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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
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
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.”).
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
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
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
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
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.”).
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
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
