iowa company that purchased it improperly entered into and executed a plan to specifically injure a louisiana company in doing so the two companies impedes the substantial tortious conduct and violated the laws of numerous jurisdictions in light of the says substantial evidence of this misconduct presented to the district court i asked this panel to overturn the district court panel to apply the reasoning and a lot of success or liability to a transaction in which an ira company was purchased by a company located in missouri i will admit that at face value sounds a little bit absurd to apply louisiana law to that however under the very view nique facts of this case and given that the primary real world are facts of this asset sale were felt in louisiana with the defendants fully no my client asserted a successful liability claim under the law always iana against the successor company and also in the alternative plug that claim under iowa law which we believe would have been usurped no claim against the don't know that a detailed record was was entered into the record but i'm prepared to answer any questions of the questions you may have about that is not a record deal the question on your choice of law question for success  liability it seems to me that most of the factors are sort of a wash but the one that i think hurts you the most is sort of where all the events are center because the coffee and the business were all in iowa and so when you're talking about success or liability you're talking about sort of where the assets were what what what the company bought and so what's your best response to the fact this shouldn't be in iowa because of that and where the events dishonored element and we cited numerous cases where despite the assets that were purchased being physically located in one of the defendants jurisdictions the court has still plied a different law because the court recognized noted that this transaction would not make sense with this massive debt to west felt but otherwise they were very interested in the so literally the sole purpose of this transaction was you create a new that same proposition one seventeen f stop third one zero six district of minnesota second eleven sixty three what happened to the assets after the written by justice alito so tell me though if they bought assets that were in iowa if the assets remained in iowa after the deal was over you have a pretty pretty big uphill battle to argue that some of the elements you know that the actions that were taken in louisiana mean that we should apply louisiana law my wrong about that i respect we do you think you're wrong about that and let me explain why the district court in this case used a the local law of the state where under the terms of the contract the seller has to deliver the challenge in this case and it's and the record at appendix fifty eight and one fifty nine to two thirty five  batch of coffee that was delivered to us rose three that we're here for that we're here for including a five thousand dollars check yes why is why is that relevant though the that deliberate when we're talking about the assets we're talking about the purchase of assets that are in iowa so why why is it relevant that perform the purchase the assets it was delivered from louisiana because the contracts by which the coffee was delivered and we see and is what we're here about today that's because of the breach contracts und are actually being sued upon as the anchor are black hills molding versus brandon holdings that's two thousand and fifteen westlaw five twenty two seventy three four district of south dakota twenty fifteen id t telecom versus c v t prepaid nine seventy two f s up to ninety seven eastern district of michigan one thousand nine hundred seven and if i may quote from that case while indiana has an interest in seeing that its law governs asset purchase agreements entered into between two indiana corporations ohio has a greater interest in seeing that ohio law applies to its own citizens who may be affected by the legal implications of those agreements one thing that  there there's reversible error and expressly considering that provision but i want to quickly get to even of iowa law there's the there is still a genuine issue of material fact to the requirement of strict continuity and management which is required under i will law that's what this district judge found that we did not have and that's why we lost on summary judgment but that corp expressly recognized exception in cases where the corporation successor corporations ownership and management is different and form but not in substance my pony who argue that that exception should be limited to situations where relatives are inserted as sham owners of the predecessor company but nowhere in that grand labs decision does it limit it to that situation in fact that that decision by the it's circuit says situations plural in which the successor corporations continue running the show for a transition period for typically good compensation that doesn't that doesn't mean that there's that there's an exception to success or liability not not in and of itself a continuity of management is typical i don't see where you've got anything all that unusual here's the a typical thing that happened in this case that distinguishes it from all other assets of typical asset transactions in this case the c f o of us ro control because the eliminated acquire said don't pay the check but take the cost and you posing council brief says that wait a minute that check was for a prior sale which is consistent with my understanding that your client consistently declined to take purchase money should curity interest and always took payments always credited payments to have past sa he continued to be in unsecured credit or is the current sales although i got that all wrong you're correct in that there was a contract entered into prior to the day that that eighty five thousand dollars worth of coffee was released however it was i see i'm out of time if the court would grant any time a bottle of reserve a minute or thirty seconds thank you very much good morning your honor may please the court the general rule is successor liability is that a corporation that acquires all or part of another corporation's assets does not also acquired liabilit there are exceptions to this general rule that are designed to make sure that someone who runs up a debt is not able to shed that dead and then continue to enjoy the benefits of the assets that the debt really should attach to that that fact pattern is completely absent in this case the owner of us rose tree in the morning iowa was a man named howard fischer and he lost his company his company was in distress he owed five point two million dollars to great western bank great western bank had a perfected security interests in that five point two million dollar debt and great western bank foreclosed and the bank sold the assets to my clients were no go and its sister company met america and in that sale were no go and middle america were willing to pay two point one million dollars to the bank the bank was left with a shortfall on its secured debt of three point one million dollars out of the five million dollars it was owed by us rose tree now we have in this case an unsecured creditor wesco from louisiana saying that it should get in front of the secured creditor great western bank and be made whole on three million dollars of unsecured debt that it was owed by this failed company when companies fail unsecured creditors are often left in the lurch it happens all the time there was nothing unique about this situation and it's particularly under markable in a case such as this where the secured creditor the secure lender great western bank was left with a three million dollars shortfall at  submitted an affidavit from great western bank if which the bank states that it was familiar with the financials of us rose tree it foreclosed on its security interest because u s rosary was not paying its debts and the a company called a c i had entered into a licensing agreement and as part of the licensing agreement it granted a security interest to noble noble failed to perfect the security interest then a c i the  line of credit now a c i is in trouble and then a cia approaches the defendant in this in the noble case alan ripka and says would you like to buy our assets would you like to buy our company as a as a going concern to foreclose so the facts of the case are closely analogous to what happened here pandora's the secured creditor that would be in the shoes of great western bank and the court finds that the defendant who bought the assets of  pursuant to the foreclosure sale that's the defendant the case al rica that defendant had no duty to buy a c i as a going concern and it had no duty to rescue i s creditors and that in that case it was noble who said it was owed this unsecured debt on the licensing fees that it was entitled to and so the reasoning of the noble case i think applies perfectly to this case in they saw all this debt that was owed five point two million dollars owed to great western bank secured three million dollars owed to west felt unsecured also i think about another million dollars of debt owed to other unsecured creditors vendors suppliers and in america said record by this company with all this debt and then the foreclosure happens and then we're not them in america by the assets at the foreclosure sale there's case there's nothing wrong full about that there's nothing fraudulent about that because there's no duty on the part of her nokomis america to save the struggling company and to bail out the struggle struggling companies  creditors what about the eighty five thousand dollars opposing counsel makes a lot of a lot out of that and it does appear that if the facts are taken as true that that there was some perhaps bad behavior on your client's part the the facts concerning the eighty five thousand dollars are that that was money that was going to be applied to us or astri's debt with wes felt from coffee that had been shipped i think about nine months from twenty twelve to twenty fifteen that three million dollars debt is floating along and us roaster is buying coffee from was fell and it's sending payments to west felt that or that applied to the oldest debt so it was about a nine month lag so judge local was right that that eighty five thousand was to pay for coffee that ship months ago when westfeldt shipped coffee to us for a story in january twenty fifteen in exchange that eighty five thousand dollars payment was well actually had no expectation was going to be paid for that coffee for nine months if the past practice held up in fact went from twenty twelve to twenty fifteen that three million dollar debt actually whittled down by one hundred  says on one occasion after us restaurant had already mailed a check for eighty five thousand dollars to west felt and provided was felt with a confirmation number a tracking number or bomb ball rochas c f o called me and learned that us rosary would not also be able to pay or no go for coffee that were no go was going to ship to us for a story at this time us or issues was getting coffee supplied by west dealt as it had been for years and there were no go was going to send coffee to us restaurant and rocha said we're going to send you that coffee but we want prepayment because we're not going to give it to you on credit because we know that you're struggling so us roaster e in his own best self interest because he knew that we're no go was possibly going to buy the assets of us or a story at all no that would be his future employer so in paragraph eleven of his declaration mr hudson says although i did not believe it was the right thing to do i had no choice other than the fall of the directive of my future employer and i reluctantly complied and requested a stop payment on the check so it is false to say that we're no joke literally controlled the bank account of u said i had no choice but to do it doesn't that taken in the light most favorable to the other party and to kate that there's some sort of control whether it's implicit or otherwise over the the the issue i think is not control but the the term would thought was going to own us for a story in the future he literally says it's it's the directive of my future employer that means that they are not his employer and there's no actual thirty there a few other items that  success or liability of new york law really are not relevant but what john deere says is that at the dismissal stage at the pleading stage if the plan of pleads some continuing benefit that the debtor is is realizing from the assets that are sold then that continuing benefit might be sufficient to plead continuity of ownership but at the dismissal stage not a summary judgment and that's exactly what happened in this case judge hamilton denied our motion to dismiss the successor liability claims and then a footnote her or her order she says was well has a long way to go to prove that success or liability should attach or but at the pleading stage i'm going to let them survive so that's all john deere means mr not have mentioned hankinson which is a case for minnesota it applies minnesota law and it's a case about a successor liability in the context of nonprofit corporations and the court struggles with the definition of continuity of ownership because nonprofit corporations don't have owners they don't have shareholders stock in directors and so they the court is looking at who is really the owner of a nonprofit corporation for purposes of the conard ownership prom and so that case i think really has no relevance my colleague mentioned the swartz case which is from the ninth circuit it's a california case in that case the players schwartz bought a hog and us franchise and they opened an ice cream shop in california they sued  haagen das and its successor pillsbury on theories of tort fraudulent misrepresentations and omissions and in schwartz the parties agreed the california law would apply to the question of whether pillsbury was liable for the tort claims as the successor there is no choice of law analysis that i could find in the schwartz case and it involves tort claims which really involve different sorts of law considerations than the contract claims that are at issue here mr not to mention chrysler corporation versus ford motor company that's a case from the eastern district of michigan that is a tort case the underlying claim was circle of and so the court looked at where the where the facts of the case really were centered and found that in a circle a case what you're concerned about is who's going to clean up this property who polluted this property in the first place and all of those things make the real world effect in the circle  case really should be the location where the cleanup the pollution and the cleanup are happening and the court in chrysler found that really poor choice of law rules would govern its analysis so again the west cites a number of tort cases to support its position none of which we believe are or lumen a thing here because these are contract claims and there's no no dispute about that  finally wes felt mentioned grand laboratories which is an eighth circuit case from one nine hundred ninety four it was cited by judge hamilton below and takeaway from the grand laboratories case is that it it discusses the iowa success or liability law and it talks about a case called seem act chambers from iowa which involved the owner of a taekwondo business who had a massive debt he formed a new corporate entity and he put his son he made his son the owner of it and the court under i will live you need continuity of ownership for the mere continuation exception to the general rule against excess reliability so the court and chamber said we're going to look past the fact that the owners are literally different because it's the son of the man who read up this debt and then in grand laboratories the predecessor of the company would be different in form but not in substance but we don't believe that will get you off the hook if you do that kind of thing and then in a subsequent case called paine kratz the iowa supreme court look back at the reliability and so graham labs i don't think supports was felt at all in fact is quite to the contrary again there was nothing unique about this transaction at all the th that was felt points to to allege that roko came in and controlled us roaster e r this eighty five thousand dollars check that we've talked about and then another thing that was not mentioned says that us rose three could not talk about the impending asset sale that's because there was a confidentiality clause in the party's agreement when they were doing due diligence and so that's very common and if you decide if you went with wes felts argument then the law would be that a company that enters into a confidentiality clause with another company effectively owns that company because it is controlling that company's ability to speak that's not the law there's no support for that th here that's exactly what we have here are the other asset purchase agreement that's right and that's what we had in the noble case we had a foreclosure sale there's no case in iowa or louisiana or any other jurisdiction that find successor liability attaches through a foreclosure sale where the owner of the debtor loses his company and acquires no ownership interest in the successor and that's what happened here at the summary judgment stage westcott was saying that there was can't you even ownership because we're noko effectively control us or a street before the transaction through the eighty five thousand dollars check if you and then after the transaction there was continuity of ownership because howard fischer who was the owner of the debtor stayed on and he had essentially had a sales function he had to the title of president of the new entity minimal erica he stayed on i think for a year and help transition customers so wes felt  judgment stage was literally on both sides of the ownership issue they said that loco showed kondraty of ownership by being involved before and after the transaction they said that howard fischer the debtor the owner of us registry that's that's where the continuity of ownership was because he was the owner before and then he continued to work for the company afterward it was a totally inconsistent theory it's a theory that their expert advanced and judge hamilton was all over that in her in her order granting  directed the predecessor to continue taking coffee from a creditor during the pre op was a certain period when when what when renault clio directed us were to continue taking coffee on credit knowing that west fault was never going to see a penny for that coffee i believe that is a very uncommon scenario i don't know of another case where the court has seen facts that are courageous pre acquisition control i know your orders are concerned that technically the manager of us worse we were not employed by renault co during the time of the horse's conduct that i'm alleging on page thirty one of the deposition of scott meter scott meter is the c a court has applied has imposed excessive liability when there's a foreclosure cell involved and we have cited a case in our brief i don't have the cite three or grabby right now but it is in our brief that a foreclosure does not automatically negate the possibility of success or liability and then i'll close with the before the final point mr comfort was astonishing in some cases because they were a successful liability princeton tort our claim second restatement for a successful liability claim premised and tort you lose you use the restatements tort based framework and the district court used the restatements tort braced tort based framework to properly choose louisiana law which it actually applied to west tort based claims so this record dead applies louisiana law to some claims being the tort claims we argue that for the purposes of the fraud exception they sort of use that same framework thank you very