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CSX Transportation, Inc. v. TRI County Recycling

United States District Court, D. Massachusetts

July 17, 2019



          Denise J. Casper United States District Judge.

         I. Introduction

         Plaintiff CSX Transportation, Inc. (“CSX”) has filed this lawsuit against Defendant Tri County Recycling (“Tri County”) seeking the collection of a judgment owed to CSX by ABC&D Recycling. D. 6. CSX alleges that Tri County is liable to CSX for ABC&D Recycling's debt because Tri County's operation of ABC&D's business constitutes a de facto merger with and/or a continuation of ABC&D Recycling. D. 6 at 5. Tri County has moved to dismiss, or in the alternative, for summary judgment. D. 8. For the reasons stated below, the Court DENIES the motion.

         II. Standard of Review

         A. Motion to Dismiss

         On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), the Court must determine if the facts alleged “plausibly narrate a claim for relief.” Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citation omitted). Reading the complaint “as a whole, ” the Court must conduct a two-step, context-specific inquiry. García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013). First, the Court must perform a close reading of the claim to distinguish the factual allegations from the conclusory legal allegations contained therein. Id. Factual allegations must be accepted as true, while conclusory legal conclusions are not entitled credit. Id. Second, the Court must determine whether the factual allegations present a “reasonable inference that the defendant is liable for the conduct alleged.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (citation omitted). In sum, the complaint must provide sufficient factual allegations for the Court to find the claim “plausible on its face.” García-Catalán, 734 F.3d at 103 (citation omitted).

         B. Summary Judgment

         The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A fact is material if it carries with it the potential to affect the outcome of the suit under the applicable law.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000) (quoting Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)). The movant “bears the burden of demonstrating the absence of a genuine issue of material fact.” Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets its burden, the non-moving party may not rest on the allegations or denials in her pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986), but “must, with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor, ” Borges ex rel. S.M.B.W. v. Serrano- Isern, 605 F.3d 1, 5 (1st Cir. 2010). “As a general rule, that requires the production of evidence that is ‘significant[ly] probative.'” Id. (alteration in original) (quoting Anderson, 477 U.S. at 249). The Court “view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor.” Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009).

         III. Factual Background

         The following facts are undisputed unless otherwise noted. ABC&D Recycling (“ABC&D”) operated a construction and debris disposal facility (the “Facility”) at 198 E. Street, Ware, Massachusetts (the “Property”). D. 6 ¶ 11. The Facility on the Property is bisected by rail tracks, which provide the Facility with access to rail services. D. 6 ¶ 12; D. 8 at 2. In 2011, CSX provided transportation services for ABC&D, transporting railcars from the Facility to landfills for disposal. D. 6 ¶ 14. On August 1, 2013, a court in this district entered judgment for CSX in a lawsuit against ABC&D for unpaid transportation services, late payment charges and finance charges in the amount of $427, 530.36 (the “Judgment”). D. 6 ¶ 17; CSX Transp., Inc. v. ABC&D Recycling, Inc., Civ. A. No. 3:11-cv-30268-FDS (D. Mass. Aug. 1, 2013).

         At the time of the Judgment, ABC&D Holdings owned one hundred percent of ABC&D. D. 6 ¶ 18. ABC&D Holdings is also the sole shareholder of ABC&D. D. 6 ¶ 38(b)(ii). George A. McLaughlin, III (“McLaughlin”) is the sole member, one hundred percent owner and managing member of ABC&D Holdings. D. 6 ¶ 5.

         On or about May 6, 2014, McLaughlin formed Tri County and transferred ABC&D's assets to Tri County, including equipment and vehicles. D. 6 ¶ 22; D. 8 at 2. Tri County also assumed ABC&D's debts. D. 6 ¶ 22; D. 8 at 2. In or about May of 2014, Tri County opened and resumed ABC&D's processing operations at the Facility on the Property. D. 6 ¶ 23; D. 8 at 2. CSX alleges that ABC&D Holdings continued ABC&D's operations at the Facility through at least February 2014 despite representing to CSX that it was not operational. D. 6 ¶ 21.

         McLaughlin holds all officer and director positions of ABC&D, ABC&D Holdings and Tri County, with the exception of one director position at ABC&D, which is held by Matthew E. Burke. D. 6 ¶¶ 26-28; D. 8 at 2. ABC&D, ABC&D Holdings and Tri County have the same principal corporate office and agents for service: McLaughlin, c/o McLaughlin Brothers, P.C., at an address in Boston. D. 6 ¶ 25.

         In July 2012, McLaughlin acquired a controlling interest in ABC&D. D. 12-1 at 4; see D. 8-1 ¶¶ 5, 6. McLaughlin attests that ABC&D ceased all operations in fall 2012. D. 8-1 ¶ 6. CSX disagrees, asserting that ABC&D continued operating until February 2014. D. 6 ¶ 21. McLaughlin had no ownership stake or management role in ABC&D when it incurred the debt to CSX reflected in the Judgment. D. 8-1 ¶ 5. McLaughlin, however, was owner, president and treasurer of ABC&D for at least six months during the pendency of the ...

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