Paradise Corp. v. Amerihost Dev., Inc.
| Docket Number: | 2001-CA-01847-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 06-19-2003 Opinion Author: Graves, J. Holding: Affirmed |
|
| Additional Case Information: |
Topic: Successor corporation - Continuation of predecessor Judge(s) Concurring: Pittman, C.J., McRae and Smith, P.JJ., Waller, Cobb, Diaz, Easley and Carlson, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - OTHER |
|
| Trial Court: |
Date of Trial Judgment: 11-02-2001 Appealed from: Warren County Circuit Court Judge: Frank G. Vollor Disposition: Denied the Appellant's motion to dismiss a writ of garnishment. Case Number: 950196-CI |
|
| Party Name: | Attorney Name: | |||
| Appellant: | Paradise Corporation |
PAUL E. ROGERS |
||
| Appellee: | Amerihost Development, Inc., an Illinois Corporation | RICHARD M. DYE PHIL B. ABERNETHY |
|
|
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
|
| Topic: | Successor corporation - Continuation of predecessor |
| Summary of the Facts: | Amerihost entered into a construction contract with Bromanco, Inc., a general contractor, as a prime contractor for a construction project. Bromanco defaulted on the general contract with Amerihost, and Amerihost completed the project itself. Litigation ensued between Amerihost and Bromanco along with numerous contractors and materialman, including Paradise Pools and Spas. Amerihost filed a complaint for the purpose of interpleading certain remaining contract balances held by Amerihost against Bromanco. The court ruled that Paradise Pools and Spas should recover $12,656.46 from Amerihost and later issued a writ of garnishment allowing Amerihost to recover the $12,656.46 back from Paradise Pools and Spas. Paradise filed a motion to dismiss writ of garnishment on the basis that it was not a party to the proceeding. The court denied the motion to dismiss, and Paradise appeals. |
| Summary of Opinion Analysis: | Paradise argues that it was never a party to the construction contract upon which the judgment was based, that the contract was dated September 29, 1994, and Paradise was incorporated in December 1995, and that it did not assume Paradise Pool and Spas’ liabilities when it acquired the assets of Paradise Pools and Spas in 1996. A corporation which acquires the assets, but not the stock of another corporation, is not obligated for the liabilities of the acquired corporation expect where the successor expressly or impliedly agrees to assume the liabilities of the predecessor; the transaction may be considered a de facto merger; the successor may be considered a "mere continuation" of the predecessor; or the transaction was fraudulent. No evidence exists that Paradise expressly or impliedly assumed the liabilities of its predecessor. The de facto merger exception does not apply. There is no evidence that the transaction made to acquire the assets of Paradise Pools and Spas was fraudulent. The traditional rule states that a corporation is not to be considered a continuation of a predecessor unless, after the transfer of assets, only one corporation remains, and there is an identity of stock, shareholders, and directors between the two corporations. Other factors to consider include retention of the same employees; retention of the same supervisory personnel; retention of the same production facilities in the same physical location; production of the same product; retention of the same name; continuity of assets; continuity of general business operations; and whether the successor holds itself out as the continuation of the previous enterprise. Paradise retained the same supervisory personnel. It is located in the same cities and in the same buildings as Paradise Pools and Spa. Paradise is still in the business of selling pool and spa equipment and services. Paradise still utilizes the name of Paradise Pools and Spas. A wealth of evidence exists to prove that Paradise is exploiting the goodwill of Paradise Pools and Spas for the attendant benefits and yet wants to avoid the liabilities. Given these factors, Paradise is a mere continuation of Paradise Pools and Spas and would be unjustly enriched if it is allowed to keep the $12,656.46. |
Home | Terms of Use | About the JDP | Feedback | Using JDP | MC Law Library | Mississippi Supreme Court
