Free Order on Motion for Miscellaneous Relief - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Pending before the Court is Defendants' Motion to Join Bomanite Corporation as a 19 20 Pursuant to Federal Rule of Civil Procedure 25(c), "[i]n case of any transfer of 21 interest, the action may be continued by or against the original party, unless the court upon 22 motion directs the person to whom the interest is transferred to be substituted in the action 23 or joined with the original party." "Whether a party is a successor in interest or subject to 24 liability as a successor, so that Rule 25 applies, is a matter of substantive law." James Wm. 25 26 27 28 On October 6, 2006, Bomanite was served with a copy of the Motion to Join. (Doc. 153 Ex. A) On October 10, 2006, Bomanite was ordered to respond to the Motion to Join. (Doc. 149) QC Construction Products, but not Bomanite, file a response in opposition to the Motion.
Case 2:03-cv-01997-ROS Document 154 Filed 10/12/2006 Page 1 of 3
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

QC Construction Products, LLC, a) Delaware limited liability company, ) ) Plaintiff, ) ) vs. ) ) ) Cohill's Building Specialties, Inc., and) Michael Cohill, ) ) Defendants. ) _________________________________ ) ) AND RELATED COUNTERCLAIMS ) )

No. 03-1997-PHX-ROS ORDER

Counterdefendant. (Doc. 147) For the following reasons, the motion will be granted.1

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Moore Et al., Moore's Federal Practice ¶ 25.31[2] (3d ed. 2006). The parties agree that California law applies to this issue. California courts have long recognized "an express or implied agreement of assumption" of liability as a valid indicator of a successor corporation's intention to assume liabilities. Ray v. Alad Corp., 136 Cal. Rptr. 574, 578 (Cal. 1977). On June 1, 2005, QC Construction Products ("QC") entered into an "Assignment Agreement" with Bomanite Corporation. According to that agreement, Bomanite assumed "all of QC's liabilities, obligations and duties as of December 3, 2004." (Emphasis added.) The agreement was a valid assumption of all of QC's liabilities. Also, California law provides that "[t]he liability of [a] corporation to respond in damages for any failure to perform the covenants contained in [a] contract [is] necessarily created or incurred by the execution of the contract, notwithstanding that no right of action could accrue until a breach." GMS Properties, Inc. v. Superior Court In and For Fresno County, 33 Cal. Rptr. 163, 168 (Cal. Ct. App.1963) (quotation omitted). Thus, QC's liabilities to Cohill's were created at the time their contract was executed. The liabilities were subject to the express assumption of liabilities present in QC and Bomanite's transfer agreement. Bomanite, through QC, objects to jurisdiction and venue. These objections have no merit. See Moore's Federal Practice ¶ 25.33 (stating that "substitution or joinder does not affect jurisdiction or venue"). Accordingly, IT IS ORDERED Cohill's Motion to Join Bomanite Corporation (Doc. 147) is GRANTED. QC Construction Products remains a party and Bomanite Corporation shall be joined as a Counterdefendant. The trial of this matter remains set for October 17, 2006 at 2:00 p.m.

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DATED this 12th day of October, 2006.