The Honor able Curtis L . Colli er, Chief J udg e of the Un i ted States District Court for the * Easter n District of Tenne ssee, sitting by desig nation. NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 10a0295n.06 No. 08-2624 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
L OU I S STR

AM AG L I A, MI L LCO NT RA CTO RS AND DE VEL OPERS, I NC., MEL TON ROAD DEVEL OPMENT CO., Pla int if fs , VOL PE-VI TO, I

NC., Pla int if f- Ap pe lla nt,
v. UNI TED STATES OF AMERI CA, Def endant- Appellee
. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) On Appea l f

ro m the United States District Court for the Eastern District of Michig an

Be fore : BO GGS and COOK, Circ uit J udg es; and COL L I ER, Chief District J udg e. *

PER C URI AM. Volpe-V ito, I nc. appeals the district cour t’s order g ranting summary judgme nt in favor of

the United States of Ame rica on the issue of whe ther, unde r Michig an law, Volpe-V ito is a mere continuation of Auburn Park Manag ement C o. Be cause we c onclude that the district court d i d not err, a nd beca use we find no g enuine issues of material fa ct, we a ffirm the jud g me nt o f t

he dis tr ic t c ourt
.No. 08-2624

Str a ma g lia , e t a l. v . U SA

- 2 - I V o l p e - V i t o , In c . ( V o l p e - V i t o ) , a M i c h i g a n c o r

p o r a t i o n , w a s f

o u n d e d i nO c t o b e r

1 9 8 1
. In 1982, L ouis St rama g lia (Stramag lia) and his brothe r F rank a cquire d sole owner sh ip of the corpor ation. Volpe-V ito’s business i n v o l v ed the de velopment of a water park on the corpor ation’s re al estate in Shelby

Township, Michig an. Volpe-Vito beg an operating the park, known as F our B ear s Water Park ( Four

Be ars) , in 1983. Volpe-Vito continued to oper ate the pa rk, which w as open
seasona lly , until 1992. I n 1 99 2, at th e beh e st o f V olp e -V ito ’s c re dit or s a nd a tto rn e y s, the Str a ma g lia s d e c ide d to fo rm a se pa rate mana g e me nt c omp any to op e rate F our B e ars . T he e xpre ss r e a so n f or fo rm ingthi s
ne w c omp any

wa s to se pa

rate the wate r p ark ’s op e ratin g lia bil iti e s f ro m V olp e -V ito ’s a sse ts ( i.e. , the land and f

acilities). Stramag lia’s s ister Nancy formed the new corporation, named Aubur n Park Manag ement Company

(Auburn Par

k), in Marc h 1992. Shortly afte r its formation, Auburn Par k enter ed into a lea se ag ree ment with Volpe-Vito, wh ic h g ra nte d A ub ur

n Pa rk the ri g ht t o o pe ra

te F our B e ars . A ub ur

n Pa rk e nte re d in to n e w l e a se ag ree ments with Volpe-Vito in 1993 and 1996, the latter of which is at issue in this case . Under the terms of these contra cts, Auburn P ark ag ree d to pay Volpe-V ito an annual renta l fee of $200,000 and ten per cent of

g ross sales. Auburn P ark also ag ree d to pay all rea l estate taxes and asse ssments that be c a me du e on

Vo lpe -V ito ’s pr op e rt

y . T he a g re e me nts wo uld a uto ma tic a lly re ne w a

nnua lly un le ss either pa rty g ave notice of ca

ncellation due to br eac h.No. 08-2624

Str a ma g lia , e t a l. v . U SA

- 3 - Au burn Park mana g e d F our B e ars fo r n ine y e ars . D ur ingthat ti me , Stra ma g lia g ra du ally
a ssume d s ole ow ne rs hip and c on tr ol ov e r bo th Au

burn Park and Vo lpe -V ito
. B y 19 97 , Stra

ma g lia
wa s th e so le sh are ho lde r, dir e c tor , a nd pr e sid e nt o f b oth

Au burn Park and Vo lpe -V ito . T he on ly oth e r of fi c e r wa s Th oma s Ne pa (N e pa ), wh o s e rv e d a s se c re tary and a c c ounta nt f or bo th V olp e -V ito
and Au burn Park . I t w a s Str a ma g lia , h owe ver, who , in hi s c a pa c ity a s A ub ur n Pa rk ’s pr e sid e nt, manag ed the da ily

business activities of F our B ear s. B oth be fo re and

a ft e r Str a ma g lia

be c a me pr e sid e nt, Au

burn Park a pp are ntl y re pe a te dly neg lected to satisfy

its employ

ment tax obl iga

tions. Ac co rdi ng to the I nterna l Revenue Ser vice (I RS), b e tw e e n1 9 9 6 a n d 2 0 0 2 , A u

b u r nPa r k a c c r u e d o v e r $ 2 7 0 , 0 0 0 in

u np a id e mp lo y me n t t ax obligations. I n October

2001, the I RS filed Notices of F eder al Tax L iens ag ainst Auburn Park f or over $300,000 in ba ck taxes. Shortly there afte r, on Nove mber 29, 2001, S tr a ma g li a , a cting as sole shar eholder and dire ctor of Volpe- Vito, passed a r esolution terminating the lease ag ree ment betwee n Volpe-V ito and Auburn Park. The r esolution noted that Auburn Park had failed to pa y Volpe-V ito’s rea l estate taxes in 2000 and 2001, and that such failure constituted a brea ch of the lease ag ree ment. Auburn Park ma de no appar ent ef

fort to contest or r esist termination. Pursuant to t h e No v ember 29 resolution, the lease ag ree ment betwee n Auburn Park a nd Vo lpe -V ito e nd e d o n D e c e mbe r 3 1, 20 01 . A t th a t ti me , th e ri g ht to ope ra te F our B e ars re ve rt e d to Volpe-V ito. This left Auburn Park with t hree rema ining assets. First, Auburn Park held e quipment and mac hinery

with a book value of $14,228. Stramag lia offe red to surr ender this equipment and machiner y to the I RS, but the I RS apparently declined the offe r. Ther eaf ter, the eq u i p m en t andNo. 08-2624

Str a ma g lia , e t a l. v . U SA

Flab, I nc. wa s another c orporation o wned by Stramag lia’s family

and, by 1992, run by 1 Stramag lia. Flab ope rate d Honey Be ar Resta

urant, the on- site restaur ant of F our B ear s. - 4 - machiner y we re placed on V olpe-Vito’s books, in re turn for w hich Volpe- Vito reduc ed Aubur n Park’s de bt to Volpe-Vito by $14,228. Second, Auburn Park held investment acc ounts of unknown value. The se ac counts wer e tra nsfer red to Volpe -Vito’s books. Fina lly , Auburn Park posse ssed
acc ounts rec eivable with a book value of over $300,000, repr esenting debts owed to Aubur n Park by Flab, I nc. Auburn Park c ontinued to car ry these re ceiva

bles on its books, but eventually forg ave 1 them as uncollec tible. Once Stramagl i a c an ce l l edt h e l ea s e a gre em en tb et we en Volpe-V ito and Auburn Park, V olpeVito r esumed operating Four Be ars. Volpe-V ito a ppare ntly did not make any signific ant ch anges to the op e ratio ns of F our B e ars . Rathe r, Str a ma g lia , a c tin g a s V olp e -V ito ’s pr e sid e nt, c on tin ue d to manag e F our B ear s much as he ha d bef ore. V olpe-Vito oper ated F our bea rs until 2004, at which time the park pe rmane ntly closed. I n 2 00 6, the I RS file d tax lien s ag a ins t Volp e -V ito , Stra ma g lia , an d two oth e r r e la te d e nti tie s,
asser ting that they

wer e liable for t he unpaid tax liabiliti es of Aubur n Park. Stramag lia, Volpe-V ito, and the r elated e ntities filed a complaint in the Unit ed S tates District Court for the Easter n District of Michig an see king a

judgme nt declar ing that they wer e not liable for

Auburn Park’ s debts. VolpeVito and the g overnme nt both filed motions seeking summary judgme nt on the issue of Volpe- Vito’s 1iability as succ essor to Auburn Par k. The district cour

t gr anted summary

judgme nt in favor

of the g overnme nt on the g rounds that, under Michig an law, Auburn Park wa s a m er e continuation of Volpe-V ito. Volpe-Vito timely appea led.No. 08-2624

Str a ma g lia , e t a l. v . U SA

- 5 - II On appea l, V o lp e - V it o a s s e rts th a t t h e d is tr ic t c o u rt e r

r e d w h e nit a p p li e d th e “ mere
c on tin uatio n” e xce pti on . Th is co ur t re vie ws a dis tr ic t court ’s or de r g ra nti ngsu mma

ry jud g me nt de

novo , but review s its findings of fa ct for c lear err or. Ke c k

v . G ra ha m H

ote l Sy s. , 566 F.3d 634, 636 (6th Cir. 2009)
. Summary judgme nt is appropr iate wher e “the pleading s, the discover y and disclosure mate rials on file, a nd any aff idavits show that there is no g enuine issue a s to any materia l fa c t and that the mov ant is en tit le d to judg me nt as a ma tte r o f l aw. ” F e d. R. C iv. P. 5 6( c ). Th e pa rt y moving for summary judgme nt “ bear s the initial burde n of identifying those parts of the record which demonstrate the abse nce of any g enuine issue of mater ial fac t.” W hit e v . B ax te r H

e alt hc ar e Corp. , 5 3 3 F
. 3 d 3 8 1 , 3 8 9 -9 0 (6 t h C i r. 2 0 0 8 ) ( ci t i n g Ce lot e xCor p. v . Ca rtr e tt , 477 U.S. 317, 323 (1986))
. Once the moving party has satisfied its burden, the nonmoving pa rty “may not rest upon its me re a lle g a tio ns or de nia ls of the a dv e rs e pa rt y ’s ple a din g s, bu t rathe r mus t se t fo rt h s pe c if ic fa c ts showing that there is a g enuine issue f or trial.” Moldowan v. City of W arren , 578 F .3 d 3 51 , 3 74 (6 th Cir . 2 00 9) . T he “ me re e xiste nc e of a sc int il la of

e vid e nc e ” wi ll n ot p re ve nt s umm ary jud g me nt, Anderson v. Liberty Lobby, I nc. , 477 U.S. 242, 252 (1986), a nd if the evide nce “ is merely colora ble,
o r i s n o t signific antly

probative, summar

y judgme nt may

be g rante d.” Id . at 249-50 (c itations omitted). I n this case, the district c ourt did not err w hen it found Volpe-V ito liable as Auburn Par k’s
succe ssor. Michig an follows the “ traditional rule of nonliability

for c orporate succ es s o rs who acquir e a prede cessor throug h the purc hase of assets.” Foster v. Cone-B lanchard Mach. Co. , 597No. 08-2624

Str a ma g lia , e t a l. v . U SA

- 6 - N.W. 2d 506 , 5 0 9 (Mich. 1999). H oweve r, Michig an re cog nizes five narr ow exceptions to the t r a d i t i o n a l r

u l e o f n o n - l i a b i l i t y: (1) whe re the re is an e x press or implied assumpti o n of liability ; (2) whe re the transac tion amounts to a consolidation or merg er; (3) wher e the tra nsaction wa s fraudulent; ( 4 ) w h e r e s o me e le me n ts o f a p u r c h a s e in

g o o d f a it h w e r e la c k in g , or wher e the tra

nsfer was without consideration and the cre ditors of the transf eror wer e not provided for; or (5) wher e the transfe ree corpor ation was a mere continuation or reinc arnation of the old corpor ation. Id. at 5 0 9 -1 0 (q u o t i n g Turner v

. Bituminous Casualty Co. , 244 N.W.2d 873, 878 n.3 (Mich. 1976)). I t is the fifth exception–the so-ca lled “mer e continuation” e x ception–that is at issue in the pre sent
case . The Michig an Supreme Court has rec og nized the “ mere continuation” exception since the turn of t he twentieth c entury
. See Chase v . Mich. Tel. Co. , 80 N.W. 717, 718 (Mich. 1899) (c iting Austin v. Tecumse h Natl. Bank , 68 N.W. 628 (Neb. 1896)) . T h e co u rt h as indicate d that the exception rests on tw o re l ated pr inciples. See P earcev. Schne ider , 217 N.W. 761 (Mich. 1928) (i mpo sin g lia

bil ity on a c or po ratio n b e c a

us e it w a s a

“ re inc arn a tio n” of it s predec e sso r) . F ir st, “cour ts will not tolerate any

specie s of transa ction wher e the stockholde rs in the debtor c orporation
are pe rm itt e d, by

vir tue of the ir sto c k own e rs hip , to re ta in fo r the mse lve s an i nte re st i n th e c or po rate assets until the debts of the c orporation shall have bee n paid.” Id. at 762 (quoti ng 15 A.L .R. 1112). Second, a “c o rp o ration which a cquire s the entire pr operty of anothe r cor

poration under

an
arr ang e me nt w hic h h a s th e e ff e c t of dis tr ibutin g the a sse ts of th e lat ter c or po ra tio n amon g its stockholders, to the e x clusion of its creditors, take s the proper ty subject t o pay

ment of the de bts of its vendor.” Ibid. (qu o t i n g Grene ll v. Detroit Gas Co. , 70 N.W. 413, 413-14 (Mich. 1897))
.No. 08-2624

Str a ma g lia , e t a l. v . U SA

No ta b ly , h o w e v e r , n o M ic h ig an c o u rt h a s f o u n d th e s e f

a c to r s a lo n e s u f

f ic ie n t to justify 2 i mp o s i t i o no f

s u c c e s s o r

l i a b i l i t y. - 7 - To deter mine whether

a succ essor c orporation is a mere c ontinuati o n of its prede cessor , Michig an courts examine the t otality of t he cir cumstance s and eng ag e in a multi-fac tor ana ly sis. See, e.g. , id. a t76 2; S

hue &Voek

s, Inc. v . Amenity D esign & Mfg., Inc. , 511 N.W.2d 700, 702 (Mich. Ap p. 19 93 ); Fe rgus on v . G laz e , No. 268586, 2008 WL 314544, at *5 (M ich. App. F eb. 5, 2008). Th e on ly ind isp e ns a

ble pr e re qu isi te s to a

pp lic a tio n of the e xce pti on a pp e ar to be c omm on

ow ne rs hip
and a tr ans fe r o f s ub sta

nti a lly a ll a sse ts. See, e .g. , Pearce , 2 17 N. W. at 76 2; Sh u e &Voek s, Inc. , 2 51 1 N .W. 2d

a t 70 2; Gougeon Bros. v. Phoenix Re sins, Inc. , No. 211738, 2000 WL 33534582, at *2 (M ic h. Ap p. F e b. 8, 20 00 ). B e sid e the se tw o fa c tor s, the mos t imp or tant c on sid e ratio n a

pp e a rs to be the n a tur e of

the bu sin e ss p e rf

or me d b y the su c c e sso r c or

po ra tio n– that is , w he the r i ts “ ma in corpor ate pur

pose wa s to conduct the same business” as its prede cessor . Pearce , 217 N.W. at 762; see also Shue &

Voek s, Inc. , 5 11 N. W.2 d at 70 2; Ferguson , 2008 WL 314544, at *2. Severa l other fa c tor s a lso be ar u

po n “ me re c on tin

uatio n” ana ly sis : th e ne w c or po ra tio n’ s r e te nti on

of the old corpor ation’s offic ers a

nd employ ees, see Shue & Voek s, Inc. , 511 N. W.2 d at 70 2; Ferguson , 2008 WL31 45 44 , at *5 ; the ne w c or po ratio n’ s oc c up anc y

of the old c or po ra tio n’ s p la c e of

bu sin e ss; see Gougeon Bros ., 20 00 WL 33 53 45 82 , at *2; and the ne w co rp or a tio n’ s sel e c tiv e re pa y me nt of the old corpor ation’s debts, see ibid. Volpe-V ito asserts that a c ourt must also find evidence of i nadequate consideration or fr aud to impose liabili ty

under the “mer e continuation” e x ception. We re cog nize that severa l jurisdictions do require the presence of one or bot h of these f actor s. See, e .g. , Kazir’s Floor & Home D esign, Inc.No. 08-2624

Str a ma g lia , e t a l. v . U SA

Volpe-V ito sug g ests that Auburn Park a ctually abandone d this property . Yet Volpe- Vito’s 3 a c tio ns be lie thi s cha

ra c te ri zat ion of

Au burn Park ’s c on du c t, a s V olp e -V ito so ug ht t o c omp e ns a te Auburn Park f

or the a ssets by

forg iving pa

rt of Aubur

n Park’s de bt. Stramag lia acknow ledg ed in his deposition testim ony that Auburn Park’s a ssets included 4 the rig ht to operate Four

Be ars, e mbodied by

the lease ag ree ment. - 8 - v. M- MLS.com , 394 F.3d 1143, 1 1 5 0 (9 t h C ir. 2004) (discussingCalifornia law ). Michig an, howeve r, is not such a jurisdiction. See Shue& Voek s, Inc. , 511N.W.2d at 702 (finding the Uniform Fr audulent Convey ance Act inapplica ble base d on the ade quacy of consider ation and absence of fra ud, but failing to mention either the a bsence of fraud or a dequac y of consider ation as par

t of “mer e continuation” ana ly sis). Ap ply ingthe fa c tor s e xami ne d b y Mic hig an c ourt s to the pr esen t c a se , V olp e -V ito wa s a
mere continuation of Auburn Par k. First, Volpe- Vito acquire d substanti all y all of Auburn Par

k’s
a sse ts. Th is incl ud e d n ot o nly a ll o f Aub ur

n Pa rk ’s ph y sic a l a sse ts –w hic h w e re re la tiv e ly 3 meager–but also, more importantly , Auburn Park’ s most valuable asset: the r ight to oper ate F our B e ars . Cf., e.g. , W

arne Inv s., Ltd. v. Higgins , 195 P.3d 645, 651 (Ariz. App. 2008) (imposing 4 lia bil ity ba se d o n th e tr ans fe r o f i nta ng ibl e a sse ts) ; Gladstone v. Stuart Cinemas, Inc. , 878 A.2d 214, 225 (V t
. 2005) (ba sing liability on the transf

er of “the c ritical asse t [ of] acce ssibili ty to films for pub l i c v i e w i n g ” )
. S t r a m a g l i a e f f e c t i v e l y t r an s f e r r e d t h a tr i g h tf

r o m A u b u r nP ar k t o V o l p e - V ito wh e n, in his c a

pa c ity a s so le sh are ho lde r a

nd dir e c tor of Vo lpe -V ito , h e c anc e lle d th e le a se
a g re e men t bet ween Vo lpe -V ito and Au burn Park . O rd ina

ri ly , o f c ours e , c anc e llatio n o f a le a se ag ree ment would not constitute an asset transfe r. In this case , howeve r, Stramag lia had sole c ontrol over both Aubur

n Park’s pe rfor

mance of i ts obligations under the lease ag ree ment and Volpe- Vito’sNo. 08-2624

Str a ma g lia , e t a l. v . U SA

Ac c or din g to Str a ma g lia ’s te sti mony , b e fo re re su min g c on tr ol o ve r F our B e ars , V olp e -V ito 5 was mere ly a shell that held the prope rty and fa cilities operate d by Auburn Park, but that c onducted no business and had no e mploy ees of its own. - 9 - response to defa

ult. Moreove r, Stramag lia controlled Auburn Park’s re sponse to canc ellation–that is, whether Auburn Park f oug ht to preser

ve its primary reve nue-pr oducing asset, or simply acc epted the loss (as it did). As a result, S tramag lia essentially had dis cre tion to shi ft the rig ht to operate Four B e ars be tw e e n A ub ur

n Pa rk and Vo lpe -V ito . U nd e r t

he se c ir c ums tanc e s, c anc e llatio n of t he le a se
a g re e me nt r e se mbl e d mo re a vo lun tary

tr ans fe r t ha n a n invo lun tary

te rm inatio n o f r ig hts
. Appellant conte nds, howeve r, that Auburn Park’s most valuable a sset was a ctually the $300,000 in acc ounts rece ivable that re mained on Aubur n Park’s books. See Appellant’s B rief at 18. Yet the district c ourt found that these rec eivables wer e eve ntually forg iven as unc ollectible, and appellant doe s not contest that finding
. Fur ther, Auburn Park’s acc ountant, Nepa , admitted that the company had no asse ts after

it transfer

red its phy sical prope rty

to V olpe-Vito. The evidenc e in the
re c or d th us ind ic a te s th a t V olp e -V ito did a c qu ir e su

bs tanti a lly

a ll o f Aub ur

n Pa rk ’s a sse ts. Second, as appellant conc edes, Auburn Park a nd Volpe-V ito shared c ommon ownership, as Stramag lia was the sole sha reholde r in both corpor ations. Th ir d, a ft e r Vo lpe -V ito a c qu ir e d Au burn Park ’s a sse ts, it c on du c te d e xac tly the sa me bu sin e ss at th e same loc a tio n a s A ub ur n Pa rk –it op e ra te d F our B e ars . Ap pe lla

nt s e e ks t o d ist inguis h 5 Volpe-V ito’s business on the grounds that Volpe- Vito operated the par k using its own prope rty

and equipment. Yet appellant of fer s no expl anation of howowner ship of the under ly ing a ssets altere d the nature of the business conduc ted. B oth Auburn Park a nd Vol p e- Vi t o fo cused e ntirely onNo. 08-2624

Str a ma g lia , e t a l. v . U SA

Unsurprising ly , g iven the s ea s o n al nature of the water pa rk’s business, many

employ ees 6 chang ed betwe en sea sons. Notably , howeve r, the c ateg ories an d n u mber of positions that exis ted un de r Vo l p e - V i t o ’ s c o n t r o l w a s e s s e n t i a l l y t h e s a m e a s e xi s t e d

u n d e r A u b u r nP ar k ’ s c o n t r o l. Moreove r, there was sig nificant ove rlap betwee n the life g uards a nd office worke rs employ ed by the two corpor ations, the positions t hat pre sumably require d the most training a nd thus ex hibited the most stabili ty
. - 10 - operating the same facilities; the l atter’ s owner ship of those fac iliti es had no a ppare nt impact upon the natur e of

its bu sin e ss a c tiv iti e s. Four th, Volpe-Vito re tained t h e s am e manag ers a s Auburn Park. Strama g lia serve d as president a

nd sole direc tor of both companie s, with primary responsibility

for the a ff

ai rs of F our Be ars, a nd Nepa serve d as both corpor ations’ sec reta ry and ac countant. Finally , t h o u gh t h ei r e mp l o y ee s we re n o ti d en t i ca l , t h ere wer e substantial similarities betwee n Au burn Park ’s and

Vo lpe -V ito ’s wo rk fo rc e s. 6 Additionally , t h e co n siderations that led Michig an to embra ce the “mer e conside ration” exception support its application in the present case . By transfe rringAuburn Park’ s assets to VolpeVito, Stramag lia soug ht to derive benef its fr om the same assets (including the rig ht to operate Four Be ars) that serve d as Auburn Par k ’s p ri m ary source of re venue, w hile leaving Auburn Park’ s
cre ditors without recourse . This is prec isely the t y pe of behavior that the Michig an Supreme Court soug ht to control when it adopted the “mer e continuation” e x ception. See P earce , 217 N.W. at 762. Acc ording ly , under Michig an law, V olpe-Vito is a mer e continuation of Auburn Park. The district court thus did not err whe n it gr anted summary judgme nt in favor of

appellee
. III F or the a fo re me nti on e d r e a so ns , w e a ff ir m th e jud g me nt o f t

he dis tr ic t c ourt
.