NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No s . 12

- 2229 and 13

- 2100

_____________ JOHN W. FINK, Appellant in No. 12

- 2229

v. EDGELINK, INC.; KAYDON A. STANZIONE

_____________ IN RE: ADVANCED LOGIC SYSTEMS, INC., Debtor

v. JOHN W. FINK, Appellant in No. 13

- 2100

___________ __ On Appeal from the United States District Court for the District of New Jersey ( D.C. Civil No s . 1

- 09

- cv - 05078 & 1

- 12

- cv - 04479 ) District Judge: Honorable Noel L. Hillman

___________ Submitted Under Third Circuit L

. A

. R

. 34.1 (a)

November 6 , 201 3 Before: GREENAWAY, JR. , VANASKIE and ROTH , Circuit Judges

(Filed: January 21, 2014 )

___________2 OPINION

___________ VANASKIE, Circuit Judge. Before us are consolidated appeal s from cases in which p laintiff

- appellant John Fink attempt s to recoup the benefits of a capital investment in Advanced Logic Systems, Inc. (“ALSI”) , a n ow - defunct corporation which dissolved after filing for Chapter 7 bankruptcy in 2009. In Case No. 12

- 2229, Fink is suing EdgeLink, Inc., a company which he claims is a “mere continuation” of ALSI and thus responsible for ALSI’s financial obligations to hi m. He also seeks relief from Kaydon Stanzione, the founder of both EdgeLink and ALSI. Fink appeals from the District Court’s order granting summary judgment against him. In Case No. 13

- 2100, Fink seeks to reopen the ALSI bankruptcy on the theory that AL SI concealed assets from the trustee

. He appeals from the District Court’s order affirm ing the Bankruptcy Court’s denial of his request to
reopen. In both cases, we will affirm.
I. We write primarily for the parties, who are familiar with the somewhat co nvoluted facts and procedural history of th e s e case s . Accordingly, we set forth only those detail s necessary to our analysis.
In December 2000, F ink began working as a financial consultant for ALSI, a networking and telecommunications company founded by d efendant Kaydon Stanzione. Through its website, ALSI offered the comme rcial use of “proprietary” communication s technology with distinctive trademark s such as the “Alert Notification and Incident3

Command System (ANICS) , ” the “WorkQuick Campaign Manager , ” and something known simply as “Trinity.” Prominent ALSI customers of record included the United States Coast Guard, Verizon, Sunoco, ADT Security Services, Inc. , and Holt Logistics , Inc

. In 2001, Fink entered into a series of secured credit agreements wit h ALSI to loan approximately $830,000 in working capital to the company in return for stock purchasing options detailed in a “warrant agreement.” Over the next three years, however, the financial condition of ALSI deteriorated. In March 2003, Fink filed suit against ALSI and Stanzione in New Jersey Superior Court, claiming breaches of the aforementioned credit agreements, as well as fraud. Fink claims that as of December 31, 2003, Stanzione had wrongfully granted over $125,000 in personal loans to himsel f from ALSI ’s coffers

. Fink contends that beginning in 2005, during the pendency of the state court litigation, Stanzione began a course of corporate maneuvering that resulted in the theft or fraudulent transfer of valuable ALSI assets, including existin g contracts and intellectual property. That year, a company c alled Advanced Logic Services, Inc. (“ALServ”) was incorporated in Nevada , with Stanzione’s 85

- year - old mother listed as the sole owner and officer. ALSI’s accountant, Joseph Troupe, characteri zed ALServ as a pass - through entity created as a separate investment ve hicle for potential business partners concerned with Fink’s lawsuit against ALSI. In 2007, the parties settled portions of the state court litigation, with ALSI agreeing to pay Fink rou ghly $1,000,000. In October 2008, however, having paid only about $524,000 to Fink, and with some of Fink’s state court claims still pend ing, ALSI4

filed for Chapter 11 bankruptcy. Fink was listed as a secured creditor on ALSI’s bankruptcy petition.
In January 2009, during the course of ALSI’s bankrup tcy proceeding, Stanzione founded the defendant company EdgeLink, Inc ., a New Jersey corporation with the same listed business address as ALSI and ALServ

. Gregory Cucchi, a former ALSI executive, was named EdgeLink’s Chief Executive Officer, and Troupe, ALSI’s former accountant, became EdgeLink’s Chief Financial Officer. EdgeLink hired Stanzione as a consultant. Fink bases m ost of his claims in both cases before us on the contention that EdgeLink wa s the r ecipient of valuable ALSI technology and customer relations hips. He offers a May 2009 capture of a website, http://www.edgelinkinc.com , which describes a variety of “proprietary” telecommunications offerings from EdgeLink that are extremely
similar to ALS I’s former descriptions of its own trademarked products

. Fink also points
to the resume of a person named Michael Fisher, which states that Fisher did consulting work for “EdgeLink (formerly ALSI). ” And Fink notes that even after ALSI had filed for bankr uptcy, Stanzione continued to offer ALSI’s products and services to certain clients, except that he did so while operating under t he auspices of ALServ or EdgeLink

. From the summer of 2007 to the summer of 2009, for instance, ALSI provided the ANICS syste m to a company known alternately as Holt Logistics, Inc. and Greenwich Terminal LLC. In June 2009, Stanzione told a Holt employee that he was switching companies to EdgeLink, Inc., and that Holt would have to sign a new contract to continue receiving

serv ices similar to what ALSI had offered. Holt ultimately declined to sign the new5

contract, which offered 12 months of service for $1250, because of unacceptable service disruptions. Defendants present ed evidence to rebut Fink’s assertion that EdgeLink owne d or benefitted fr om ALSI’s property and relationship

. In affidavits, depositions, and answers to interrogatories, EdgeLink’s principals describe a company that from its founding was a complete failure as a business venture. The company never sold, licen sed, or leased any tangible or intangible assets , fel l into debt almost immediately, and, as of March 2010, list ed corporate assets consisting of only a single laptop computer. Gregory Cucchi testified at deposition that EdgeLink was primarily a research and development company, and that any product descriptions appearing on EdgeLink’s purported website were merely draft language created by Stanzione for products under development

. Cucchi stated by affidavit that EdgeLink was created to capitalize on “4G” technology that was not in existence during ALSI’s operation , and as a result EdgeLink never received any
asset or customer relationship from ALSI and never provided services to any former
custome r of ALSI. And further, defendants provided documents show ing that at least some of the intellectual property used by ALSI was owned by either Stanzione or third parties , such that its use by EdgeLink would not have violated ALSI’s rights in any event

. In March 2009 , ALSI’s bankruptcy was converted to Chapter 7. A t the time of ALSI’s final bankruptcy petition on April 7, 2009, after the company’s financial situation had been investigated by the assigned trustee , ALSI’s assets totaled $263,194 , including $200,000 attributable to “patents, copyrights, and other int ellectual property.” On May 21, 2009, t he trustee elected to abandon all ALSI assets, characterizing their value as6

highly speculative. ALServ, Stanzione’s other corporation, was dissolved on June 29, 2009. The ALSI bankruptcy proceeding w as formally cl osed on August 13, 2009 with no distribution s to creditors

. In October 2009, Fink filed what is now Case No. 12

- 2229 in D istrict C ourt. He seeks relief from EdgeLink for breach of contract under both the warrant agreeme nt of 2001 (for which Fink requests roughly $58 million in damages) and the settlement agreement of 2007 (for which Fink seeks $2.6 million in damages). Both of these arrangements, as detailed above, were entered into by Fink and ALSI

— but not EdgeLink. Fink claims that EdgeLink is liable for these breaches because it is a successor in interest to, or a mere continuation of, ALSI. Fink also brings claims for unjust enrichment and statutory violations of New Jersey’s Fraudulent Transfer Act, N.J. Stat. Ann. 25:2

- 25 et
seq . Lastly, Fink cla ims that Stanzione breached the fiduciary duties he owed to Fink as a creditor of ALSI. Between late 2009 and mid

- 2011, t he parties engaged in extensive discovery and motion practice . D uring this time Fink retained several different attorneys and briefly represented himself

. Defendants moved fo r summary judgment in June 2011, which the District Court granted in full in its order of March 27, 2012. Also i n March 2012, based on evidence obtained in discovery in our Case No. 12

- 2229 , Fink filed what is now before us as Case No. 13

- 2100, in which he sought to reopen ALSI’s bankruptcy to allow the trustee to investigate whether ALSI ’s principals
had stolen, converted, or fraudulently transferred assets to ALServ, E dgeLink, or some other party. Fink predicate s this claim in large part on a 2007 application submitted by7

ALSI to the New Jersey Economic Development Authority (the “NJEDA application”) , which lists possession of intellectual property associated with ANICS, WorkQuick, and Trinity

. The application a lso describes contracts from 2006 and 2007 with “GE,” the “US Coast Guard Sector Delaware Bay,” “ADT,” and “a major political party.” Fink
also relie s on a January 2007 ALSI “private placement memorandum” which describes
44 .6 million shares of outstanding ALSI stock valued at $1.30 per share, for a total of $58.5 million. He compare s this to the 17.9 million shares of stock listed on the company’s bankruptcy petition. Lastly , Fink cites the aforementioned evidence regarding ALSI’s purported continuation o f its business relationships even after filing for bankruptcy. The Bankruptcy Court refused to reopen the ALSI estate for several reasons . It noted , among other things, that: 1) Fink had provided no evidence that the alleged
NJEDA assets still existed in 2008, at the time of the bankruptcy; 2) Fink had provided

no evidence that those assets were fraudulently transferred before, during, or aft er the bankruptcy ; 3) the alleged assets, even if extant and recoverable, were of highly speculative value, such tha t there was no guarantee they would cover the administrative costs of reopening or recoup value for unsecured creditors; and 4) the trustee had been made aware of Fink’s claims in 2009, before issuing his final report, and found the claims
to be fruitless. In an order dated March 25, 2013, the District Court affirmed.
II.8

In Case No. 12

- 2229, the first of the two matters in this consolidated appeal , t he District Court had diversity jurisdiction under 28 U.S.C. § 1332

. We ha ve jurisdiction under 28 U.S.C. § 1291

. Our review of a District Court’s grant of summary judgment is plenary. Klein v. Weidner , 729 F.3d 280, 283 (3d Cir. 2013)

. A grant of s ummary judgment is appropriate where the movant establishes “that there is no genuine dispute as to any mater ial fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56( a ). The well

- established rule under New Jersey law is that successor corporations are legally distinct from their predecessors and do not assume any of the debts or li abilities of the prior entity. Ramirez v. Amsted Industries, Inc. , 86 N.J. 332, 340 (1981)

. There are, however, four recognized exceptions: where (1) the purchasing corporation expressly or impliedly agreed to assume such debts and liabilities; (2) the t ransaction amounts to a consolidation or merger of the seller and purchaser; (3) the purchasing corporation is merely a continuation of the selling corporation ; or (4) the transaction is entered into fraudulently in order to escape responsibility for such debts and liabilities. Id. at 340

– 41

. Here, Fink claims that EdgeLink is a “mere continuation” of ALSI. We have previously summarized New Jersey law pertaining to the “mere continuation” rule as follows:

Factors relevant to the “mere continuation” except ion include continuity of ownership; continuity of management; continuity of personnel; continuity of physical location, assets and general business operations; and cessation of the prior business shortly after the new entity is formed. Also relevant is t he extent to which the successor intended “to incorporate [the predecessor] into its system with as much the same9 structure and operation as possible.” Thus the court should determine whether “the purchaser holds itself out to the world as the effective c ontinuation of the seller.” Marshak v. Treadwell , 595 F.3d 478, 490 (3d Cir. 2009) (quoting Bowen Engineering v. Estate of Reeve , 799 F. Supp. 467, 487

– 88 (D.N.J. 1992)). Put differently, continuity exists where the successor becomes merely a “new hat” f or the predecessor. Woodrick v. Jack J. Burke Real Estate, Inc. , 306 N.J. Super. 61, 74 (N.J. Super. Ct. App. Div. 1997). In its well

- reasoned analysis, the District Court concluded that Fink’s evidence,

even when viewed in the most favorable light, would not allow a jury to conclude that EdgeLink was a mere continuation of ALSI. Because Fink’s claims of unjust enrichment and f raudulent transfer were also predicated upon the theory that ALSI directly or indirectly transferred assets to EdgeLink , the Court granted summary judgment on each of Fink’s counts against EdgeLink. 1
Fink acknowledg es that he has no direct evidence of a transfer of assets such as cash, physical property, intellectual property, or confidential client lists

. The parties dispute whethe r, under New Jersey law, a plaintiff must prove a transfer of assets as an essential element for the imposition of successor liability. Compare Ramirez , 86 N.J. at
340

– 41 (discussing successor liability in terms of the “purchasing corporation” and the “se ller”) , and Parsons Mfg. Co. v. Hamilton Ice Mfg. Co. , 78 N.J.L. 309 , 312 (N.J. 1909)

1 Fink claims that the District Court contradicted itself with the following sentence: “When, however, there [is] no transfer of assets from one company to another, it is no longer a concern that the company shifted assets to avoid liability.” App. at 20. Fink regards the District Court as having found that a “shift of assets to avoid liability” may have occurred, but is irrelevant in the absence of a transfer. We think the better reading is that in the absence of a transfer, the Court no lo nger needed to worry about a shift of assets to avoid liability, because one rules out the other.10

(stating that a corporation “having taken over the assets of the former company for the purpose of carrying on its business, without apparent change in the personnel of t he concern, is liable for the payment of the debts of the former concern”) , with Marshak , 595 F.3d at 490 (arguably considering transfer of assets as only one factor among many). We need not reach that question because we conclude that whether a transfer is a formal prerequisite for successor liability or merely one important factor among several, the record before us would not permit a rational factfinder to conclude that EdgeLink is a mere continuation of ALSI.
Fink urges the imposition of successor liab ility based on the following facts : 1) continuity in personnel ; 2) continuity in physical location; 3) the 2007 NJEDA application of ALSI detailing certain intellectual property holdings and describing purported contracts from 2006 and 2007 ; 4 ) the aforem entioned EdgeLink website bearing “customer testimonials” and technological offerings nearly identical to those of
ALSI ; 5 ) the resume of a former employee which assert s that he performed consulting

wor k for “EdgeLink (formerly ALSI); ” and 6 ) Stanzione ’s a pparent offer ings of ALSI’s trademarked products and services even after the formal transition from ALSI to ALServ and EdgeLink

. Taken in a vacuum , some of t hese facts raise at least a question as to the relationship between ALSI and EdgeLink . But d iscove ry in this case has closed and we review the facts against a more developed record. The evidence now includes a reckoning of the corporate histor ies and holdings of ALSI, ALServ, and EdgeLink

. It11

further inc orporates the results of ALSI’s bankruptcy proc eeding, along with interrogatories, affidavits, and deposition testimony from most of the relevant witnesses. Crucially, we discern no evidence , from any of these myriad sources, of a benefit to EdgeLink that is even arguably att ributable to ALSI’s intelle ctual property

. Despite Fink’s repeated claims that some measure of such property was stolen, converted, or otherwise wrongfully transferred away from ALSI and into the possession of EdgeLink, he provides no evidence at all of patent filings, technologica l blueprints, or anything el se substantive in this regard. 2 Instead he points only to vague references made on websites and in e mail exchanges to generic communications

- related technology

. Nor does Fink offer any basis for the purportedly significant val ue of this property. Th e bankruptcy
trustee characterized the value of ALSI’s intellectual property as “highly speculative” and ultimately worthless to the estate. And even if EdgeLink was at some time the beneficiary of valuable property, a s of 2010, th e company boasted a starkly negative cash flow , no apparent income attributable to intellectual property, and minimal corporate
assets

. 3
T he record also fails to reveal a continuity of operations or transfer of confidential customer lists between the two c ompanies. Fink provides no specific evidence that even

2 Indeed, the only hard evidence of intellectual property rights in the record consists of the contracts by which ALSI leased or was assigned such rights from Stanzione or third parties.

3 At best Edgelink stood to gain a single payment of $1250 if Holt had transferred its business from ALSI to EdgeLink ( which it did not )

. That transaction, even if consummated, would hardly provide an equitable basis for expos ing EdgeLink to Fink’s claims against ALSI for over $60 million.12

a single customer in fact signed contracts with or made payments to both companies. 4 EdgeLink’s principals instead offer uncontroverted testimony that the company was a total failure, and that it s pr incipal hope was in research and development of technology unrelated to ALSI’s that simply never materialized. Nothing in the “diligent inquiry” performed by the bankruptcy trustee contradicts these claims. In sum, we see no basis for the imposition of su ccessor liability on these facts. The re is no view of the record under which EdgeLink obtained benefits from ALSI such that it should also be held responsible for that company’s liabilities

. Fink also seeks relief directly from Stanzione. In his complain t h e allege s that Stanzione breached a fi duciary duty to Fink as a creditor of ALSI by transferring ALSI’s assets without fair compensation and by failing to repay personal loans from the company in excess of $125,000

. But for the reasons described above, we conclude that Fink has not submitted evidence that would allow a jury to find a transfer of valuable assets from
ALSI. And Fink directs us to no evidence detailing personal loans from ALSI to Stanzione

. Fink has failed to offer specific facts that would allow a jury to return a verdict in his favor. Accordingly, we will affirm the District Court’s order of March 27, 2012 insofar as it grants summary judgment in favor of EdgeLink and Stanzione on all claims.
III .

4 We attribute sc ant probative value to the “customer testimonials” on EdgeLink’s website. Certainly they do not allow the inference that EdgeLink in fact administered services or sold produ cts to any particular ALSI customer.13

Fink also appeals the District Court ’s decision affirming the Bankruptcy Court’s
denial of Fink’s motion to reopen ALSI’s bankruptcy. The District Court had jurisdiction over th e matter under 28 U.S.C. § 158(a)

. We ha ve jurisdiction under 28 U.S.C. §
1 58( d ) (1)

. We review a bankruptcy court ’ s decision whether to reopen a case pursuant to 11 U.S.C. § 350(b) for abuse of discretion. Donald son v. Bernstein , 104 F.3d 547, 551 (3d Cir. 1997)

. Generally speaking, a bankruptcy court “ should not be expected to reopen a closed proceeding after the p arties have had the normal opportunities to present evidence absent a special reason for permitting reopening.” In re Time Sales Fin. Corp. , 474 F.2d 1197, 1201 (3d Cir. 1971)

. The belated discovery of u ndisclosed pre

- petition assets, howeve r, may provid e good reason to reopen a bankruptcy case. In re Atanasov , 221 B.R. 113, 116 (D.N.J. 1998)

. As noted by the United States Bankruptcy Appellate Panel of the Ninth Circuit, the inquiry requires a balancing of the costs of such reopening with the expected b enefits:

In order for the denial of a motion to reopen to constitute an abuse of discretion, assets of such probability, administrability and substance must appear to exist as to make it unreasonable under all the circumstances for the court not to deal w ith them. Where the chance of any substantial recovery for creditors appears too remote to make the effort worth the risk, a trial court does not abuse its discretion in denying a motion to reopen. In re Herzig , 96 B.R. 264, 266 ( B.A.P. 9 th Cir. 1989) (i nternal citations and quotation marks omitted)

.14

Here, Fink offers the 2007 NJEDA application of ALSI detailing certain intellectual property holdings and describing purported contracts from 2006 and 2007

. He also relies on the 2007 ALSI “private placement memorandum” list ing more outstanding share s of stock than the company disclos ed on its bankruptcy petition, and on emails in which A LSI appeared to continue rendering services to its customers ev en after filing for bankruptcy. ALSI’s estate was scrutinize d by the trustee in 2008 and 2009

. The trustee found no evidence of any asset transfers by ALSI during or prior to its bankruptcy filing made for the purposes of defrauding its creditors. Nor did t he trustee find that any other corporation, such as ALSer v or EdgeLink , had agreed to assume any of ALSI’s debts or obligations such that additional funds would be recoverable

. Our independent review of the re cord accords with the trustee ’s findings. Fink’s claims of hidden assets predicated upon the NJEDA appl ication and the stock offeri ng are entirely speculative and offer little hope of additional recovery for the estate. Given that the company was essentially valueless at the time of its bankruptcy, resulting in no dis tribution to creditors whatsoever, we f ail to see how the recovery of purported “missing stock” for a now

- defunct corporation could benefit any party. And there is no evidence that ALSI’s limited bu siness dealings in the waning days of its bankruptcy filing were unknown to the trustee or that they resulted in substantial undisclosed income. We conclude that the Bankruptcy Court did not abuse its discretion in declining to reopen ALSI’s estate.
I V .15

For the foregoing reasons, we will affirm the District Court’s orders of March 2 8 , 2012 and Mar ch 25, 2013

.