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Diversified Technical Services, Inc. v. Indiana Department of Workforce Development

Court of Appeals of Indiana

October 12, 2017

Diversified Technical Services, Inc., Appellant,
v.
Indiana Department of Workforce Development, Appellee.

         Appeal from the Indiana Department of Workforce Development The Honorable Aija Funderburk, Liability Administrative Law Judge Cause No. 103781

          Attorneys for Appellant Mary Lee Schiff Wm. Michael Schiff Ziemer, Stayman, Weitzel & Shoulders, LLP Evansville, Indiana

          Attorneys for Appellee Curtis T. Hill, Jr. Attorney General of Indiana James D. Boyer Deputy Attorney General Indianapolis, Indiana

          Bailey, Judge.

         Case Summary

         [¶1]Diversified Technical Services, Inc. ("DTS") appeals the decision of a Liability Administrative Law Judge ("ALJ") concluding that DTS was a successor employer that had assumed unemployment tax liabilities, upon acquiring substantially all the assets of Diverse Technical Services ("Diverse"), an entity owned by Pokey, Inc. DTS raises a single issue, whether the ALJ erred as a matter of law in concluding that DTS is a successor employer of Diverse or Pokey, Inc., [1] under Indiana Code Section 22-4-10-6(a). We reverse.

         Facts and Procedural History

         [¶2]Pokey, Inc., an entity owned by Richard and Pamela Martin, registered with the Indiana Department of Workforce Development ("the Department") and was assigned an Unemployment Insurance Benefit Fund ("Fund") account number of 718021. Pokey, Inc. owned Diverse, a staffing agency that placed retired ALCOA employees in temporary post-retirement positions with ALCOA in Indiana. In November of 2014, Diverse shut down its operations. The Diverse labor force of approximately forty-five persons was, in large part, transferred to Manpower.

         [¶3]Daniel Harpenau ("Harpenau") worked in the construction industry as an electrician, project manager, and general manager. He incorporated DTS in July of 2015. Having spent significant amounts of time at the ALCOA plant in Newburgh, Indiana, he was aware of the closing of Diverse. He approached the Martins with an offer to pay for the name, goodwill, and accounts receivable of Diverse as an "opening in the door" at ALCOA. (Tr. Vol. II, pg. 83). At that time, Diverse had two dormant staffing accounts, one with ALCOA and one with Toyota Motor Manufacturing Indiana, Inc. Harpenau initially was advised that there was a "zero balance" due as receivables, but it was subsequently discovered that a sum was due on one account. (Tr. at 82.)

         [¶4]On September 9, 2015, DTS and Diverse executed an Asset Purchase and Sale Agreement ("the Agreement") whereby DTS purchased from Diverse, for the sum of $15, 000.00:

A. Name "Diverse Technical Services";
B. Accounts receivable due from Alcoa Warrick accruing after June 26, 2015;
C.Any accounts receivable due from Toyota Motor Manufacturing Indiana, Inc. to the extent work is performed after the Closing Date;
D. All goodwill associated with the Business.

         (Exhibits, pg. 12.) Apart from the Agreement, DTS acquired W-2s and W-3s pertaining to former employees of Diverse. The Agreement stated that DTS was not acquiring any liability of Diverse.

         [¶5]DTS, which had three employees including its owner/incorporator, offered safety training and consulting services, project management services, project funding management, electrical design services and electrical safety services to ALCOA and Toyota.

         [¶6]In October of 2015, an accountant employed by DTS, Karen Moseley ("Moseley"), contacted the Department regarding completion of State Form 2837, SUTA Account Number Application & Disclosure Statement. The "call came in" to Department staff to pose an inquiry summarized as "if you buy the name of a company, does that count as an acquisition?" (Tr. Vol. II, pg. 38.) After consultation, Moseley answered Question 5(a) on the SUTA form to reflect that DTS had acquired 100% of a "disposer" Indiana corporation, specified as "Pokey, Inc." having SUTA ...


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