UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JAMES R. LOFTUS; MITCHELL 

ROSENFELD,

Plaintiffs-Appellants,

v.

VISTARMS, INCORPORATED,  No. 02-2320

Defendant-Appellee,

and

THOMAS L. ARNOLD,

Defendant. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Gerald Bruce Lee, District Judge.

(CA-02-140-A)

Argued: June 4, 2003

Decided: July 9, 2003

Before MICHAEL and MOTZ, Circuit Judges, and

Robert R. BEEZER, Senior Circuit Judge of the United States

Court of Appeals for the Ninth Circuit, sitting by designation.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: Geoffrey Stetson Gavett, GAVETT & DATT, P.C.,

Rockville, Maryland, for Appellants. Scott S. Ives, IVES & ASSOCIATES, Sterling, Virginia, for Appellee. 
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

James Loftus and Mitchell Rosenfeld sued VistaRMS, Inc. for

breach of its obligation to act as guarantor on a loan owed to them.

The district court granted summary judgment in favor of VistaRMS.

We affirm. 

I.

On November 13, 1996, Thomas Arnold signed a Settlement

Agreement and Mutual Release in which he agreed to pay James Loftus $780,000; Mitchell Rosenfeld, Loftus’s former attorney, was entitled to a portion of the $780,000 as part of his fee. Under the terms

of the agreement, Arnold would pay Loftus and Rosenfeld $19,500 on

or before November 1, 1996 and $6,500 every month from April 10,

1997 until December 10, 2006. Arnold was a director of a corporation

called Resource Management Systems, Inc. ("RMS"), which agreed

to guarantee Arnold’s obligations. 

On January 1, 1997, Arnold gave Everett Holtz, the principal

owner of RMS International, Inc. ("RMSI"), a check for $651,000. In

return, Holtz orally agreed to assume Arnold’s liability under the Settlement Agreement to Loftus and Rosenfeld. 

On January 7, 1997, RMS entered into an Agreement of Purchase

and Sale ("Purchase Agreement") in which RMS agreed to sell all of

its "business contracts and accounts . . . together with all of its valuable assets," to RMSI. RMS acknowledged in the Purchase Agreement that RMSI "has not undertaken to purchase or assume any

obligations except as specifically set forth in this Agreement." 

In June 1997, RMS changed its name to TLA Investments, Inc.

("TLA"). Fifteen months later, RMSI merged with another company

to become VistaRMS. 

2 LOFTUS v. VISTARMS, INC.
Pursuant to Holtz’s oral agreement with Arnold, Holtz and RMSI

made payments to Loftus on Arnold’s behalf from April 1997 until

October 2001. On October 31, 2001, Arnold, Holtz, TLA, and

VistaRMS entered into an agreement (the "October Agreement") that

purported to resolve "all disputes that have arisen between . . . the

parties." The October Agreement provided that VistaRMS would pay

Arnold $100,000, and that an existing promissory note payable to

RMS from RMSI in the amount of $115,775 would be paid upon execution of the agreement. The October Agreement explicitly relieved

Holtz of his obligation to make any future payments to Loftus on

behalf of Arnold. 

Shortly after the October Agreement was executed, Arnold

defaulted on his November 10, 2001 payment to Loftus and Rosenfeld. Arnold ultimately made this payment on November 30, but

defaulted on his December 10, 2001 payment. Loftus and Rosenfeld

have received no payments since November 30, 2001. 

On January 28, 2002, Loftus and Rosenfeld sued Arnold for breach

of contract and fraud and VistaRMS for breach of guaranty. Arnold

filed for bankruptcy on June 24, 2002, staying the trial court proceedings with respect to Loftus and Rosenfeld’s claims against Arnold. On

August 9, 2002, Loftus and Rosenfeld moved for summary judgment

against VistaRMS and VistaRMS filed a cross-motion for summary

judgment. 

II.

The district court denied Loftus and Rosenfeld’s motion for summary judgment and granted summary judgment to VistaRMS.1

 The

court concluded that VistaRMS was not the successor in interest to

RMS and therefore could not be held liable for RMS’s guaranty on

Arnold’s obligations to Loftus and Rosenfeld. In reaching this conclusion, the court first reasoned that "RMS was not a shell corporation

1Although Loftus and Rosenfeld’s case against Arnold had been stayed

as a result of Arnold’s bankruptcy proceeding, the district court made an

explicit finding that there was no just reason to delay ruling on

VistaRMS’s motion for summary judgment and directed that an order be

entered pursuant to Federal Rule of Civil Procedure 54(b). 

LOFTUS v. VISTARMS, INC. 3
and remained a going-concern after the asset sale [to RMSI] as evidenced by their Federal Income Tax filings and the increase in assets

after the sale." The court explained that "RMS acknowledges that

TLA Investments is its true successor in interest in filings with the

Commonwealth of Virginia’s State Corporation Commission, and in

its federal income tax filings." The district court recognized that while

RMS and TLA shared the identical sole officers, directors, and shareholders, RMS and RMSI did not share any officers, directors, or

shareholders. The court further reasoned that RMSI did not assume

RMS’s guaranty obligation on Arnold’s debt to Loftus and Rosenfeld

by virtue of the Purchase Agreement because that agreement

expressly provides that RMSI has not undertaken to purchase or

assume any obligations. Finally, the court noted that Loftus and

Rosenfeld had not pled fraud against VistaRMS or RMSI.2

III.

We have reviewed the record, briefs, and applicable law and have

considered the oral arguments of the parties. We conclude that the

district court was correct in its holding and affirm on the basis of the

district court’s well-reasoned opinion. 

AFFIRMED

2The fraud allegations against VistaRMS relate only to VistaRMS’s

alleged obligation to pay Arnold’s debt to Loftus and Rosenfeld pursuant

to Holtz’s oral agreement with Arnold. Because Loftus and Rosenfeld

did not include breach of this oral agreement in their pleadings against

VistaRMS, see J.A. 99 (Second Amended Complaint), the district court

did not err in rejecting their fraud claim against VistaRMS. 

4 LOFTUS v. VISTARMS, INC.