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Suzhou Allpro Certified Public Accountants Co., Ltd. v. Sure Heat Manufacturing, Inc.

United States District Court, N.D. Georgia, Atlanta Division

April 1, 2019

SUZHOU ALLPRO CERTIFIED PUBLIC ACCOUNTANTS CO., LTD., as Bankruptcy Administrator of SURE HEAT MANUFACTURING SUZHOU CO. LTD., Plaintiff,
v.
SURE HEAT MANUFACTURING, INC., SHM INTERNATIONAL CORPORATION, MICHAEL R. MULBERRY, MICHAEL S. MULBERRY, and HARRY CLIFFORD VILLERS, Defendants.

          ORDER

          Richard W. Story, United States District Judge

         This case is before the Court at summary judgment. The Court considers Plaintiff's Motion for Partial Summary Judgment[1] [188, 189], Sure Heat Defendants' Motion for Summary Judgement [186], and Defendant Villers' Motion for Summary Judgment [184]. The Court further considers Sure Heat Defendants' additional Motions: for Reconsideration [187]; to Strike Memorandum of Law in Support of Plaintiff's Motion for Partial Summary Judgment [191]; to Strike Exhibit 66 to Plaintiff's Statement of Additional Material Facts [215]; to Strike Plaintiff's Response to Defendants' Motions for Summary Judgment [214]. As well as Defendant Villers' additional Motion to Strike Memorandum of Law in Support of Plaintiff's Motion for Partial Summary Judgment [192] and Request for Oral Argument on his Motion for Summary Judgment [185]. After a review of the record, the Court enters the following Order.

         Background [2]

         This case arises out of an import-export business arrangement between the parties. The parties have detailed the slew of complicated facts repeatedly in their various motions and statements of material facts. The Court does not need to do so again here. Instead, the Court will frame this Order with a brief overview of the case, using undisputed facts from the parties' statements of facts. Any specific facts necessary to the Court's findings will be addressed in the Analysis section of this Order.

         The pertinent issues before the court at summary judgment concern the boundaries of the corporate form's limited liability. Defendant Michael R. Mulberry (“Mulberry”) is the president and a director of all three corporations involved in this action, Sure Heat Manufacturing, Inc. (“Sure Heat US”), Sure Heat Manufacturing, (Suzhou) Co. Ltd. (“Sure Heat China”), and SHM International Corporation (“SHM”). (Pl.'s Statement of Material Facts (“Pl.'s SMF”), Dkt [189] ¶¶ 3, 10; Sure Heat Defs.' SMF, Dkt. [186-2] ¶ 9.) He is also the majority owner of all three companies as a 100% owner of SHM and 80% owner of Sure Heat US, which is the sole owner of Sure Heat China. (Pl.'s SMF, Dkt [189] ¶¶ 9, 17; Sure Heat Defs.' SMF, Dkt. [186-2] ¶ 8.) After forming Sure Heat U.S. in 1982, Mulberry incorporated Sure Heat China in 2004 as a wholly owned subsidiary to manufacture and sell gas-powered products, including barbecue grills, heaters, and hearth products to retailers. (Pl.'s SMF, Dkt. [189] ¶¶ 3, 8, 26.) Mulberry later incorporated SHM in 2010 to execute a similar role as Sure Heat US, although the exact business is unclear.[3] (Pl.'s Statement of Additional Material Facts (“Pl.'s SAMF”), Dkt [198-1] ¶157.)

         The other individual Defendants, Michael Scott Mulberry (“MSM”) and Harry Clifford Villers (“Villers”), similarly hold central roles in Sure Heat U.S. and Sure Heat China. MSM is the corporate secretary and vice president of operations of Sure Heat US. (Pl.'s SMF, Dkt. [189] ¶4.) Further, the Michael Scott Mulberry Trust owns 10% of the shares of Sure Heat US. (Id. ¶ 18.) He is also vice president of manufacturing, and oversaw management of Sure Heat China. (Id. ¶¶ 4, 12.) Villers is a director of Sure Heat China and was the general manager from 2004 to 2010. (Id. ¶¶ 13, 14.)

         A bankruptcy proceeding under the Law of the People's Republic of China on Enterprise Bankruptcy was commenced by its creditors against Sure Heat China on January 8, 2014. (Pl.'s SMF, Dkt. [189] ¶136.) Plaintiff Suzhou Allpro Certified Public Accountants Co., Ltd. (“Plaintiff” or the “Administrator”) was appointed as “Bankruptcy Administrator” to liquidate the bankruptcy estate. (Id. ¶137.) Plaintiff now seeks to collect on Sure Heat US's debt to Sure Heat China-$5, 215, 854 in current accounts payable and $15, 000, 000 in long-term debt, or a total of $20, 215, 854. (Id. ¶¶ 49, 50.)

         In its Third Amended Complaint [136], Plaintiff brings claims for Breach of Contract (Counts I and II); Unjust Enrichment (Count III); Money Had and Received (Count IV); Conversion (Count V); Alter Ego Liability (Counts VI and VII); Fraudulent Inducement (Count VIII); Negligent Misrepresentation (Count IX); Breach of Fiduciary Duty (Count X); and Civil Conspiracy (Count XI), against some or all of the Defendants. Defendants Sure Heat US, Mulberry, and MSM (collectively the “Sure Heat Defendants”) now move for summary judgment [186], Defendant Villers similarly moves for summary judgment [184], and Plaintiff moves for partial summary judgment [188]. The Court will consider each in turn, but will begin with the various motions filed by parties in connection with their motions for summary judgment.

         Analysis

         II. Preliminary Motions

         A. Sure Heat Defendants' Motion for Reconsideration [187]

         Defendants request that the Court reconsider its October 2, 2018 Order [175] addressing discovery disputes of the parties. Defendants argue that the Court did not follow the procedures outlined in the Standing Order Regarding Civil Litigation because the Court ruled on the dispute based upon the submissions of the parties and did not allow further briefing or a hearing or a telephone conversation. In fairness to Defendants, the Standing Order filed in this case would have led them to this conclusion. However, since this case has been pending, the Court entered a new Standing Order that appears on the Court's website, and the procedure in the new Standing Order was followed in this case.

         Out of fairness, the Court still considers Defendants' motion for reconsideration on the merits. Under the Local Rules of this Court, “[m]otions for reconsideration shall not be filed as a matter of routine practice[, ]” but rather, only when “absolutely necessary.” LR 7.2(E), N.D.Ga. Such absolute necessity arises where there is “(1) newly discovered evidence; (2) an intervening development or change in controlling law; or (3) a need to correct a clear error of law or fact.” Bryan v. Murphy, 246 F.Supp.2d 1256, 1258-59 (N.D.Ga. 2003). Defendants have not offered a proper reason for the Court to reconsider its prior decision. Defendants' Motion for Reconsideration is, therefore, DENIED.

         B. Sure Heat Defendants' Motion to Strike Memorandum of Law in Support of Plaintiff's Motion for Partial Summary Judgment [191]

         Defendants request that the Court strike Plaintiff's memorandum because it exceeds the page limit. Defendants reach this conclusion based on the Plaintiff having incorporated facts from its Statement of Undisputed Facts rather than including a full “Facts” section in its memorandum. Defendants argue that this violates the Court's Standing Order provision regarding Motions for Summary Judgment, section II(g)(I), which provides, “All citations to the record evidence should be contained in each party's brief, not just in the parties statement of undisputed (or disputed) facts.” Defendants interpret this as requiring a party to actually state all of the facts in the brief, as well as in the statement of undisputed facts. That is not the intent of this provision. This provision addresses citations. The intent of the provision is to require a party to provide a citation to the record for facts stated in the brief. It is not a requirement that every fact be restated in the brief. While the Court appreciates Defendants' concern that a party might game the system and gain pages using this approach, under the circumstances of this case, the Court does not find there to be an abuse. And certainly, it is not a violation of the Order. Accordingly, Defendants' motion is DENIED.

         C. Sure Heat Defendants' Motion to Strike Exhibit 66 to Plaintiff's Statement of Additional Material Facts [215]

         Plaintiff attached as an exhibit to its Statement of Additional Material Facts an email chain. Defendants moved to strike the exhibit as unauthenticated double hearsay. However, under Fed.R.Civ.P. 56(c)(2) a valid objection may be raised when the material “cannot be presented in a form that would be admissible in evidence.” In its response [222] to the motion, Plaintiff makes the case that it will be able to present the evidence in an admissible form at trial. Therefore, the motion is DENIED.

         D. Sure Heat Defendants' Motion to Strike Plaintiff's Response to Defendants' Motions for Summary Judgment [214]

         Defendants seek to strike Plaintiff's response to their motions for summary judgment because the response exceeds the applicable page limitation. Defendants point out that Plaintiff included 13 numbered paragraphs that were single-spaced. Local Rule 5.1C requires, with limited exceptions, that all documents be double-spaced. Defendants also complain about Plaintiff filing a six-page Statement of Additional Material Facts [198-1]. It appears that Plaintiff did not follow the rules by failing to double-space the numbered paragraphs. Rather than striking the response, the Court treats Plaintiffs response to this motion as a request for an extension of the page limitation and grants the request. As for the statement of additional facts, Local Rule 56.1(2)(b) authorizes a statement of additional facts. Therefore, the motion to strike the statement of additional facts is DENIED.

         E. Defendant Villers' Motion to Strike Memorandum of Law in Support of Plaintiff's Motion for Partial Summary Judgment [192]

         Defendant Villers adopts the motion of the Sure Heat Defendants to strike the memorandum of law [191]. For the same reasons that the motion of the Sure Heat Defendants is denied, Defendant Villers' motion is DENIED.

         F. Defendant Villers' Request for Oral Argument on his Motion for Summary Judgment [185]

         Defendant Villers has requested oral argument on his motion for summary judgment. A hearing on this issue is unnecessary. Therefore, this motion is DENIED.

         III. Motions for ...


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