction. 6 Furthermore, Welltower remains the owner of the senior-
care home facility, and Paramount occupies and operates the facility in its capacity as a
subtenant. 7
On January 2, 2018, immediately after Paramount assumed operation of the
senior-care facility, the Bankruptcy Trustee filed a motion to dismiss the Passage
Companies’ bankruptcy proceedings. In support thereof, the Trustee explained that the
debtors’
sole source of income [had been] from the operation of the
Senior-Care Facilities. Effective January 1, 2018, the debtors’
[sic] no longer operate the Senior-Care Facilities and will
receive no further income. The debtors have no ability to fund
a Chapter 11 plan and, as reported to the Court, are
administratively insolvent.
The Trustee further advised the bankruptcy court that there were insufficient funds to
convert the case to a Chapter 7 bankruptcy proceeding “as all of the debtors[’] assets are
secured by Welltower,” and that “based on Welltower’s secured claims[,] there [were] not
6
In this regard, Paramount states that it was not purchasing Passage’s
substantial assets as part of the OTA and that, as such, it “did not pay consideration as part
of the transaction – other than absorbing the financial risk associated with assuming the
operation of a failing facility.”
7
According to the OTA, HCRI Pennsylvania Properties Holding Company
and Welltower, as landlords of the senior-care facility, were to enter a master lease with
Paramount Senior Living Properties, LLC (“Paramount Properties”), an affiliate of
Paramount, as the tenant. Paramount Properties was then to sublease the senior-care
facility to Paramount.
6
sufficient assets to pay outstanding administrative claims, priority claims or general
unsecured claims.” It appears that the bankruptcy court granted the Trustee’s motion and
closed the bankruptcy case on or about January 25, 2018, but the order itself is not included
in the record on appeal.
On August 21, 2019, Ms. Milmoe filed her complaint against both
Paramount, (as an alleged successor in interest to Passage), and Midland Meadows Senior
Living, LLC, 8 asserting claims of negligence and wrongful death. After Paramount filed
its answer and affirmative defenses, the parties apparently reached an agreement to conduct
discovery in phases, with the first phase focusing on whether Paramount could be held
accountable for the actions of Passage under Ms. Milmoe’s successor liability theory. The
parties further agreed to a deadline for dispositive motions. Following a period of
discovery, and within the established deadline for dispositive motions, Paramount filed a
motion for summary judgment in which it argued that, because it did not purchase all, or
even a substantial portion of, Passage’s assets, it was not liable as a successor to Passage
and, thus, Ms. Milmoe could not rely on exceptions to the general rule that “the purchaser
of all the assets of a corporation [is] not liable for the debts or liabilities of the corporation
purchased” to establish liability on the part of Paramount. Syl. Pt. 2, in part, Davis, 187
W. Va. 566, 420 S.E.2d 557. Ms. Milmoe filed her response to Paramount’s motion, and
According to the complaint, Midland Meadows Senior Living, LLC, was a
8
predecessor in interest to Passage.
7
the circuit court held a hearing at which the parties orally presented their summary
judgment arguments. Following the hearing, the circuit court entered an order on February
10, 2021, in which it granted Paramount’s motion for summary judgment and dismissed
Ms. Milmoe’s complaint in its entirety. Thereafter, the circuit court entered an amended
order on March 11, 2021, that granted Paramount’s motion for summary judgment and
dismissed Ms. Milmoe’s complaint only as to Paramount. The amended order noted that
Ms. Milmoe’s complaint as to defendant Midland Meadows Senior Living, LLC, is not
dismissed and remains on the circuit court’s active civil docket. This appeal by Ms.
Milmoe followed.
II.
STANDARD OF REVIEW
Our review of Ms. Milmoe’s appeal of the circuit court’s order granting
summary judgment to Paramount is de novo. “A circuit court’s entry of summary judgment
is reviewed de novo.” Syl. Pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
Accordingly,
[i]n reviewing a circuit court’s order granting summary
judgment this Court, like all reviewing courts, engages in the
same type of analysis as the circuit court. That is “‘we apply
the same standard as a circuit court,’ reviewing all facts and
reasonable inferences in the light most favorable to the
nonmoving party.”
State ex rel. Vanderra Res., LLC v. Hummel, 242 W. Va. 35, 42, 829 S.E.2d 35, 42 (2019)
(quoting Fayette Co. Nat’l Bank v. Lilly, 199 W. Va. 349, 353 n.8, 484 S.E.2d 232, 236 n.8
8
(1997), overruled on other grounds by Sostaric v. Marshall, 234 W. Va. 449, 766 S.E.2d
396 (2014)). To this end, “[a] motion for summary judgment should be granted only when
it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts
is not desirable to clarify the application of the law.” Syl. Pt. 3, Aetna Cas. & Sur. Co. v.
Fed. Ins. Co. of N.Y., 148 W. Va. 160, 133 S.E.2d 770 (1963). In other words,
[s]ummary judgment is appropriate where the record
taken as a whole could not lead a rational trier of fact to find
for the nonmoving party, such as where the nonmoving party
has failed to make a sufficient showing on an essential element
of the case that it has the burden to prove.
Syl. Pt. 4, Painter, 192 W. Va. 189, 451 S.E.2d 755. We will apply the foregoing standards
in resolving this appeal.
III.
DISCUSSION
Ms. Milmoe seeks to hold Paramount accountable under a theory of
corporate successor liability. Thus, the dispositive question in this appeal is whether there
exists on the record in this case a genuine issue of fact regarding Paramount’s status as a
successor to Passage. Ms. Milmoe raises three grounds upon which she claims the circuit
court erred in failing to find Paramount subject to successor liability for her claims. She
contends that the circuit court erred in granting summary judgment in favor of Paramount
by (1) improperly applying and extending the law related to successor liability; (2) finding
that Paramount was not a mere continuation of Passage; and (3) failing to find that the
9
transaction between Paramount and Passage was not made in good faith. She additionally
contends that summary judgment was premature. We first turn our attention to the question
of whether Paramount is, in fact, a successor to Passage, which question we find
dispositive.
A. Successor Liability
This Court has adopted the general rule acknowledging that “the purchaser
of all the assets of a corporation [is] not liable for the debts or liabilities of the corporation
purchased.” Syl. Pt. 2, in part, Davis, 187 W. Va. 566, 420 S.E.2d 557. This is a widely
accepted rule. See 15 William M. Fletcher, Fletcher Cyclopedia of the Law of
Corporations, § 7122, at 229-30 (Perm. ed. 2017) (“The general rule, which is well settled,
is that where one company sells or otherwise transfers all its assets to another company,
the latter is not liable for the debts and liabilities of the transferor.”). As is the case with
general rules, “[t]his rule has . . . been tempered by a number of exceptions and statutory
provisions.” Syl. Pt. 2, in part, Davis, 187 W. Va. 566, 420 S.E.2d 557. Specifically, this
Court has held that
[a] successor corporation can be liable for the debts and
obligations of a predecessor corporation if there was an express
or implied assumption of liability, if the transaction was
fraudulent, or if some element of the transaction was not made
in good faith. . . . Finally, such liability will also result where
the successor corporation is a mere continuation or
reincarnation of its predecessor.
Syl. Pt. 3, id.10
In her first assignment of error, Ms. Milmoe observes that the general rule of
purchaser nonliability applies to the purchaser of all of the assets of a corporation, and she
maintains that the circuit court improperly applied and expanded that general rule to
Paramount when it is undisputed that Paramount did not purchase all of the assets of
Passage. Ms. Milmoe nevertheless avers that Paramount “gained control” of Passage’s
“assets,” and contends that Paramount failed to pay consideration for the transaction, 9
which left Passage without funds to cover its liabilities. Therefore, she reasons, without
citing any authority, that Paramount should be accountable to her for Passage’s alleged
misconduct. No theories of successor liability may be applied to Paramount, however,
unless it is first determined that Paramount is a successor corporation to Passage. Ms.
Milmoe has failed to establish that Paramount is such a successor corporation.
“A successor corporation is defined as ‘another corporation, which through
amalgamation, consolidation, or other legal succession, becomes invested with rights and
assumes burdens of [the] first corporation.’” Total Waste Mgmt. Corp. v. Com. Union Ins.
Co., 857 F. Supp. 140, 151 (D.N.H. 1994) (quoting Unifirst Corp. v. Jeff Wyler Ford, Inc.,
No. CA92-08-079, 1993 WL 7875, at *3, 1993 Ohio App. LEXIS 143, at *7-8 (Ohio Ct.
9
We note, however, that under the OTA Paramount did agree to undertake
certain limited obligations and liabilities of Passage that effectively amount to
consideration for the transaction. For example, Paramount agreed to hire Passage
employees under the same terms of employment they had with Passage, including honoring
their accrued vacation and other paid-time-off benefits, and all FICA, state, and federal
taxes related thereto. Paramount further notes that it absorbed the financial risk of
assuming the operation of a failing facility.
11
App., January 19, 1993) (per curiam)); see also Tourangeau v. Uniroyal, Inc., 138
F. Supp. 2d 259, 265-66 (D. Conn. 2001) (“With regard to corporations, a successor is one
‘that, through amalgamation, consolidation or other assumption of interests, is vested with
the rights and duties of an earlier corporation.’” (quoting Black’s Law Dictionary 1446
(7th ed. 1999))); Corneal v. CF Hosting, Inc., 187 F. Supp. 2d 1372, 1375 (S.D. Fla. 2001)
(“The term successor ‘is generally applicable to corporations wherein one corporation by
a process of amalgamation, consolidation or duly authorized legal succession becomes
vested in the rights and assumes the burdens of its predecessor corporation.’” (quoting Int’l
Ass’n of Machinists v. Shawnee Indus., 224 F. Supp. 347, 352 (W.D. Okla.1963)));
Bouchard v. People’s Bank, 594 A.2d 1, 4 (Conn. 1991) (“[T]he term ‘successor in interest’
ordinarily refers to a corporation that ‘by a process of amalgamation, consolidation or duly
authorized legal succession, has become invested with the rights and has assumed the
burdens of [another] corporation’” (quoting D.D.J. Elec. Contractors, Inc. v. Nanfito &
Sons Builders, Inc., 479 A.2d 1250, 1251-52 (Conn. 1984))); Successor, Black’s Law
Dictionary (11th ed.) (2019) (“A corporation that, through amalgamation, consolidation, or
other assumption of interests, is vested with the rights and duties of an earlier
corporation.”).
Ms. Milmoe argues that Paramount became Passage’s successor when it took
over the operations of the senior-care home previously operated by Passage, and, in so
12
doing, obtained Passage’s clientele 10 and employees. However, merely hiring a former
operator’s employees and serving its prior clientele is not sufficient to render a new
operator a successor of the former operator. Rather, for one corporation to be the successor
to another, the assets of the predecessor company must be transferred to the successor.
“In order for one corporation to be deemed a successor
corporation in the first place, it must be a successor to all, or
substantially all, of another corporation’s assets.” National
Soffit & Escutcheons, Inc. v. Superior Sys., Inc., 98 F.3d 262,
266 (7th Cir. 1996). In other words, a transfer of assets is “an
essential prerequisite to successor liability.” Carreiro v.
Rhodes Gill & Co., 68 F.3d 1443, 1448 (1st Cir. 1995).
Premier Cap., LLC v. KMZ, Inc., 984 N.E.2d 286, 292 (Mass. 2013); 11 see also Med.
Shoppe Int’l, Inc. v. S.B.S. Pill Dr., Inc., 336 F.3d 801, 803 (8th Cir. 2003) (acknowledging
that “under Missouri law, transfer of all assets is a sufficient condition to invoke the general
rule [of purchaser nonliability] and its exceptions,” and further concluding that, insofar as
10
Although Ms. Milmoe asserts that Paramount obtained “a full client base”
from Passage, she does not refer to any evidence of record to indicate how many residents
were at the senior-care home when Paramount took over. We reiterate that Rule 10(c)(7)
of the West Virginia Rules of Appellate Procedure requires the petitioner’s brief to, inter
alia, “contain appropriate and specific citations to the record[.]”
11
It appears that a majority of jurisdictions recognize that one corporation
may be a successor to another upon the transfer of all or substantially all of the transferee
corporation’s assets. However, Syllabus Point 2 of Davis refers to the purchase of “all the
assets of a corporation” as triggering purchaser nonliability. 187 W. Va. 566, 420 S.E.2d
557. For purposes of this appeal, we need not decide whether the transfer of substantially
all of a corporation’s assets is sufficient to render the transferee corporation a successor, or
to apply the exceptions to the general rule of purchaser nonliability, as there simply is no
evidence of record in this case to show that the assets transferred from Passage to
Paramount were substantial.
13
Missouri law was silent as to whether the transfer of all assets was a necessary condition,
the transfer of substantial assets from the predecessor corporation was sufficient to invoke
the rule and its exceptions); Williams v. Bowman Livestock Equip. Co., 927 F.2d 1128,
1132 (10th Cir. 1991) (applying Oklahoma law and observing that “successor liability can
be imposed . . . in limited circumstances [when there has been] a sale or transfer of all, or
substantially all, the assets of a corporation”).
The transfer of assets is also required for application of the exceptions to the
general rule of purchaser nonliability. See Grand Lab’ys, Inc. v. Midcon Labs of Iowa, 32
F.3d 1277, 1281 n.5 (8th Cir. 1994) (“Most jurisdictions hold that a prerequisite to the
imposition of liability against a corporation under any of the four exceptions to the
nonliability of successors is a transfer or sale of all, or substantially all, the assets of the
predecessor to the successor.”); Edwards v. Black Twig Mktg. & Commc’ns LLC, 418
S.W.3d 512, 521 (Mo. Ct. App. 2013) (holding “that a transfer of all or substantially all of
the assets of one corporation to another is a prerequisite to corporate successor liability
under any of the four exceptions to the general rule of nonliability” and acknowledging
that this is the majority rule (footnote omitted)); accord 15 Fletcher, supra § 7122, at 240
(referring to “[e]xceptions to the general rule of nonliability in the event of a transfer of
corporate assets” (emphasis added)).
Ms. Milmoe has failed to establish that Paramount received all, or even
substantially all, of Passage’s assets, or that there is a genuine question of law as to any
14
such transfer of assets. Under the OTA, the only assets that were transferred to Paramount
in connection therewith were nominal assets that were characterized as facility supplies: 12
(D) Facility Supplies. On the Commencement Date,
Exiting Operator [Passage] shall convey to New Operator
[Paramount] all of Exiting Operator’s inventory of supplies,
including (without limitation) linens, consumables and food
stuffs, medical supplies, office supplies, and maintenance
inventory (collectively, the “Facility Supplies”) used or
maintained in connection with the operation of the Facility
which were either (i) purchased within ninety (90) days of the
Commencement Date or (ii) if purchased prior to ninety (90)
days of the Commencement Date, do not expire within ninety
(90) days after the Commencement Date.
Other assets, such as cash, accounts receivable, and stock, were expressly excluded:
(E) Excluded Assets. Except as expressly set forth
herein, no other assets of Exiting Operator shall be transferred
to New Operator, and no other assets of Exiting Operator shall
be included as Transferred Assets for the purposes of this
Agreement. Without limiting the generality of the foregoing,
and notwithstanding anything to the contrary contained in this
Agreement, the following assets of Exiting Operator shall not
be transferred to New Operator and shall not constitute
Transferred Assets: all cash, cash equivalents, accounts
receivable, notes receivable, capital stock, tax refunds,
proprietary information and know-how and forms, including
accounting and other proprietary software, equipment or other
items that are leased/licensed pursuant to leases/licenses that
are not assigned to New Operator, and any other items
specifically designated as an excluded asset on Schedule 2(C).
The record in this case is clear that the senior-care home facility itself was
12
never owned by Passage and is not owned by Paramount. Rather, the OTA plainly states
that Welltower is the owner of the senior-care home facility. In her response opposing
Paramount’s motion for summary judgment, Ms. Milmoe acknowledged that “[t]he facility
operated by Passage was and is currently owned by Welltower, Inc.”
15
(Emphasis added). 13 The OTA further clarified that Paramount “shall have no right, title,
interest, claim, lien encumbrance or entitlement, directly or indirectly to any accounts
receivable with respect to the Facility relating to the period prior to [January 2, 2018,] the
Commencement Date [of the OTA].”
Accordingly, the evidence of record shows that Paramount merely assumed
operations of a failing senior-care home that was formerly operated by Passage. Although
certain nominal assets were transferred from Passage to Paramount, presumably to
facilitate a smooth transition from one operator to another with minimal disruption to the
residents of the facility, Ms. Milmoe has failed to present evidence to show that Paramount
was the recipient of sufficient assets from Passage such that Paramount could be potentially
liable to her as successor corporation to Passage.
Although the circuit court granted summary judgment in favor of Paramount
based on its conclusion that none of the exceptions to the general rule of purchaser
13
Schedule 2(C) states in its entirety:
SCHEDULE 2(C)
Excluded Assets
All cash, cash equivalents, accounts receivable through the
Commencement Date, notes receivable, capital stock, tax
refunds, proprietary information and know-how and forms,
including accounting and other proprietary software,
equipment or other items that are leased/licensed by Exiting
Operator pursuant to leases/licenses that are not assigned to
New Operator.
16
nonliability applied, we may affirm on any ground apparent from the record. “This Court
may, on appeal, affirm the judgment of the lower court when it appears that such judgment
is correct on any legal ground disclosed by the record, regardless of the ground, reason or
theory assigned by the lower court as the basis for its judgment.” Syl. Pt. 3, Barnett v.
Wolfolk, 149 W. Va. 246, 140 S.E.2d 466 (1965). Here, the record does not reflect that
Paramount obtained all, or substantially all the assets of Passage. Thus, Ms. Milmoe has
failed to establish that Paramount falls within the general rule related to a purchaser’s
liability or lack thereof, and we need not look to any alleged exceptions to that general rule.
While the circuit court granted summary judgment in Paramount’s favor because it found
that none of the exceptions to the general rule applied, we believe summary judgment,
while warranted, was actually proper because Ms. Milmoe has failed to establish a question
of fact as to Paramount’s status as a successor corporation. Therefore, we affirm the circuit
court’s grant of summary judgment to Paramount pursuant to our authority to so affirm the
court based on any legal ground disclosed by the record.
B. Additional Discovery
In her final assignment of error, Ms. Milmoe argues that this case was not
ripe for summary judgment. She reasons that, despite the parties’ agreement to an early
dispositive motion deadline, and the fact that Paramount moved for summary judgment
within the established timeframe, “there remained sufficient time to discover additional
facts,” because the circuit court’s amended discovery deadline had not yet passed. She
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further asserts that “Paramount [had] declined to fully respond to [her] outstanding written
discovery.” This argument lacks merit.
It is well established that
[i]f the moving party makes a properly supported
motion for summary judgment and can show by affirmative
evidence that there is no genuine issue of a material fact, the
burden of production shifts to the nonmoving party who must
either (1) rehabilitate the evidence attacked by the moving
party, (2) produce additional evidence showing the existence
of a genuine issue for trial, or (3) submit an affidavit explaining
why further discovery is necessary as provided in Rule 56(f) of
the West Virginia Rules of Civil Procedure.
Syl. Pt. 3, Williams v. Precision Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995)
(emphasis added). Furthermore,
[w]here a party is unable to resist a motion for summary
judgment because of an inadequate opportunity to conduct
discovery, that party should file an affidavit pursuant to
W. Va. R. Civ. P. 56(f) and obtain a ruling thereon by the trial
court. Such affidavit and ruling thereon, or other evidence that
the question of a premature summary judgment motion was
presented to and decided by the trial court, must be included
in the appellate record to preserve the error for review by this
Court.
Syl. Pt. 3, Crain v. Lightner, 178 W. Va. 765, 364 S.E.2d 778 (1987) (second emphasis
added). Here, Ms. Milmoe has failed to direct this Court to any affidavit in the record
citing the need for additional discovery that was filed pursuant to West Virginia Rule of
Civil Procedure 56(f). Additionally, during the circuit court’s hearing on Paramount’s
motion for summary judgment, counsel for Ms. Milmoe stated
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I think the facts -- to be honest, I think the facts related to this
motion, pretty much could be stipulated, it is just a question of
how you interpret the West Virginia law to those facts.
I think we could have -- in hindsight, filed a cross-
motion for summary judgment . . . .
“A litigant may not silently acquiesce to an alleged error, or actively contribute to such
error, and then raise that error as a reason for reversal on appeal.” Syl. Pt. 1, Maples v.
W. Va. Dep’t of Com., 197 W. Va. 318, 475 S.E.2d 410 (1996). Due to Ms. Milmoe’s
failure to file an affidavit requesting the opportunity to engage in additional discovery, and
in light of the above-quoted comments, which contradict the arguments Ms. Milmoe has
made on appeal, we find no error in the circuit court’s timely ruling on Paramount’s
summary judgment motion.
IV.
CONCLUSION
For the reasons explained above, and based on the alternative grounds set
forth herein, we affirm the Circuit Court of Cabell County’s grant of summary judgment
in favor of Paramount as ordered in the circuit court’s amended order of March 11, 2021.
Affirmed.
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