978-1285770178 Case Printout Case CPC-06-07

C.A.2 (Conn.),2011.

Call Center Technologies, Inc. v. Grand Adventures Tour & Travel Pub. Corp.

635 F.3d 48 United States Court of Appeals,

Docket No. 09–1224–cv.

Argued: Feb. 23, 2011.

Decided: March 11, 2011.

Background: The United States District Court for the District of Connecticut, Dominic J. Squatrito, J., 599

Affirmed in part, vacated in part, and remanded.

West Headnotes

[1] Federal Civil Procedure 170A 388

District court did not err in curing jurisdictional defect by dropping nondiverse defunct corporation from

equipment supplier’s breach of contract suit against defunct corporation’s alleged successor where alleged successor

failed to show how defunct corporation’s dismissal would cause it any prejudice. Fed.Rules Civ.Proc.Rule 21, 28

Under Connecticut law, a corporation which purchases all the assets of another company does not become liable

170A Federal Civil Procedure

170AXVII Judgment

170AXVII(C) Summary Judgment

170AXVII(C)2 Particular Cases

170Ak2513 k. Stock, stockholders, and corporations, cases involving. Most Cited Cases

John B. Farley (Coleman C. Duncan, on the brief), Halloran & Sage LLP, Hartford, CT, for Defendant–Appellee,

Interline Travel & Tour, Inc.

Before: KEARSE, SACK, KATZMANN, Circuit Judges.

erred in granting summary judgment in favor of Interline on the “mere continuation” theory of successor liability

under Connecticut law, but we affirm in all other respects.

BACKGROUND

Call Center is a Delaware corporation with a principal place of business in Brookfield, Connecticut, that is in

the business of selling refurbished telecommunications equipment. Grand Adventures Tour & Travel Publishing

ment.

FN1. This agreement recites that the purchaser of the equipment is “Grand Adventures Tour & Travel,

Inc.,” App. 117, a name that differs slightly from that of Defendant–Appellee Grand Adventures Tour &

Travel Publishing Corporation, which we refer to herein as “GATT.” In his affidavit opposing Interline’s

motion for summary judgment, Call Center’s president asserts that when preparing the agreement, he made

mary judgment motion, Call Center neither identified any facts in the record that substantiate its allegations of fraud

nor presented any legal argument as to why this transaction would qualify for the fraud exception. Call Center at-

tempts to excuse its silence below in this regard by contending that it was Interline’s burden to show that it was a

bona fide purchaser of GATT’s assets in all respects in order to avoid successor liability. This contention misunder-

stands the burdens of proof and production applicable here. Because the “general rule” is that a purchaser of assets

FN3. We do not consider Call Center‘s arguments, raised for the first time on appeal, that Interline’s acqui-

sition of GATT‘s assets through the foreclosure sale was fraudulent because it was inconsistent with certain

provisions of the Texas Uniform Commercial Code. See, e.g., Baker v. Dorfman, 239 F.3d 415, 420 (2d

Cir.2000) (“In general, ‘a federal appellate court does not consider an issue not passed upon below.’ ”

(quoting Singleton v. Wulff, 428 U.S. 106, 120, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976))).

Extruder Corp., 96 Conn.App. 183, 899 A.2d 90, 93 & n. 3 (2006); Kendall v. Amster, 108 Conn.App. 319, 948

A.2d 1041, 1051 (2008); see also Altman, 722 F.Supp.2d at 242–43 (“In Kendall the Appellate Court makes it plain

that ‘continuity of enterprise’ is not just a theory of successor liability, it is a recognized principle of Connecticut

law.”); Medina v. Unlimited Sys., LLC, 760 F.Supp.2d 263, 270, 2010 WL 5253530, at *6–7 (D.Conn. Dec. 15,

2010) (“Connecticut courts treat ‘continuity of enterprise’ as their preferred version of the ‘mere continuation’ ex-

Chamlink, 899 A.2d at 93.

[3] On appeal, Call Center contends that the existence of fact issues should have precluded the district court

from granting summary judgment on the basis that there was no continuity of enterprise.FN4 In evaluating whether

Call Center could establish continuity of enterprise, the district court looked to the factors of “management, person-

nel, physical location, assets and general business operations of the companies.” Call Center Techs., Inc. v. Grand

Town of W. Hartford, 288 F.3d 467, 470 (2d Cir.2002) (“[Rule] 56 does not impose an obligation on a dis-

trict court to perform an independent review of the record to find proof of a factual dispute.”).

First, as to management, the district court found that this factor favored Interline, noting that Boyd and Fleisch-

man, who have the highest management positions at Interline, were not employees or officers at GATT. However,

Boyd and Fleischman were not strangers to GATT. As noted, Boyd was a former GATT director, and he and

Fleischman were retained by GATT’s management as unpaid consultants prior to Interline‘s formation. In that capac-

ity, they made loans to GATT in exchange for security interests, and it is pursuant to those agreements that they,

through Interline, eventually obtained GATT‘s assets. Moreover, other members of Interline’s senior management

were formerly GATT employees or managers, although there is some testimony that their responsibilities differed

across the two companies. While there may not be a perfect identity of management, we think that with all infer-

ences drawn in Call Center’s favor, a reasonable trier of fact could find that there is continuity in this regard.

Second, as to personnel, the district court noted that 31 out of 51 of Interline’s full-time employees were former

GATT employees, which is consistent with deposition testimony cited by Call Center that the “majority” of GATT

ployment.

Third, as to physical location, the district court identified the undisputed fact that both GATT and Interline op-

erated out of the same office building, and noted a factual dispute as to whether the two companies were located on

the same floor or in the same suites. Thus, for purposes of summary judgment, we must assume that the companies

occupied the same offices, which clearly establishes continuity of location.

Fifth, as to business operations, the district court noted that “Interline provides some, but not all, of the same

services GATT provided.” Id. at 295. In particular, the record reflects that both companies were in the business of

providing travel services to “interliners”—i.e., active and retired airline employees—and certain other categories of

travelers. While the district court correctly observed that the overlap in the services provided by the two companies

GATT’s assets. This circumstance also supports a conclusion of continuity of enterprise. Cf. Beriguette v. Innovative

Waste Sys., Inc., 2009 WL 2450773, at *2 (Conn.Super.Ct. July 7, 2009) (“[T]he mere continuation exception seeks

to determine whether ‘the purchasing corporation [is] merely a “new hat” for the seller.’ ” (second alteration in orig-

inal)).

Based on this record, and cognizant that the ultimate question of whether there was a continuity of enterprise