Becnel v. Lamorak Insurance Company

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

JAMES BECNEL ET AL CIVIL ACTION

VERSUS NO. 19-14536

LAMORAK INSURANCE COMPANY ET AL SECTION “B”(5)

ORDER AND REASONS

Before the Court are defendant’s motion for partial summary

judgment on plaintiffs’ allegations of intentional tort and alter

ego liability (Rec. Doc. 361), plaintiffs’ memorandum in

opposition (Rec. doc. 540), and defendant’s reply in support (Rec.

Doc. 619). For the following reasons,

IT IS ORDERED that defendant’s motion for partial summary

judgment (Rec. Doc. 361) is GRANTED in part, dismissing plaintiffs’

intentional tort claim, and DENIED in part, retaining plaintiffs’

claim under the single business enterprise theory.

I. FACTS AND PROCEDURAL HISTORY

This suit arises from alleged exposure to asbestos and

asbestos-containing products on the premises of Avondale Shipyards

in 1965. See Rec. Doc. 1. The plaintiff, James Becnel, was employed

in various positions by or on the premises of Avondale Shipyards

in 1965. Rec. Doc. 1-2 (Plaintiff’s Petition). It was during this

time that Plaintiff claims he was exposed to both asbestos and

asbestos-containing products. Id. Not only does the plaintiff

claim to have been exposed to asbestos, but Mr. Becnel also asserts

that he carried asbestos home on his person, clothing, and other

items. Id. Because of this alleged constant exposure, Mr. Becnel

claims he contracted asbestos-related cancer and/or lung cancer,

although the disease did not manifest itself until 2019. Id.

On July 22, 2019, Plaintiff filed suit in the Civil District

Court for the Parish of Orleans against several defendants,

including, but not limited to, Huntington Ingalls Inc. and Lamorak

Insurance Co. (the “Avondale Interests”) and Hopeman Brothers,

Inc. (“Hopeman”). Id. In his Complaint, Plaintiff asserted several

negligence claims against the defendants. Rec. Doc. 1-2. Against

Defendant Avondale Interests, Plaintiff claimed that it failed to

exercise reasonable care for the safety of persons on or around

their property and failed to protect the plaintiff from

unreasonably dangerous conditions. Id. Likewise, Plaintiff

claimed that Hopeman was liable for manufacturer and vendor strict

liability, intentional tort, and alter ego liability. Id.

Plaintiff argued that because Hopeman was hired by his employer,

Avondale Shipyard, to perform joiner services on newly constructed

vessels at the yard, Hopeman is liable for exposing him to

asbestos. Id.

On August 14, 2019, Mr. Becnel filed a First Supplemental and

Amending Petition for Damages to add a defendant. See Rec. Doc. 1-

3. On November 13, 2019, Mr. Becnel died from his asbestos-related

lung cancer, complications therefrom, and/or complications from

treatment therefrom. See Rec. Doc. 1-4. At his death, Mr. Becnel

was survived by his wife, Jacqueline Becnel, and his children,

Sheila Becnel Eschete and James Becnel, Jr. Id.

On November 19, 2019, Mr. Becnel’s heirs (“Plaintiffs”) filed

a Second Supplemental and Amending Petition for Damages

substituting themselves as party plaintiffs. Id. In their

petition, Plaintiffs asserted both survival and wrongful death

claims, pleading that Mr. Becnel’s asbestos-related lung cancer

caused and/or contributed to his death. Id. Additionally, the

plaintiffs asserted new strict liability claims against all named

defendants. Id.

On April 26, 2022, defendant Hopeman filed the instant motion

for partial summary judgment. Defendant asserts that plaintiffs’

claims for intentional tort and alter ego liability must be

dismissed because she cannot provide evidentiary support for all

elements of her claims. Rec. Doc. 361. Subsequently, plaintiffs

filed a memorandum in opposition to defendant’s motion on May 17,

2022. Rec. Doc. 540. Defendant filed a reply in support of its

motion on May 26, 2022. Rec. Doc. 619.

II. LAW AND ANALYSIS

A. Summary Judgment Standard

Pursuant to Federal Rule of Civil Procedure 56, summary

judgment is appropriate when “the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment as

a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986) (quoting Fed. R. Civ. P. 56(c)). A genuine issue of material

fact exists if the evidence would allow a reasonable jury to return

a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). As such, the court should view all facts

and evidence in the light most favorable to the non-moving party.

United Fire & Cas. Co. v. Hixon Bros. Inc., 453 F.3d 283, 285 (5th

Cir. 2006).

When the movant bears the burden of proof, it must

“demonstrate the absence of a genuine issue of material fact” using

competent summary judgment evidence. Celotex, 477 U.S. at 323.

However, “where the non-movant bears the burden of proof at trial,

the movant may merely point to an absence of evidence.” Lindsey v.

Sears Roebuck & Co., 16 F.3d 616, 618 (5th Cir. 1994). Should the

movant meet its burden, the burden shifts to the non-movant, who

must show by “competent summary judgment evidence” that there is

a genuine issue of material fact. See Matsushita Elec. Indus. Co.,

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Lindsey, 16

F.3d at 618. However, “a party cannot defeat summary judgment with

conclusory allegations, unsubstantiated assertions, or only a

scintilla of evidence.” See Sec. & Exch. Comm’n v. Arcturus Corp.,

912 F.3d 786, 792 (5th Cir. 2019).

B. Whether Hopeman is Entitled to Summary Judgment on

Plaintiffs’ Intentional Tort Claim

Initially, plaintiffs claim that this Court should deny

Hopeman’s motion for summary judgment because such a motion is not

appropriate on the issue of intent. Rec. Doc. 540. In support,

plaintiffs cite several cases which state “summary judgment is

seldom appropriate for determinations based on subjective facts of

motive, intent, good faith, knowledge, or malice….” Id. According

to plaintiffs, Hopeman’s sole basis for summary judgment on the

intentional tort claim is that plaintiffs cannot provide

evidentiary support for the intent element. Id.

Although plaintiffs are correct that summary judgment is

disfavored when issues of intent or state of mind are involved,

plaintiffs fail to consider that this is a general rule. The rule

does not preclude this Court from evaluating the merits of such a

motion or granting summary judgment where elusive concepts such as

motive or intent are at issue. See Dempster v. Lamorak Ins. Co.,

No. CV 20-95, 2020 WL 1984327, *9 (E.D. La. Apr. 27, 2020) (citing

International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257,

1266 (5th Cir. 1991) (“This is not to say that the court can never

enter summary judgment when intent or state of mind is at issue,

only that the court must recognize that undermining the moving

party's professed state of mind is not a simple task.”))But, the

Fifth Circuit has cautioned that “the court must be vigilant to

draw every reasonable inference from the evidence in the record in

a light most flattering to the nonmoving party.” Dempster, 2020 WL

1984327 at *9. Summary judgment may still be appropriate if the

non-moving party merely rests on conclusory allegations or

unsupported speculation. Id.

To prove an intentional tort, plaintiff must show that Hopeman

either consciously desired that plaintiff contract primary lung

cancer or knew that the result was substantially certain to follow

from its conduct. Zimko v. Am. Cyanamid, 905 So. 2d 465, 475 (La.

App. 4 Cir. 2005), cert. denied, 925 So. 2d 538 (2006).

“Substantial certainty requires more than a reasonable probability

that an injury will occur,” and plaintiff must prove that his

contracting lung cancer was “inevitable or incapable of failing.”

Cortez v. Lamorak Ins. Co., No. CV 20-2389, 2022 WL 1001445, *11

(E.D. La. Apr. 4, 2022); Reeves v. Structural Pres. Sys., 731 So.

2d 208, 213 (La. 1999). The “belie[f] that someone may, or even

probably will, eventually get hurt if a workplace practice is

continued does not rise to the level of intentional tort, but

instead falls within the range of negligent acts ...” Reeves, 731

So. 2d at 214; Dempster, 2020 WL 1984327 at *10 (quoting Reeves,

731 So. 2d at 214). To prove a claim for intentional tort,

Plaintiffs would have to show that Hopeman's “conduct [went] beyond

knowingly permitting a hazardous work condition to exist, ordering

an employee to perform an extremely dangerous job, or willfully

failing to furnish a safe place to work ...” Zimko, 905 So. 2d at

477.

In its motion for summary judgment, Hopeman contends that

plaintiffs’ intentional tort claim must be dismissed because they

cannot provide evidentiary support that it consciously desired to

afflict Mr. Becnel with primary lung cancer or knew that his cancer

was substantially certain to follow from its actions. Rec. Doc.

361. Plaintiffs do not agree. Rather, plaintiffs argue that they

can present material facts that Hopeman can be found liable at

trial for an intentional tort. Rec. Doc. 540. Plaintiffs did not

address the first prong of the intentional tort analysis, i.e.,

that Hopeman consciously desired Mr. Becnel contract primary lung

cancer. Instead, they argue that Hopeman knew of the hazards of

asbestos and Mr. Becnel’s disease was substantially certain to

occur.

Both parties have cited several recent cases from this Court

in support of their claims including, Vedros v. Northrop Grumman

Shipbuilding, Inc., No. CIV.A. 11-1198, 2014 WL 906164 (E.D. La.

Mar. 7, 2014), Dempster v. Lamorak Ins. Co., No. CV 20-95, 2020 WL

1984327 (E.D. La. Apr. 27, 2020), and Cortez v. Lamorak Ins. Co.,

No. CV 20-2389, 2022 WL 1001445 (E.D. La. Apr. 4, 2022). Defendant

cites to both Vedros and Cortez in support of its argument that

this Court grant summary judgment given plaintiffs cannot present

any evidence that it knew about the hazards of asbestos prior to

1965 or that it intended for Mr. Becnel to develop an asbestos-

related disease. By contrast, plaintiffs rely on Dempster to

support their contention that the court should deny summary

judgment because the key determination is Hopeman’s intent, and

such a question should be presented to the jury. See Dempster,

2020 WL 1984327 at *10 (stating that “the Court cannot determine

at the summary judgment stage whether Avondale was substantially

certain that Decedent would contract lung cancer based on its

conduct.”)

In Vedros, Judge Carl Barbier dismissed a similar intentional

tort claim on defendant Avondale’s motion for summary judgment.

2014 WL 906164 at *3. Plaintiffs in that case attempted to establish

that Vedros's mesothelioma was caused by exposure to asbestos as

a result of a dangerous working environment at Avondale, and to

show that Avondale committed an intentional tort. Id. However, in

response to Avondale’s motion, plaintiffs only submitted evidence

that defendant was aware of the asbestos risk at Avondale and that

Defendants failed to remedy the unsafe working conditions despite

their knowledge of the risks. Id. This court found that “[e]ven

considering the facts in the light most favorable to Plaintiffs

and assuming that Defendants were aware that there was a major

risk, or even a probability, that [decedent] would contract

mesothelioma,” plaintiffs had not submitted evidence permitting a

reasonable jury to conclude that the decedent’s illness was

“inevitable or incapable of failing” Id. Thus, the Court granted

summary judgment in favor of Avondale. Id.

Likewise, in Cortez, this Court granted Avondale’s motion for

summary judgment in part, dismissing the plaintiff’s intentional

tort claims. 2022 WL 1001445 at *12. The plaintiff in that case

also attempted to allege Avondale was liable for an intentional

tort because the plaintiff’s mesothelioma was substantially

certain to occur from Avondale’s conduct. Id. On review, the court

found the plaintiff’s evidence lacking. Id. Like Vedros, the

plaintiff in this case only generally asserted that the defendant

“knew that asbestos was a health hazard,” that it “caused fatal

lung disease,” and that it “had problems with it.” Id. The

plaintiff also pointed to Avondale’s attempts to clean up the yard

before inspections. Id. However, the Court found that such evidence

was not enough to suggest Avondale intended to harm him, or that

his mesothelioma was “inevitable or incapable of failing.” Cortez,

2022 WL 1001445 at *12. Instead, the evidence only showed that the

defendant knew of the dangers of asbestos and did nothing to

rectify the working conditions. Id.

Here, like the plaintiff Cortez, the evidence plaintiffs

present in this case fall far short of what is necessary to raise

a material issue for an intentional-tort claim. Plaintiffs rely on

Mr. Becnel’s deposition testimony stating that Hopeman exposed him

to asbestos when its workers would cut and fit boards aboard the

Lykes vessels on Avondale’s yard. Rec. Doc. 540. Plaintiffs also

point to the deposition testimony of Bertram Hopeman and a memo of

his dated November 11, 1965. Id. Both Mr. Hopeman’s testimony and

memo show that he knew in 1965 that the asbestos dust generated

from the sawing of his company’s boards was dangerous and steps

needed to be taken to protect workers. Id. Additionally, plaintiffs

point to various exhibits suggesting that defendant took steps to

conceal the hazards of asbestos from its workers by removing

asbestos warning labels from its products. Id. But a defendant's

“mere knowledge and appreciation of a risk does not constitute

intent, nor does reckless or wanton conduct by an employer

constitute intentional wrongdoing. Cortez, 2022 WL 1001445 at *12.

Moreover, such evidence is not enough for this court to deny

summary judgment. Cortez, 2022 WL 1001445 at *11. (“it is not

sufficient for plaintiff to show that [defendant] had knowledge

that its practices were dangerous and created a high probability

that someone would eventually be injured.”) Plaintiffs have not

submitted any evidence suggesting that Hopeman consciously

intended to harm Mr. Becnel, or that his primary lung cancer was

“inevitable or incapable of failing.” Thus, even considering the

facts in the light most favorable to plaintiffs and assuming that

Hopeman was aware that the asbestos dust generated from the sawing

of its boards was dangerous and it should have used precautionary

measures, plaintiffs have failed to bring sufficient evidence

whereby a reasonable jury could conclude that Mr. Becnel’s

contracting of primary lung cancer was “inevitable or incapable of

failing” and was thus substantially certain to result from

defendants' conduct. For these reasons, the court finds plaintiffs

intentional tort claim should be dismissed.

C. Whether Hopeman is Entitled to Summary Judgment on

Plaintiffs’ Alter Ego claim

Upon reviewing the parties’ briefs and the relevant caselaw,

the Court has determined that the parties have articulated and

analyzed two utterly different theories of liability. In its motion

for summary judgment, Hopeman addressed plaintiffs’ alter ego

claim by applying a five-factor test utilized to determine the

alter ego liability of shareholders. By contrast, plaintiffs

analyzed their alter ego claim under another veil piercing theory,

single business enterprise. While both theories are employed to

pierce the corporate veil, one is distinctly used to hold

shareholders liable, while the other is used to find affiliate

corporations liable. See Aker Sols., Inc. v. Shamrock Energy Sols.,

LLC, No. CV 16-2560, 2016 WL 4529828 (E.D. La. Aug. 30, 2016)

(analyzing both theories separately and applying two distinct sets

of factors). Considering these differing standards, the Court will

separately analyze both theories.

1. Alter Ego Liability

As a general rule, corporations are distinct legal entities

separate from the individuals who comprise them, and shareholders

are not liable for corporate debts. Riggins v. Dixie Shoring Co.,

590 So. 2d 1164, 1167 (La. 1991). In limited circumstances,

however, a court may ignore the corporate fiction and hold

individual shareholders liable where the corporation is found to

simply be the alter ego of the shareholder. Id. To prove alter ego

liability, a plaintiff must “prov[e] that the shareholders

disregarded the corporate entity to such an extent that it ceased

to become distinguishable from themselves.” Id.; see also In re

Areno, 615 B.R. 449, 455 (Bankr. W.D. La. 2020); Aker Sols., Inc.

v. Shamrock Energy Sols., LLC, No. CV 16-2560, 2016 WL 4529828

(E.D. La. Aug. 30, 2016).

Courts within this jurisdiction have delineated several

factors relevant to this alter ego analysis, including: (1)

commingling of corporate and shareholder funds; (2) failure to

follow statutory formalities for incorporating and transacting

corporate affairs; (3) undercapitalization; (4) failure to provide

separate bank accounts and bookkeeping records; and (5) failure to

hold regular shareholder and director meetings. ORX Res., Inc. v.

MBW Expl., L.L.C., 2009-0662 (La. App. 4 Cir. 2/10/10), 32 So. 3d

931, 936, writ denied, 2010-0530 (La. 5/7/10), 34 So. 3d 862;

Walker v. Dupart, No. 20-3425, 2022 WL 500482, *7 (E.D. La. Feb.

18, 2022).

In this case, Hopeman contends that when applying the five-

factor test, supra, plaintiffs cannot provide evidentiary support

for any factor. In response, plaintiffs did not apply their

evidentiary support to the factors articulated by Hopeman;

instead, they analyzed the factors determinative to a single

business enterprise theory of liability, discussed infra. The

Court finds that plaintiffs are correct in their application of

those factors, and the alter ego factors argued by defendant are

not appropriate in this case.

At all times relevant to this litigation, plaintiffs have

alleged that Hopeman is an alter ego of Wayne. In essence, they

are seeking to hold one corporation (Hopeman) liable for the

actions of another affiliated corporation (Wayne). This is

precisely what the single business enterprise theory is designed

to accomplish. See Aker Sols., Inc. v. Shamrock Energy Sols., LLC,

No. CV 16-2560, 2016 WL 4529828 (E.D. La. Aug. 30, 2016) (“If,

however, a group of affiliated corporations constitutes a single

business enterprise, “a court may disregard the concept of

corporate separateness and extend liability to each of the

affiliated corporations for the purpose of preventing fraud or

achieving equity.”)

While the single business enterprise theory seeks to hold an

affiliated corporation liable, the alter ego doctrine defendant

cites is applied to hold officers, directors, or shareholders of

a corporation liable. See Andretti Sports Mktg. Louisiana, LLC v.

Nola Motorsports Host Comm., Inc., 147 F. Supp. 3d 537, 563 (E.D.

La. 2015). Because plaintiffs are seeking to do the former, the

single business enterprise theory is applicable to this matter.

2. Single Business Enterprise

When a group of affiliated corporations constitutes a single

business enterprise, a court may “disregard the concept of

corporate separateness and extend liability to each of the

affiliated corporations” for the purpose of preventing fraud or

achieving equity. Lee v. Clinical Research Ctr., 04–0428 (La.App.

4th Cir.11/17/04), 889 So.2d 317, 323; In re Ark-La-Tex Timber Co.,

Inc., 482 F.3d 319, 335 (5th Cir. 2007). This theory of veil

piercing is called the “single business entity,” and it occurs

when a corporation is found to be the “alter ego, agent, tool or

instrumentality of another corporation.” Dishon v. Ponthie, 918 So.

2d 1132, 1135 (La. App. 3 Cir. 2005), writ denied, 927 So. 2d 317

(La. 2006) (quoting Green v. Champion Insurance Co., 577 So.2d 249

(La. App. 1 Cir.), writ denied, 580 So. 2d 668 (La. 1991)).

In Green v. Champion Insurance Co., Louisiana's First Circuit

Court of Appeal listed eighteen factors that courts could consider

when determining whether a single business enterprise had been

formed. 577 So. 2d 249, 257–58 (La. Ct. App.), writ denied, 580

So. 2d 668 (La. 1991); see also Walker v. Dupart, No. 20-3425,

2022 WL 500482 (E.D. La. Feb. 18, 2022) (“Louisiana courts consider

a non-exhaustive list of eighteen factors, none of which is

dispositive, to determine whether a single business entity

exists.”)

These Green factors include:

1. corporations with identity or substantial identity of

ownership, that is, ownership of sufficient stock to

give actual working control;

2. common directors or officers;

3. unified administrative control of corporations whose

business functions are similar or supplementary;

4. directors and officers of one corporation act

independently in the interest of that corporation;

5. corporation financing another corporation;

6. inadequate capitalization (“thin incorporation”);

7. corporation causing the incorporation of another

affiliated corporation;

8. corporation paying the salaries and other expenses or

losses of another corporation;

9. receiving no business other than that given to it by its

affiliated corporations;

10. corporation using the property of another corporation as

its own;

11. noncompliance with corporate formalities;

12. common employees;

13. services rendered by the employees of one corporation on

behalf of another corporation;

14. common offices;

15. centralized accounting;

16. undocumented transfers of funds between corporations;

17. unclear allocation of profits and losses between

corporations; and

18. excessive fragmentation of a single enterprise into

separate corporations.

Green v. Champion Ins. Co., 577 So. 2d 249, 257–58 (La. App. 1

Cir. 1991), writ denied, 580 So. 2d 668 (La. 1991); see also Lee

v. Clinical Research Center of Fla., 889 So. 2d 317, 322 (La App.

4 Cir. 2004).

This list is neither illustrative nor exhaustive. Green, 577

So. 2d at 258. Furthermore, this Court need not find evidence of

all factors in order to find single business enterprises exist.

See E.g., Bona Fide Demolition & Recovery, LLC v. Crosby Const.

Co. of Louisiana, 690 F. Supp. 2d 435, 448 (E.D. La. 2010) (“In

sum, many of the Green factors are present in this case and on the

whole, the evidence demonstrates that [the two companies] are not

operated as distinct entities despite their separate

incorporation.”); Cargill, Inc. v. Clark, No. 14-00233-BAJ-SCR,

2015 WL 4715010, at *12 (M.D. La. Aug. 7, 2015).

Here, the Court finds there are genuine issues of material

fact as to whether Hopeman is an alter ego of Wayne. Plaintiffs

have submitted several exhibits, including the deposition

testimonies of Mr. John Baker and Mr. Bertram Hopeman. These

exhibits provide evidentiary support for several of the Green

factors, supra. For example, plaintiffs point to the deposition of

John Baker wherein he testifies that Wayne was a wholly owned

subsidiary of Hopeman during the relevant period, both

corporations shared common officers, both companies shared the

same address for a time, and Hopeman supplied Wayne’s business.

Rec. Doc. 540-17 (Deposition of John Baker at pp. 78-80, 84); Rec.

Doc. 540-18 (Deposition of John Baker at pp. 16-22). Because no

one Green factor is dispositive, and this Court cannot weigh

evidence on this motion, we cannot determine at the summary

judgment stage whether as a matter of law Hopeman is an alter ego

of Wayne. See Bona Fide Demolition & Recovery, LLC v. Crosby Const.

Co. of Louisiana, 690 F. Supp. 2d 435 (E.D. La. 2010) (stating no

one Green factor is dispositive); Williams v. City of Port Arthur,

No. 120CV00527MJTZJH, 2022 WL 1183293 (E.D. Tex. Feb. 25, 2022),

report and recommendation adopted, No. 1:20-CV-00527, 2022 WL

866407 (E.D. Tex. Mar. 23, 2022) (“[T]he court ... may not make

credibility determinations or weigh the evidence.”) Thus, it is

for a reasonable jury to decide.

New Orleans, Louisiana this 8th day of June, 2022

___________________________________

SENIOR UNITED STATES DISTRICT JUDGE