Murphy & King, Professional Corporation v. BlackJet, Inc.
Filing
128
MEMORANDUM OPINION AND ORDER. Signed by Judge Daniel T. K. Hurley on 5/26/2016. (tda)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 13-80280-CIV-HURLEY
MURPHY & KING, PROFESSIONAL
CORPORATION, a Massachusetts
Professional Corporation,
Plaintiff,
v.
BLACKJET, INC., a Delaware Corporation,
successor by merger to GREEN JETS, INC.,
a Florida Corporation,
Defendant.
_____________________________________/
BLACKJET TECHNOLOGY, INC.,
Third-Party Impleader Defendant.
_____________________________________/
MEMORANDUM OPINION
THIS CAUSE involves postjudgment proceedings supplementary initiated by plaintiff,
Murphy & King, a Professional Association (“Murphy & King”) against the third-party
impleader defendant, BlackJet Technology Inc. (“BlackJet Technology”) in effort to collect on a
final judgment previously entered against the defendant and original judgment debtor, BlackJet,
Inc. (“BlackJet”).
I.
Procedural History
On January 27, 2014, this Court entered a Final Judgment in the amount of $376,981.51
("Judgment") against BlackJet, Inc. (“BlackJet”) [DE 37]. This liability arose out of an unpaid
bill for legal services rendered by the Plaintiff law firm, Murphy & King, to the BlackJet’s
corporate predecessor, Green Jets, Inc., in certain intellectual property litigation originally filed
in the Eastern District of Virginia and later transferred to the Southern District of Florida. Patent
Licensing and Investment Co., LLC v. Green Jets, Inc., Case No. 11-80689-CIV-MARRA (S.D.
Fla.). On May 9, 2012, that lawsuit was dismissed without prejudice for lack of subject matter
jurisdiction on the basis of a covenant not to sue [Case No. 11-60689-CIV-MARRA; DE 103].
In the instant lawsuit, BlackJet (as successor by merger to Green Jets) initially contested
its liability for the Murphy & King legal bill on the ground that the parties had earlier reached
“general agreement” that Green Jets would pay a “greatly reduced” fee for Murphy & King’s
legal services, and only then when it had cash flow from operations, as opposed to investor
funding, a contingency which BlackJet claimed never occurred [DE 25]. BlackJet did not file
any response in opposition to Plaintiff’s motion for summary judgment in this suit, however, and
in January, 2014, the Court ultimately entered final summary judgment on the merits in favor of
Murphy & King for the full amount claimed [DE 35].
On April 9, 2015, a Writ of Execution was issued in favor of Murphy & King in an effort
to collect on the Judgment [DE 53]. The Writ of Execution remains unsatisfied and is valid and
outstanding.
On May 26, 2015, Murphy & King was granted leave to initiate proceedings
supplementary in aid of execution and to implead a third party, BlackJet Technology, Inc.
(“BlackJet Technology”), in an effort to collect on its judgment [DE 57]. Accordingly, on
October 26, 2015, Murphy & King filed its Impleader Complaint against BlackJet Technology,
asserting its liability on the underlying Judgment as the “mere continuation” of BlackJet, the
original judgment debtor, or alternatively, as the successor by de facto merger to BlackJet [DE
68].
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BlackJet Technology moved to dismiss the Impleader Complaint for lack of subject
matter jurisdiction, contending that Florida law governing proceedings supplementary does not
permit a request for relief against a third party based on anything other than fraudulent transfer,
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a theory not advanced in this case [DE 90]. The Court denied the motion, observing that the
Florida statute governing proceedings supplementary permits, but does not require, a judgment
creditor to allege fraudulent transfer in order to implead a third party defendant. See Sanchez v.
Renda Broadcasting Corp., 127 So.3d 627 (Fla. 5th DCA 2013) (lessor’s allegations that lessee
entered into a lease when it had no assets to pay rent, and that its sole shareholder used an
undercapitalized shell company for his personal benefit were a proper basis for use of
proceedings supplementary impleading lessee’s sole shareholder, even without allegations of
fraudulent transfer, since allegations related to improper conduct by lessee and shareholder);
Ocala Breeders’ Sales Co. v. Hialeah, Inc., 735 So.2d 542, 543-44 (Fla. 3d DCA 1999)
(reversing order denying judgment creditor’s request to use proceedings supplementary to
implead parent corporation and pierce corporate veil, where judgment debtor was subsidiary
corporation that had no assets or bank account and had never been capitalized, finding that
judgment debtor was “mere instrumentality” of parent corporation and that it fraudulently misled
judgment creditor by entering into lease even though it had no ability to fulfill its obligations
under that contract). Compare Rashdan v. Sheikh, 706 So.2d 357 (Fla. 4th DCA 1998) (reversing
judgment entered against impleaded defendant due to “absence of any allegations or evidence of
fraud, fraudulent transfer or other improper conduct on the part of either [the impleaded
defendant] or his professional association [the judgment debtor”] (emphasis added)).
1
Section 56.29(5), Fla. Stat. (2015) provides in relevant part:
The court may entertain claims concerning the judgment debtor’s assets brought under chapter 726 [fraudulent
transfer statute] and enter any order or judgment including a money judgment against any initial or subsequent
transferee, in connection therewith, irrespective of whether the transferee has retained the property.
3
At the outset of trial, BlackJet Technology renewed its objections to the Court’s subject
matter jurisdiction under Section 56.29, Fla. Stat., and the Court again rejected the objections. In
this case, just as in Sanchez and Ocala Breeders, Murphy & King alleged improper conduct by
the judgment debtor (BlackJet) and a third party.
It alleged that BlackJet orchestrated a
premature default on a loan from a senior lender, Haysjet Holdings LLC – a holding company
owned and controlled by an individual who also served as a director of BlackJet – in order to
accomplish a transfer
of BlackJet’s assets to a reconstituted version of itself, “BlackJet
Technology.” The aim was to maintain BlackJet’s private airline charter booking business as a
going concern with the potential for future profits, while shedding its debt obligations to
unsecured creditors, such as Murphy & King.
The Court found these allegations sufficient to
suggest “other improper conduct,” thereby justifying the use of proceedings supplementary to
implead a third-party defendant under §56.29, Fla. Stat. (2015).
Having considered the testimony presented at trial, the exhibits entered into evidence,
deposition transcripts submitted by the parties, and the argument of the parties, and pursuant to
Rule 52(a) of the Federal Rules of Civil Procedure, the Court now makes the following findings
of fact and conclusions of law.
II. FINDINGS OF FACT
1.
On April 27, 2009, Haysjet Holdings, LLC ("Haysjet"), made a loan to BlackJet's
predecessor, Green Jets Inc. ("Green Jets") in the amount of $500,000.00 (the "Loan"). The
Loan was evidenced by a Loan and Security Agreement, as well as a UCC filing statement
recorded on April 29, 2009.
2.
Haysjet is owned, controlled and operated by Stephen Hays ("Hays"), who is the
sole managing member of Haysjet.
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3.
At all material times, Hays was also a director of Green Jets and BlackJet, and is
currently a director of BlackJet Technology.
4.
Pursuant to the April 29, 2009 Loan and Security Agreement, Haysjet held a
security interest in all of Green Jets' assets as collateral for the Loan (the "Assets").
5.
On January 20, 2010, Haysjet and Green Jets entered into a Loan Modification
Agreement ("First Modification"), under which (i) the loan amount was increased to
$600,000.00, and (ii) Haysjet was given a 5% ownership interest in Green Jets in exchange for
the increased credit.
6.
On February 29, 2012, Haysjet and Green Jets entered into a second Loan
Modification Agreement ("Second Modification").
The Second Modification extended the
maturity date of the loan from December 31, 2010 to March 31, 2014. This document contains
Haysjet’s affirmation that “he (sic) will not place Borrower in default under any provision of the
Loan for any reason prior to March 31, 2014,” while further providing that the Second
Modification “shall be null and void” in the event “new equity in the amount of not less than $1
million is not invested in Borrower by May 31, 2012” [Impleader Defendant’s Exhibit No. 5].
7.
Green Jets merged into BlackJet, Inc. in March 2013.
8.
On March 19, 2013, Murphy & King filed the instant action against BlackJet,
seeking compensation for legal services provided to its corporate predecessor, Green Jets, in
connection with certain intellectual property litigation initiated in the Eastern District of Virginia
and later transferred to the Southern District of Florida.
9.
On August 7, 2013, Dean Rotchin, the President of BlackJet, sent an email to
Hays stating “It appears as if there’s no way to default until March 31, 2014.” This email was
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copied to Joe Grimes, BlackJet’s Chief Financial Officer, and included a message directed to
him: “Joe – are we sure we received the full $1M by May 31? If not, I think there’s a door open.”
10.
On September 13, 2013, Rotchin sent another email to Hays asking for issuance
of a default notice, “Can we have the default letter with next Thursday as the final date to have
$500k? ASAP.” Hays initially hesitated, stating, “Probably best I pass on this call unless you
think good idea ... Bit of conflict.”
11.
However, on September 16, 2013, Hays, acting as managing member of Haysjet,
sent a formal notice of default to BlackJet due to the stated “inability [of Borrower] to pay its
debts as they became due and Borrower’s potential insolvency,” which Hays described as
“Events of Default” under the Loan Agreement. The notice provided BlackJet with four days to
cure by raising a minimum of $500,000 in new equity capital.
12.
In deposition testimony introduced at trial, Hays testified that he had no
knowledge of any specific debts BlackJet could not pay at the time he sent the default letter, and
that the reference to BlackJet’s financial issues in this notice was derived from his discussions
with BlackJet board members, Rotchin and Grimes.
Hays also testified that he had no
knowledge of BlackJet's alleged failure to meet its capital contribution requirements, and did not
default BlackJet on that basis.
13.
On November 4, 2013, Haysjet filed a second UCC Financing Statement,
updating its lien to identify BlackJet as the debtor.
14.
On January 27, 2014, this Court entered Final Summary Judgment in favor of
Murphy & King and against BlackJet in the full amount of its claim.
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15.
On March 4, 2014, Haysjet conducted a public sale of BlackJet assets [“Assets”]
at the offices of Haysjet’s attorney, Richard Barron, in Fort Lauderdale. Haysjet acquired the
Assets at the sale after a single credit bid of $5,000.00.
16.
After the sale, Haysjet allowed the Assets to remain in possession and control of
BlackJet, which continued to use all of the BlackJet Assets, including BlackJet's intellectual
property, website and mobile application.
17.
BlackJet Technology was formed on March 31, 2014.
18.
On April 1, 2014, BlackJet Technology and Haysjet entered into a Formation and
Funding Agreement ("Funding Agreement”). The Funding Agreement provided that BlackJet
Technology was formed to "implement a business plan based on the BlackJet business model."
The Funding Agreement permitted BlackJet Technology to continue to use Blackjet’s website
(www.BlackJet.com); to "leverag[e] the BlackJet assets and the talent of the principals of
BlackJet," along with the intellectual property of BlackJet to run BlackJet Technology, and to
use the Assets pursuant to a License Agreement.
19.
On April 1, 2014, Haysjet and BlackJet Technology also executed a License
Agreement, pursuant to which BlackJet Technology obtained a royalty-free license to use the
BlackJet Assets for one year, with the option to take free and clear title to the Assets if certain
conditions were met. Under the License Agreement, "Assets" were defined to include "all the
assets of BlackJet" acquired by Haysjet, including "certain physical assets, software, trademark,
internet domains, as well as two patent applications filed with the USPTO, accounts and other
assets," i.e. the BlackJet Assets. In exchange for the license, Haysjet acquired a one-third
ownership interest in BlackJet Technology.
20.
BlackJet ceased operations on April 21, 2014.
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21.
Since April 1, 2014, BlackJet Technology has possessed, controlled and used
BlackJet’s Assets for the purpose of continuing the BlackJet business.
22.
BlackJet Technology initially operated in the same physical space as that
previously occupied by BlackJet. It later moved to a different office suite in the same building.
BlackJet Technology performs under the same lease as that previously assumed by BlackJet.
BlackJet Technology operates through the BlackJet website, www.BlackJet.com, and BlackJet
mobile application, and uses BlackJet’s customer lists.
It also uses the same mailing address
and business addresses. The books and records of BlackJet are physically located at BlackJet
Technology's principal place of business.
23.
BlackJet Technology conducts the same business operation as BlackJet and
essentially follows the same business model. BlackJet generated revenue from aircraft charters,
and BlackJet Technology generates revenue from aircraft charters. BlackJet generated revenue
from reserving private charter airline seats (through an online booking system) for its clients, and
BlackJet Technology generates revenue from reserving private charter airline seats (through the
same seat reservation system).
24.
Although there is not a complete overlap of shareholders, BlackJet and BlackJet
Technology have a common identity of primary shareholders, officers and directors. Dean
Rotchin, Joseph Grimes, and Stephen Hays were all officers and directors of Green Jets and
BlackJet, and are now officers and directors of BlackJet Technology.
III. CONCLUSIONS OF LAW
A.
Corporate Successor Liability Doctrine
Florida law generally does not impose liabilities of a predecessor corporation on a
successor corporation unless (1) the successor expressly or impliedly assumes obligations of the
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predecessor; (2) the transaction is a de facto merger; (3) the successor is a mere continuation of
the predecessor; or (4) the transaction is a fraudulent effort to avoid the liabilities of the
predecessor. Bernard v. Kee Mfg. Co. Inc., 409 So. 2d 1047, 1049 (Fla. 1982). See also Bud
Antle, Inc. v. Eastern Foods, Inc., 758 F.2d 1451 (11th Cir. 1985). The imposition of successor
liability, as the exception to the general rule, is based on the equitable principle that no
corporation should be permitted to commit a tort or breach of contract and avoid liability through
a corporate transformation in form only. Amjad Munim, M.D., P.A. v. Azar, M.D., 648 So. 2d
145, 154 (Fla. 4th DCA 1995). In this case, Murphy & King invoke only the second and third
theories of corporate successor liability.
B.
BlackJet Technology is the Mere Continuation of BlackJet, Inc.
The concept of continuation of business arises where a successor corporation is merely a
continuation or reincarnation of the predecessor corporation under a different name. Bud Antle,
Inc. v. Eastern Foods, Inc., 758 F.2d 1451, 1458 (11th Cir. ) (en banc), reh’g denied, 765 F.2d
154 (1985). The “purchasing corporation is merely a ‘new hat’ for the seller, with the same or
similar entity or ownership.” Id. The key element of a continuation is a common identity of the
officers, directors and stockholders in the selling and purchasing corporation, that is, a
continuation of the corporate entity of the seller corporation. Id. at 1458-1459, citing Travis v
Harris Corp, 565 F.2d 443, 447 (7th Cir. 1977).
The change is in form, but not in substance.
Put another way, “[t]he bottom line question is whether each entity has run its own race, or,
whether there has been a relay-style passing of the baton from one to the other.” Azar at 154,
citing 300 Pine Island Assoc. v. Steven L. Cohen & Assoc., 547 So.2d 255 (Fla. 4th DCA 1989).
In this case, approximately five months after the lawsuit was filed, BlackJet's directors
and officers prompted a premature foreclosure on the Haysjet Loan in order to orchestrate a
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transfer of its assets to a reconstituted version of itself and to continue its business under a new
name with a potential for increased profits, while shedding its obligations to unsecured creditors,
such as Murphy & King. The email exchange between Rotchin and Hays which immediately
preceded and precipitated the default notice demonstrates that Rotchin understood he needed a
suggestion of insolvency, and more precisely, a suggested inability to meet capital investment
requirements in place under the Second Modification. The email to Hays acknowledging the
earliest foreclosure date of March 31, 2014, contains a side note, addressed to director Joe
Grimes, inquiring if Grimes was “sure” that the company had raised $1 million in revenues by
May 31st (2012), and adding – hopefully - “If not, I think there’s a door open.” Presumably, the
“door” Rotchin refers to is a basis for triggering a premature default, based on a failure to meet
capital investment requirements per the terms of the modification document.
While Hays initially was hesitant to call in the Loan -- raising the possibility of a conflict
of interest between his role as Haysjet’s managing member and his role as director and
shareholder in BlackJet – he ultimately acceded to Rotchin’s request, declared the Haysjet Loan
in default and initiated UCC foreclosure proceedings on BlackJet’s Assets. Next, Hays acquired
the Assets, on behalf of Haysjet, and instead of applying the proceeds of sale toward the
outstanding BlackJet debt, he allowed BlackJet to remain in possession and control of the Assets
in order to continue its business operations. At the same time, BlackJet’s officers and directors
caused BlackJet to shut down and formed BlackJet Technology in order to continue to operate
BlackJet’s business under a new name, occupying the same offices and using the same assets,
website, mobile application, customer lists, and employees used by BlackJet. BlackJet and
BlackJet Technology also enjoyed substantial overlap in officers, directors and primary
shareholders.
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Effectively, BlackJet Technology is the reincarnation of BlackJet, “dressed up with a new
name and controlled by the same individual[s].” Azar, supra. Given the overwhelming evidence
of continuity of the corporate entity in all material aspects, BlackJet Technology is appropriately
found to be a “mere continuation” of BlackJet, and as such is liable for its debts. Azar, 648 So.
2d at 154. See also Allied Indus. Int'l, Inc. v. AGFA-Gevaert, Inc., 688 F. Supp. 1516, 1521
(S.D. Fla. 1988); In re Aqua Clear Tech., Inc., 361 B.R. 567, 578 (S.D. Fla. 2007); Global One
Fin., Inc. v. Intermed Servs., P.A., 2015 WL 1737710, at * 4-5 (S.D. Fla. April 16, 2015).
C.
BlackJet Technology is Successor by De Facto Merger to BlackJet
A de facto merger occurs where one entity is absorbed by another without formal
compliance with the statutory requirements for a merger. Azar, 648 So. 2d at 153. To determine
if a de facto merger has occurred, the finder of fact looks at factors reasonably indicative of
commonality or distinctiveness. Lab Corp. of Am. v. Prof. Recovery Network, 813 So. 2d 266,
270 (Fla. 5th DCA 2002) (determination of de facto merger hinges on whether there has been a
change in form, but not in substance, in the corporate identity).
In determining whether to characterize an asset sale, or transfer, as a de facto merger,
courts consider the following indicia of continuity: (1) whether there is a continuation of the
enterprise of the seller corporation, so that there is continuity of management, personnel,
physical location, assets and general business operations; (2) whether there is a continuity of
shareholders, accomplished by paying for the acquired corporation with shares of stock; (3)
whether there is a dissolution of the
seller corporation, and (4) whether the purchasing
corporation assumes the obligations of the seller ordinarily necessary for the uninterrupted
continuation of normal business operations. Azar at 153-154. All of these events, however, need
not occur at the same time. Id., citing Knapp v. North American Rockwell Corp.,506 F.2d 361
(3d Cir. 1974), cert. den., 421 U.S. 965 (1975). The rationale for imposition of successor liability
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in these circumstances is grounded on the notion that no corporation should be permitted to
commit a tort or breach of contract and avoid liability through corporate transformations in form
only. Id.
Applying these criteria here, the Court concludes that a de facto merger occurred between
BlackJet and BlackJet Technology. The undisputed evidence shows a continuation of the
BlackJet business operation, with continuity in management, officers and directors, personnel,
physical location, web presence, and general business operations. Although there was not an
actual transfer or purchase of assets, for all practical purposes, an asset transfer was effected via
the mechanism of a “license” agreement between Haysjet, a senior lender who acquired title to
the assets at a foreclosure sale, and the BlackJet Technology, which was granted a royalty-free
license to use and possess the assets, as well as a future option to purchase them. See Glausier v
A+ Nursetemps, Inc., 2015 WL 2020332 *5 (M.D. Fla. 2015) (noting lack of clarity on issue of
asset transfer requirement due to dicta in certain successorship decisions). Second, although
there was not complete continuity of shareholders resulting from the purchasing corporation
paying for the acquired assets with shares of its own stock, there was some continuation of the
stockholders’ ownership interests, which is sufficient to satisfy this element. See Bud Antle,
supra at 1458 (“[a]t the very least, there must be some sort of continuation of the stockholders’
ownership interests”).
Third, BlackJet ceased operations and dissolved shortly after its assets
were acquired by Haysjet and effectively transferred to BlackJet Technology. Fourth, BlackJet
Technology assumed the obligations of BlackJet necessary for the uninterrupted continuation of
Blackjet’s normal business operations: It assumed Blackjet’s office lease; it continued to
operate BlackJet's business using BlackJet’s office equipment, customer lists and other
proprietary property, and it leveraged the same management, employees, officers and directors
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of BlackJet in effort to maintain the private aircraft charter business of BlackJet as a going
concern with the potential for generating future profits. This evidence establishes the existence of
a de facto merger which renders BlackJet Technology liable for BlackJet’s debts, including the
underlying Judgment at issue in this case.
D.
The Foreclosure Sale By Haysjet Does Not Preclude Imposition of Successor
Liability
Finally, BlackJet Technology asserts that the UCC foreclosure sale of the BlackJet Assets
by a senior lender (Haysjet) precludes a finding of mere continuation or de facto merger; that is,
it contends that because the assets of the predecessor corporation were encumbered by a valid
senior lien, the claims of Murphy & King, an unsecured creditor, cannot be asserted via either
theory of successor liability.
This argument overlooks the essential fact that the senior lien of
Haysjet, perfected with a UCC financing statement filing, was not impaired by the unsecured
claim of Murphy and King at the time Haysjet foreclosed on the lien. Assuming, arguendo, the
commercial reasonableness of the UCC foreclosure sale, this translates simply into Haysjet
assuming title to the BlackJet Assets free and clear of the claims of unsecured creditors such as
Murphy and King. In a similar vein, had Haysjet sold the assets to a third party, to the extent
that the proceeds of the sale were insufficient to satisfy BlackJet's obligation to Haysjet, Murphy
& King, as unsecured creditor, would not have been able to recover its outstanding judgment
debt because, as a general proposition, the liabilities of a predecessor corporation are not
imposed on the successor corporation that purchases its assets.
Haysjet, however, opted to leave possession and use of the Assets with BlackJet, in effort
to further the parties’ joint interest in continuing the business of BlackJet, and opted to later
transfer use and possession of the Assets to a successor corporation, BlackJet Technology, under
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the machination of a “licensing agreement” which included an option for free and clear transfer
of title to the new company if certain conditions are satisfied.
By transferring use and possession of the assets to a reconstituted version of the original
debtor, in an effort to maintain the debtor’s private aircraft charter booking business as a going
concern, Haysjet assumed the risk of a successor liability inquiry, which has in fact materialized.
This does not result in frustration of reasonable commercial expectations protected by the UCC,
but rather, preserves the equitable principles embodied in the rules of successor liability. Ed
Peters Jewelry Co v. C & J Jewelry Co., 12 F.3d 253 (1st Cir. 1997) (recognizing that foreclosure
process does not preempt successor liability inquiry). Haysjet assumed this risk by effectively
transferring the BlackJet Assets back to the borrower, and then to a successor corporation, in
order to facilitate the continuation of BlackJet’s business under a new name.
While there are no Florida authorities directly on point, other jurisdictions recognize that
a UCC foreclosure sale affords an acquiring corporation no automatic exemption from successor
liability. Ed Peters Jewelry Co. v. C & J Jewelry Co., 124 F.3d 252, 267 (1st Cir. 1997)
(although foreclosure by a senior lienor often wipes out junior-lienor interests in the same
collateral, it does not discharge the debtor's underlying obligation to junior lien creditors; by its
nature, the foreclosure process cannot preempt a successor liability inquiry); Fiber-Lite Corp. v.
Molded Acoustical Products of Easton, Inc., 186 B.R. 603, 609 (E.D. Pa. 1994) (imposing
corporate successor liability under mere continuation theory where predecessor company
defaulted under an agreement with its senior secured lender, lender foreclosed on all of the
predecessor's assets, and lender and predecessor then engineered and financed an asset purchase
by a successor corporation whose only shareholders were the children of the sole shareholder of
the predecessor corporation; foreclosure sale was not commercially reasonable, and thus
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successor corporation was not protected from liability for debt under UCC); Milliken &
Company v. Duro Textiles, LLC, 451 Mass. 547, 887 N.E.2d 244 (Mass. 2008) (affirming
imposition of successor corporate liability after UCC foreclosure sale of original company’s
assets by senior lender, who also had a stake in successor company, where successor operated
from the same location, performed same operations, offered same services, and employed same
persons as predecessor).
To hold otherwise, and allow a secured creditor with an overlapping interest and control
in the successor corporation to work in tandem with its predecessor corporation and use the
mechanism of a foreclosure sale to eliminate the claims of unsecured creditors --without losing
any control of the potential future profitability of the business -- would be to sanction “precisely
the kind of harm to innocent creditors that the successor liability doctrine was designed to
prevent.” Duro Textiles at 560.
E.
Murphy & King Is Entitled To An Award Of Attorney's Fees And Costs And
Prejudgment Interest
Pursuant to § 56.29 (11), 2 Florida Statutes, Murphy & King is entitled to recover against
BlackJet the reasonable attorneys' fees and costs incurred in bringing these meritorious
proceedings supplementary. The fee award is not directly taxable against BlackJet Technology
as the impled, non-debtor defendant. Rosenfeld v TPI International Airways, 630 So.2d 1167
(Fla. 4th DCA 1993).
However, because BlackJet Technology has been found to be the mere continuation of
and successor by de facto merger to BlackJet, BlackJet Technology is indirectly liable for
2
Section 56.29(11), Fla. Stat. (2015) provides:
Costs for proceedings supplementary shall be taxed against the defendant as well as all other incidental costs
determined to be reasonable and just by the court including, but no limited to, docketing the execution, sheriff’s
service fees and court reporter’s fees. Reasonable attorney’s fees may be taxed against the defendant.
15
Blackjet’s attorney fee and cost liability under successor liability precepts in the same manner as
the underlying Judgment is enforceable against it.
Compare Gaedeke Holdings, Ltd. v.
Mortgage Consultants, Inc., 877 So.2d 824, 826-27 (Fla. 4th DCA 2004) (plaintiff was not
entitled to a direct award of attorneys’ fees against impled defendants, but trial court should have
applied fraudulently transferred assets toward satisfaction of the attorney fee award).
The amount of the fee award shall be determined by separate order and judgment of the
Court. Plaintiff shall have ten (10) days to submit a supplemental motion for fees and costs, with
supporting affidavits and other proofs as appropriate; Defendant and Third-Party Impleader
Defendant shall have five (5) days from service of the motion to file their opposition, if any, and
the Plaintiff shall have three (3) days within which to submit its reply.
IV. CONCLUSION
Based on the foregoing, the Court finds that BlackJet Technology is the mere
continuation of BlackJet, and that a de facto merger occurred between BlackJet and BlackJet
Technology. Murphy & King is accordingly entitled to enforce the Final Judgment previously
entered against BlackJet against BlackJet Technology.
Further, Murphy & King is entitled to recover attorneys' fees and costs incurred in
prosecution of these proceedings supplementary against BlackJet, and this liability is properly
enforced BlackJet Technology under de facto merger or mere continuation theories of successor
liability.
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It is accordingly ORDERED AND ADJUDGED:
1.
As the “mere continuation” of BlackJet, or as its successor by de facto merger,
BlackJet Technology is liable for the debts and obligations of BlackJet to Murphy &
King, a Professional Corporation, including the Final Judgment previously entered in this
action.
2.
By separate order, the Court shall enter judgment in favor of Murphy & King and
against BlackJet Technology in the amount of $376,981.51, plus prejudgment interest.
3. As the “mere continuation” of BlackJet, or as its successor by de facto merger,
BlackJet Technology is also liable for the attorneys’ fees and costs taxable against
BlackJet in these proceedings supplementary.
4. The Court reserves jurisdiction to determine the amount of attorney’s fees and costs
to be taxed against defendant BlackJet, which, in turn, shall be reduced to a separate
judgment against BlackJet Technology as the “mere continuation” or successor by de
facto merger to BlackJet.
DONE AND SIGNED in Chambers at West Palm Beach, Florida this 26th day of
May, 2016.
United States District Judge
Southern District of Florida
cc. all counsel
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